- Introduction
- Figures for Market Research
- Analysis of Potential Demand
- Competing Projects
- The Value Proposition
- A Growth Strategy
- profitability
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Introduction
Are you finally ready to create your online store?
Wondering whether your customers will buy your products? If you’re entering a profitable niche? Or which technology to use for your e-commerce platform? You’ll agree with us when we say that knowing the answers to these questions puts you in a good position to succeed with your online shop project. This is where market research comes in.
Effective market research will enable you to lay the foundations for the future success of your business.
Studying your market will give you the opportunity to familiarize yourself with the major dynamics of the industry you’re launching into, to better understand the potential clientele who will come to buy from your e-commerce store, to develop a product offering that effectively responds to consumer habits, and to better apprehend your competitive environment. In other words, market research enables you to check that your online store project is in line with the reality on the ground.
How do you build a market study for your e-commerce shop that will actually be useful to you?
In this article, we’ll show you the methodology, steps and tips you need to put in place to carry out market research for your online store. From researching market trends to studying the competition, from quantifying demand to analyzing the target market, we’ll show you how to make your market research a success.
STEP 1: FIGURES FOR THE MARKET STUDY OF YOUR ECOMMERCE PROJECT
What data should be included in an e-commerce market study?
How much money do stores (physical and online) selling products similar to yours generate each year? What are the profitability levels observed? Is the market saturated, or is there still room? What are the average prices observed? Do online stores generally start with dropshipping? Should you launch your own brand right from the start? Answering these questions will give you a better understanding of the e-commerce market as a whole.
What are the new market trends in e-commerce?
What are the latest changes? Consult industry reports. Are these products generally sold online? In physical stores? Through resellers? Ask yourself how a new online store selling this kind of product can come up with an innovative offer. Do you have to slash prices? Sell packs? Offer only high-end products? Finally, ask yourself what characteristics successful online stores have in common. Is it their user experience? Their Facebook Ads strategy? Or their content strategy?
What are the regulations?
You need to be aware of the laws surrounding the type of product you’re about to sell. Sometimes, project owners discover too late certain regulatory constraints to which they are subject. Are there any draft laws that could have an impact on the growth of your e-commerce store? What about education and training? Are there any major barriers to entry?
STEP 2: ANALYZE POTENTIAL DEMAND IN A MARKET STUDY FOR E-COMMERCE
What is the target market for an e-commerce project?
Not all your visitors will become buyers. You need to define a target audience. For example, online cosmetics stores are generally designed for a predominantly female target audience. Manga e-boutiques, on the other hand, tend to be aimed at millenials. Who will be your target audience? To answer this question, you need to segment your customer base, in order to achieve precise marketing targeting and refine the value proposition of your e-commerce project. For effective segmentation, you need to establish specific target criteria. Which consumer groups share the same criteria and purchasing habits?
How do you calculate the size of your e-commerce market?
Before launching a new activity, you need to estimate the size of your target market. This information will help you better estimate the amount of revenue you can expect to generate. To quantify your market, you can draw on a number of sources. There are industry studies available for many industries. You can also analyze traffic from stores selling similar products, using tools such as SEMRush, UberSuggest or SimilarWeb. How do you acquire and retain e-commerce customers? What do your customers expect from the products you sell? What is their budget for these products? What factors can trigger a purchasing decision? What do they appreciate about competing stores? The user experience on the platform? Discounts and promotional offers? What could you offer to pique their interest? Discounts on product packs? New colors? How can you build loyalty? Should you launch a CRM strategy? How can you create content with real added value for your audience?
STEP 3: STUDY COMPETITIVE E-COMMERCE PROJECTS IN YOUR MARKET STUDY
How to do a competitive study in e-commerce?
