Steps to set up an online store, part ll: Market Research
This is the second part of the post series that we started last week where the first step was, How to define your online business. In today’s post, we’ll focus on market research, the great unknown. Raise your hand if you’ve made a market research strategy. I see you. There aren’t many, which is normal. As such we’ll break it down in to parts.
Market research is usually brief and poorly done, given that to do it well, you have to document it (and documentation is tedious) and invest a lot of time. Besides that, you have to use a series of tools that, make no mistake, are expensive. Do we have this kind of money? Probably not, which is why we’re creating this post to be able to do market research “at home” with few economic resources.
2.1 Competition Analysis
It is extremely important to do a study at various levels, even more so taking into account the quantity of competitors we have, both big and small. We’ll focus on:
- Shipping costs
- number of categories
- number of products
- Brands they distribute
- if they’re official distributors or not
- if they’re exclusive distributors
- Discount codes and promotions they use
- How they capture traffic
- How much they spend getting said traffic
- Site adaptability devices
Suppose we’re going to sell a product like dog food and we focus on the Spanish market. We could use competitor research tools like SEMRush or Sistrix to find out who sells such products by using the keywords “dog food”. SEMRush will give us a good idea of the scope this keyword has as well as part of the demand it has (to see if there really is enough of a public to build a business for that product).
In addition, we can see the main competitors, the ones that have higher visibility in Google searches and who, therefore, are the strongest in the sector:
With this we can get a good idea of what the landscape is. Is there a market? Yes. Is there competition? A lot. Even Decathlon and Carrefour are selling dog food, which means maybe we should specialize a bit 😉
Since it’s not a question of reinventing the wheel, I would choose the top 10 with the most presence (those that take the users as a reference at the time of purchase) and visit them keeping in mind what I want to assess:
- Product prices. Not all of them, just the ones that are similar or the same as what you’re selling.
- Online store structure regarding browsing / category tree.
- Corporate design
- Purchasing, selling, and payment processes
- Logistics operators in use
Where to aim? Keeping in mind that the main driver in Spain is the price when it’s time to make a purchase, I would fixate both on the price of products that we’re going to sell as well as the the shipping costs and the deals or promotions that the competition offers. There is a tool called Minderest that can be of some help to us and there are others like NetRivals or BeMyEye. We’re not just going to focus on online prices, we’ll also visit physical sites.
Furthermore, we’ll leave competitors’ websites and investigate forums, opinometers (Ciao, eKomi, etc), blogs, and social networks using search terms like “[competitor’s name] opinions”, “[competitor’s name] prices” to give ourselves an idea of the people’s opinion who buy the product and see where we can beat the competition.
2.2 Consumer Analysis
Here we’re interested in knowing what type of people buy this type of product. Our friend, Google, can help us quite a bit. It’s tool, Keyword Planner, which is still free at the moment, can supply us with the data we need.
Obviously it won’t tell us if the product was bought by a man or woman between the ages of 25 and 45, but it can help us better define where you can purchase the product.
We put the daily budget and the cost per click and we have the first insight.
We can see in the chart above that people buy more in Flushing, NY than in Madison, TN, for example. We can also adjust down to a level that’s a bit insane, like by neighborhood:
On a side note, am I interested in comparing all data with the UK and the US or going for smaller areas like different counties as seen above? There’ll be less competition, right?
Second insight, devices:
69.5% clicks on mobile devices. Actually, the audience that’s looking for this product is concentrated in two provinces and one device. At least I know that if I ship from Barcelona or Madrid, I will be able to offer not just lower shipping costs, but faster shipping. Furthermore, if I have a website that’s adapted for cellphones, I will be competitive. If not, I can forget it.
Just with this we’ve gotten a bunch of data that will allow us to better know our target. Now we’ll go to Facebook Ads where we’ll create a free campaign but not actually implement it. We click the green “create ad” button and define “increase conversions on your website” as the objective:
Then we can make up a campaign name:
And now the fun is playing with public data from Facebook. For example, we’ll define:
And also target criteria and interests like:
Ok, so after choosing a few criteria, I can get a good idea if there’s a public, right?
Out of 570,000 people, I can reach between 2,800 and 7,500 daily with the default daily investment in Facebook of 20 €, shown above. If I go up to 80 € a day we see:
It looks like there is a market. Now that we have the data, we need to define a strategy 😉