With new years come new year resolutions. After the bruising year of 2020, it’s no surprise that many people are starting off this year with the intent to open a business. Starting an eCommerce store is, for many, the easiest way to realize that dream.
In some ways, it really is easy to get started. You can make a Shopify site in a matter of hours. But just because you build it, that doesn’t mean people will come. You need to make sure that people are interested in what you want to sell, or else no one will buy!
That’s why market research is so important. Figuring out what people are willing to spend money on is square one for every profitable venture. That’s why we’ll talk about exactly how you can do that!
What is market research?
Before you start selling something, you need to make sure that people actually want it. Market research is how you confirm that people will buy what you want to sell.
If you want a formal definition, Wikipedia provides a good, nuanced one:
Market research is an organized effort to gather information about target markets and customers: know about them, starting with who they are. It is a very important component of business strategy and a major factor in maintaining competitiveness. Market research helps to identify and analyze the needs of the market, the market size and the competition. Its techniques encompass both qualitative techniques such as focus groups, in-depth interviews, and ethnography, as well as quantitative techniques such as customer surveys, and analysis of secondary data.
Why is market research important?
The basic purpose of market research couldn’t be easier to understand. Before you spend money making something to sell, you want to make sure people will buy. Makes sense!
Yet there are a number of reasons why you’d need to gauge market demand, each stemming from a need to meet specific objectives. Here are a few examples:
- You may be starting a business for the first time. That means you want to make sure the industry is a good one to enter in the first place.
- You already have a business but want to reach out to a new market. There may be underlying trends that indicate unmet market demand, giving you a chance to broaden your customer base.
- You may be seeking to create new products or features for an existing audience. If so, you’d need to confirm that your existing customers are interested in what you want to make.
- You may simply be trying to tweak your current marketing initiatives. This can be done to maximize ROI.
9 basic steps of market research
In an article I wrote on Marketing is the Product, I outline nine basic steps to conducting marketing research. These steps remain the same regardless of industry or objective, so I will reiterate them here:
- Understand the basic purposes for market research. In short, know why you’re doing research in the first place.
- Know the tools you have available. There are a ton of ways you can conduct market research, including surveys, focus groups, interviews, observation, competitors’ websites, and plain old Google. We’ll talk about some specific techniques you can use in the following section.
- Define your target audience. In general, it’s easiest to find an audience you want to serve, and then create/sell products or services based on that audience’s needs and desires. With that in mind, ask yourself a few questions to try to figure out who your target audience is. Questions include:
– What are my customers interested in?
– Where do they live?
– What kind of media do they consume?
– How much money do they have?
- Find your niche. People have a virtually infinite amount of options available online, but only a finite attention span. If you know which niche you’re going to serve, make sure to write it down so you can focus very clearly on that specific niche. If you don’t know your niche, consider starting with some exploratory market research which the specific intent to figure out what it is.
- Imagine your buyer as a real person. Though market research often pushes people to think of buyers as groups and not individuals, it’s important to try to resist this trap. Consider creating a buyer persona with imagined charactertistics such as age, gender, location, job title, and so on.
- Reach out to participants. If you plan on soliciting information directly from potential customers, you need to proactively find them and get their attention. You can do this by reaching out to people who recently bought your products, emailing regular clients, cold contacting people on social media, or even soliciting feedback when conducting a social media giveaway.
- Prepare your questions. Before you conduct marketing research, you need to come up with questions you want answered. That way, you’re always asking or at least seeking answers to the same questions every time. Knowing the right questions to ask is a topic in and of itself, but the Alexa blog provides a good guide on how to start.
- Analyze your competition. Gathering data directly from customers is very valuable, but don’t forget to look at your competitors! Oftentimes, the successful ones have conducted their own marketing research and created their business around what they found. Check out their website and the products they are offering. Ask yourself how your company compares to theirs and how you can meet needs they aren’t addressing.
- Review the results. Once you’ve collected all the information you need, take the time to properly analyze it and turn it into a coherent final product. One way to do this is by writing up a summary report of what you’ve found. Don’t skip this step! This is often where the most important realizations come from.
