You've just decided
to start an online business. You have a
great idea for a product, the adrenalin's pumping and
anxious to get started.
One important question
-- have you done your market research?
I know -- market
research, how boring!
you tune out and disregard the question, think about what
it will take to start your online business. You're going
to be investing lots of energy and time as well as money.
Don't you want to make sure your product or service has
You bet you do!
If you don't, all your efforts and money could be
wasted and your business may become another online casualty.
It happens all the time.
So, before you get
too anxious, consider the following:
Is there a market
for your idea?
Don't assume that
just because you, your family and friends love your idea,
it's going to be a profitable one. There's a big world
out there and what you consider a great idea may not be
suitable for the rest of the world, so let's make sure
it has potential.
There are 4 things
you need to consider:
- What is the online
- Who's your Competition?
- What kind of profit can you make?
The simplest way to find out if your product or service
has potential is to simply find out what the online supply
and demand is.
This is done by taking
the supply or the number of competing sites for a product
or service and dividing it by the demand or how much the
product or service is searched for. The lower the result,
let's say you want to sell 'porcelain dolls' but you're
also considering selling charm bracelets. Let's see what
the better choice might be by looking at the supply and
My search engine
of choice is Google so when I type in 'porcelain dolls'
into Google it returned 3,630,000 competing sites as of
My keyword search
tool of choice is Overture, so when I type 'porcelain
dolls' into the overture search term tool the results
When I divide the
number of Google's competing sites by the number of Overture
search count, the total is 202.27 (3,600,000 / 17946 =
Now let's do the
same thing for 'charm bracelets'.
At the time of this article Google returned 1,950,000
competing sites and Overture returned a count of 50417.
The result was 38.67 (1,950,000 / 50417 = 38.67).
Charm bracelets is
the winner because the ratio between searches and the
number of competing sites will make it easier for your
site to be found.
This is online demand
in it's simplest form but it can give you a good idea
of what you are up against.
Next you must
research your competition.
Always know what your competing sites are
doing and how they are doing it. Let's say you decide
to sell those charm bracelets. Type 'charm bracelets'
into Google and take a good look at the first few pages
of listings that come up. Look at each site and study
it. Make a chart and note the following for each site.
- What products
do they offer?
- What are the strengths and weaknesses of each site?
- What information or services does each site provide?
- What did you like or dislike about each site?.
compiled your chart this will help you determine
how you can make your site better and what information
or services you might want to include that would offer
better value and/or service. The key here is to find
out what is
out there and how you might deliver it better.
What kind of profit
can you make?
Profit is calculated
after all your expenses are met. It's basic business
101 but sometimes online business owners forget that.
If your porcelain
doll cost you $10 and you sold it for $30 you may have
made $20 but your profit may be lower. You also need
to take into account what it cost you to make that sale,
advertising, website costs, merchant account costs,
30-50% can be very good. Anything more would be ideal,
however if you can't show a profit after expenses it
won't be worth your time.
Study your competition,
keep your costs down ,keep your price competitive, offer
something free if you can, stress your value and be
sure to take all facets of cost into account.
Elizabeth McGee has spent 20 years in the service
and support industry.
She has moved her expertise to the world wide web
find trusted tools, enhance customer service, build
increase sales. You can visit Elizabeth's sites
mailings, click here