eCommerce grew faster than total economic activity in three of the four major economic sectors. The market for new online businesses is there; however, many new eCommerce entrepreneurs jump in without sufficient planning.
Some believe their product or service will “sell itself,” or that a global market means unlimited one. In truth, a wider customer base also means more competitors. A solid eCommerce business plan helps entrepreneurs consider potential problems, plan marketing strategies, secure funding, and project sales. A good business plan is updated over time to reflect the performance and new goals of the company.
One critical aspect of a good eCommerce business plan is market research. After the planning phase, management regularly uses market research to make good business decisions.
What Type of Market Research Is Needed for an Ecommerce Business Plan?
eCommerce market research should provide important information about three aspects of moving the product or service from the hands of the entrepreneur to their customers’ doors:
- Market research: Information about the industry, including trends, past performance, projections for growth, etc.
- Competitor research: Who else is selling this product or service? How are they marketing it?
- Customer research: What is the target market? What are their habits? How can they be reached and converted to buyers?
Each business has specific information needs, and the above list does not include all considerations necessary to plan a business. However, the following market research strategies will help new or growing businesses find the right type of data to make the best choices.
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Market Research: How to Find Industry-Specific Market Data
The easiest way to discover trends and projections in any product or service industry is to purchase reports. Research companies collect, compile and distribute data for a fee. Most reports are available online for purchase with a credit card.
Industry-specific market research reports allow entrepreneurs to see the big picture, using information that otherwise might not have been available to them. Before purchasing a report, check that the information collected applies only to eCommerce sales, not the industry as a whole. Also, make sure it is targeted to the right niche or industry and produced by a reputable research agency.
Such companies collect information and compile reports on market data by industry but further break the data down by country to give entrepreneurs specific, necessary planning information.
Competitor Research: Where to Find Free Information on Business Competitors
Depending on the size and scale of the business, competitive research might be in-depth or a general overview. In most cases, entrepreneurs need to know who is selling their product or service (or similar), how it is marketed, at what price point, and to which customers.
It is also wise to check into the customer service, shipping, warranty/guarantee, and other policies of competitors. This helps the new business find a competitive advantage.
Competitor research can be performed in-house or outsourced to a company or individual who can visit competition websites and gather publicly available information on product offerings, advertising methods, etc.
Use a free tool like Alexa.com to measure traffic to competitor sites. Archive.org is a free tool that allows users to look up websites and see what they looked like in the past; this is useful for entrepreneurs to learn how a competitor has changed their selling strategies over time. Compete.com measures the performance of selected websites head-to-head, free of charge.
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Customer Research: Finding Information to Attract and Keep Customers
Customer research has two purposes. First, a new business needs to know its target customer and how to reach them to make a sale. Market and competitor research helps entrepreneurs discover their customer base and find business emails to contact them in the future. There are also paid resources that provide consumer information based on age, gender, lifestyle, and other demographics.
Second, businesses must understand how to manage their customer database to retain clients, promote new products, measure marketing strategy success, and more. Companies can employ Customer Relationship Management (CRM) or Customer Knowledge Management (CKM) techniques, two different but interrelated concepts for building loyalty and retaining market share.
Taking the time to formulate a realistic business plan can help entrepreneurs qualify for grants or other funding. So prepare for rapid growth or slow starts, and prevent mistakes that could spell an early end to their new business. eCommerce market research is a critical part of the planning and launching stages in any new online business.