With a good study of the competition, you will be able to consider the most effective strategy to capture market share. Thanks to this study, you will know, first of all, how many daily and monthly visitors these platforms receive. Also, you will identify their different offers. Do they offer exactly the same products as you? Do they work with dropshipping? Then, you will be able to judge the dynamism of their activity. Do they generate significant traffic? Do they advertise on Facebook? Via Google Ads? How do they communicate on social networks? What is their pricing policy? Do they sell high-end products? What about delivery costs? Finally, try to understand who the different offers are aimed at. Are they targeting exactly the same audience as you? Do they seem to address several market segments? What marketing messages do they use? Also, don’t forget your indirect competitors. These are all those that sell products similar to yours but are not online stores. There are, for example, physical stores, or, depending on your industry, supermarkets, wholesalers, resellers, concept stores, etc.
How to analyze competitors in e-commerce?
Do your competitors appear to be generating significant profits? You need to identify the strengths of their value proposition. Do they offer free shipping? Promo codes for new buyers? Algorithms for recommending new products? Should you include these points in your value proposition? Also, you will identify the points on which they have difficulties. Does the e-commerce platform have bugs? Do the product descriptions leave something to be desired? Are the photos poor quality? All of these things can lead to frustration among your potential customers. Exploit these gaps and offer something better to your market segments. What competitive advantages for an e-commerce project? A simple strategy is to spot competitors’ shortcomings and take advantage of them. Are your competitors too expensive, charge for delivery and don’t work on their product pages? So you need to offer more affordable prices, free delivery and professional photos (or even videos) as well as detailed descriptions for your product pages. However, you should not stop there if you want to establish yourself in the market you are about to conquer. You will need to build other competitive advantages with your e-commerce store. A competitive advantage gives you a different positioning. For an online store, this can be prices significantly below the market, exclusivity on certain products or even a very aggressive marketing strategy. You won’t be able to fight on every front, so only select competitive advantages that are likely to appeal to your audience. You won’t be able to fight on every front, so only select competitive advantages that are likely to appeal to your audience.
STEP 4: THE VALUE PROPOSITION IN THE MARKET STUDY OF YOUR E-COMMERCE PROJECT
How to do a competitive study in e-commerce?
With a good study of the competition, you will be able to consider the most effective strategy to capture market share. Thanks to this study, you will know, first of all, how many daily and monthly visitors these platforms receive. Also, you will identify their different offers. Do they offer exactly the same products as you? Do they work with dropshipping? Then, you will be able to judge the dynamism of their activity. Do they generate significant traffic? Do they advertise on Facebook? Via Google Ads? How do they communicate on social networks? What is their pricing policy? Do they sell high-end products? What about delivery costs? Finally, try to understand who the different offers are aimed at. Are they targeting exactly the same audience as you? Do they seem to address several market segments? What marketing messages do they use? Also, don’t forget your indirect competitors. These are all those that sell products similar to yours but are not online stores. There are, for example, physical stores, or, depending on your industry, supermarkets, wholesalers, resellers, concept stores, etc.
You have now collected information.
You know the profiles of the people to whom your offer could potentially be addressed. You also know their preferences for your products. You know your competitors better and you have identified their weak points in order to take advantage of them. All you have to do is develop a value proposition and a good commercial positioning for your online store.
Which graphic charter to choose for an e-commerce project?
The colors and typographies used must be consistent with your universe and your brand strategy. To make your logo easy to identify, use a maximum of 4 colors. Also choose a very readable and specific font to stand out. When creating the logo, remember to create a model that can be adapted and used on all your communication media. When it comes to images and icons, avoid those from free image banks: instead choose photos taken by a real professional. Finally, test the customer journey several times to ensure that there are no points of friction. Prioritize your content as best as possible and take care of the arrangement of texts and images.
What delivery policy for an e-commerce project?