7 market research techniques you can use
Now let’s get to nitty-gritty tactics which you can use to conduct market research. For the most part, you don’t need special software or even knowledge. All you need is some patience, the right mindset, and some well-defined goals.
1. Use Google Trends.
Google Trends may be my favorite way to conduct market research. The basic idea is simple: Google keeps count of what people search, as well as when they search and where they search from. In practice, this means that you can plug in all kinds of words to see if people are interested enough to Google them.
For example, over the past five years, the search term “Roomba” has always seen a spike around Black Friday to Cyber Monday. That would suggest that people buy robot vacuum cleaners when they are on sale or when they need to buy someone a gift. Otherwise, search volume is much lower.
Similarly, if you look up “dried beans” for the last five years, you see a massive spike around when the COVID-19 pandemic hit, followed by a plateau higher than the previous one. That indicates that the market for non-perishable goods, such as dried beans, increased after people got a good scare.
2. Use Amazon Search.
Amazon spends an inordinate amount of money getting people to buy just a little bit more on their website. That means the search bar is a shockingly good research tool that many people use on a weekly, maybe even daily, basis.
Seriously, if you type in “pet grooming”, all kinds of suggestions come up on Amazon:
- Smocks for women
If you type in “board game”, you see:
- For kids
You get the idea! Then you can start viewing individual items to see their reviews as well as their best-seller rank. You can use this to figure out just how popular certain items and niches are before you start selling.
Once you find a good niche to research, consider looking at the items that show up under “customers who view this item also viewed” when looking at individual items. This can help you learn even more by taking you off the beaten path.
3. Use JungleScout.
If you want to go one step further, there is a paid software that I use called JungleScout. If you use it, you can view daily and monthly sales estimates for any item you pull up on Amazon. This can help you find specific facts and figures that would be otherwise inaccessible to you.
4. Use Oberlo.
Oberlo is a popular dropshipping app and website. If you’re not familiar with dropshipping, here’s the basic idea: you can sell items on a storefront that another company manufactures and ships for you. In other words, dropshippers manage a store, brand, and customer service. That’s it!
For dropshippers, the key to success is selling items that people really want. Oberlo helps them do so by suggesting items which are known winners. Even if you don’t plan to use a dropshipping model, this can still help you quite a bit.
For example, if you look up pet grooming, you can find all kinds of products that are being manufactured and shipped directly from overseas. This tells you a lot about what people are already buying!
5. Collect data from your customers.
One of the best ways to know what your customers and potential customers want is to simply listen to them. At a basic level, you can conduct marketing research by interviewing customers one on one or even asking questions on social media. If you want to reach a wider audience, you can always offer a prize in return for filling out a survey.
If you want to take a more data-driven approach, you can always use statistics to analyze text on social media. Similarly, you can focus your sights inward and use metrics from your email or customer relationship management system to find out what your current customers are interested in.
6. Collect data from media, events, and government agencies.
If you want to seek data from outside of your niche’s echo chamber, you can also seek data from the following sources:
- News headlines
- Government agencies such as the Bureau of Labor Statistics and Small Business Administration
- Conversations with suppliers, distributors, and retailers
- Industry events
- Trade journals
7. Collect data from your competitors.
Lastly, one of the best ways to conduct market research is by going to competitors’ websites. By doing so, you can see what they’re selling, who they are targeting, and what price point they’re focusing on.
All the information that competitors post on their websites is public, and you can learn a lot even without inside access. Just by paying attention to the features or qualities your competitors promote, you can get a sense for what needs are or are not being adequately served.
Making sure that you have a product worth selling in square one no matter what kind of store you’re starting. Fortunately, conducting market research doesn’t have to be complicated! A little bit of research can go a long way toward making sure you spend your time in the most effective way possible, selling products that people really want.
- Understand the basic purposes for market research.
- Know the tools you have available.
- Define your target audience.
- Find your niche.
Read more on the Fulfillrite blog.