Remember that delivery is a lever for customer loyalty and satisfaction. Also, make sure you offer delivery tailored to the needs and lifestyle of your customers. Express delivery (delivery within 24 hours) remains the most popular, because consumers are often looking for a fast and satisfactory service. Also offer standard home delivery, but with fairly wide time slots, as well as delivery to a relay point. To complete your offer, offer, if possible, eco-responsible delivery (delivery with bicycles or electric vehicles). Such an initiative will reduce your CO2 emissions and improve your brand image. Concerning the other information to be communicated, remember to mention the delivery time, but also the return time (14 days minimum). Also specify whether the return costs will be borne by the customer or not (it is better if this is not the case). Finally, do not forget to indicate the return conditions (intact products, in packaging, etc.), the item return process (delivery method, carrier, etc.) as well as the reimbursement terms.
Should you work with influencers to develop your e-commerce project?
To quickly gain visibility on the web, and if your products are suitable, collaborate with micro-influencers. Choose those whose editorial line can correspond to your brand identity and, above all, to your products. This is imperative if you want to turn their community into buyers. Don’t be too strict about the procedure and offer them a win-win partnership: exclusive reduction for their community, voucher at the end of a competition, etc. In return, offer to do (honest) product tests, highlight your brand’s hashtag, do product placement, etc. Consider collaborating with several influencers at the same time and create a real network. When it comes to compensation, you can decide on an amount together at the start of the campaign or agree on gift cards and products. You can also offer a commission based on affiliate links, promotional codes or on clicks and “likes” on the article or video posted.
E-Commerce: should we sell products from other brands? Or create your own brand?
Firstly, to get started quickly and not commit too much funds, you can offer products from other brands for sale. Choose products that have high potential, are trendy or fit into niche segments. This will give you time to test your audience and refine your own brand and products. Use this step as a testing phase. Once you have a concept in mind, identify the added values that will constitute the qualities of your brand. Next, determine your brand positioning. The next steps will be to find a logo and catchy slogan for your brand, before launching production of your product line.
How to make a good decision?
By consulting your market! Either way, your concept must be consistent with your target market. For example, to attract a young audience, it is preferable to communicate on social networks. To find out what your audience prefers, you must conduct a study with questionnaires addressed to your potential customers. You will then obtain feedback, opinions and comments… which will be the very basis of defining your concept for your e-commerce shop.
STEP 5: DEVELOP A GROWTH STRATEGY IN A BUSINESS PLAN FOR E-COMMERCE
How to develop a profitable e-commerce project?
A business plan for your e-commerce store will serve as your roadmap. What strategy will you implement to increase the turnover of your e-commerce store? Writing a business plan helps you review all the strategic points of your activity. It is when he builds his business plan that the business creator will be able to make important decisions on everything that will help him develop his online business, namely the marketing acquisition plan in order to gain traffic on his store, all the stages and actions over 3 years, the measures to put in place to protect against the various risks, a start-up budget for your online store and its sources of financing, the growth objectives (period by period), the first (possible) recruitments and the 3-year hiring plan, communication channels to use, etc. All the learning from market research is part of the business plan. Finally, your business plan will be a guide for the implementation of the project during the first months, but also the first years.
How do you know if an e-commerce project can be profitable?
The financial forecast for your online store allows you to check the feasibility and viability of your project. It is THE document that allows you to clarify your business project. What level of income can you achieve with your online store? Your financial forecast will tell you the answer in black and white. Also, it will allow you to identify all the expenses necessary for opening an e-commerce platform. You will also analyze the recurring charges that will weigh on your profitability. But it doesn’t stop there: a good financial forecast will tell you what turnover you need to achieve in order to be profitable. You will also know how many days it will take you, each year, to theoretically reach your break-even point. Finally, you will have a clear vision of the future finances of your e-commerce store.
How to finance an e-commerce project?
The business plan remains THE essential document for a financing request. To launch your online store, you will need to make certain investments. We are thinking in particular of the design (or purchase of stock) of the first products, developer costs or even the fees of a graphic designer. Will you seek external funding? If the answer is yes, the business plan for your online platform will constitute the basis of negotiations with your investors. Building a business plan can be a colossal job.
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