We all know that we should do market research before starting our business, but beyond engaging a pricey research agency or asking a few family and friends for feedback, there hasn’t been a lot said on how to approach it as a cash-strapped start-up, or even what a start-up should be researching in the first place.
In this article I’ll take you through the areas to research, the key questions to be answered, and how to do the research on the cheap.
For the purpose of illustration, let’s say that I plan to set up a side-business with my first product line being dog harnesses.
As we go through the market research steps, I’ll highlight a couple of essential tools; primarily Google Shopping Insights and online sales data generated by over 170 million buyers – eBay’s marketplace data. Given the huge number of buyers, it’s likely yours are on eBay too. I’ll be accessing eBay’s rich product and sales data using ShelfTrend.
Researching the Industry
Knowing the size of the industry and whether it’s growing or in decline can provide an indication of longer-term opportunity.
Questions to research:
How big is the online market for your product category?
Is the online market growing or declining?
Who are the large sellers and how dominant are they?
Figure 1. Creating an industry-level report.
Getting the answers:
To begin researching your industry, start with ShelfTrend’s Top 500 Live Listings report. This report analyses the top 500 search results on eBay.
In Figure 1, you can see how simple it is to create an industry report for dog harnesses. You may want to also research more broadly.
The output of the industry report is below (Figure 2). Normally the seller names appear, but I have blurred them given this is article is public.
Figure 2: Summary of Top 500 search results on eBay reveals the largest competitors and their pricing.
In ShelfTrend’s Top 500 report, pay attention to:
The Total Search Results – This is the total number of listings for your product available on your chosen eBay marketplace. Comparing the number of listings across various product categories can help provide a sense of relative size.
Large Sellers – Are there many large sellers, based on sales, and do their listings take up a significant portion of the top 500?
Pricing model of large sellers – Are the largest sellers following a budget or premium pricing model? If their products are cheap, it may be difficult to compete against them.
This report shows that there are currently 208k listings for dog harnesses on eBay.com. That’s quite a bit of competition to cut through! However, it does look promising as there are only 2 significantly larger sellers ranking high on the eBay platform and their prices aren’t at the low end.
If I had time up my sleeve, I’d run this report weekly over a few months to see if there was a sales trend. But many of us are keen to get going, and so using Google’s Shopping Insights tool can help. It measures the number of times people have searched the related product category. Although it’s not based on sales, it can give an indication of whether buyer interest is growing or declining.
In Google’s Shopping Insights report, pay attention to:
The trend line for searches - is it seasonal, trending upwards or downwards, or flat? Change the dates on the left to get a full year view.
Figure 3: Google’s Shopping Insights
In Figure 3, I can see that the volume of searches was stable until covid-19 hit and then it boomed – a 4-legged companion during lockdown makes sense. Searches are more recently starting to decline.
What did I learn?
The market has grown recently but is starting to decline.
Larger players have decent pricing and have not squeezed out smaller competition.
Researching Products
You may have an idea of what you want to sell, but market research can be used to validate and fine tune your range and product features.
Questions to research:
What are the product features that convert sales?
What is the current demand for the products?
Is there a niche that you can create or tap into?
Getting the answers:
To see the sought-after product features, continue to use ShelfTrend’s Top 500 report. Choose the Listing view and sort by Rank (this refers to the search results order).
eBay’s search algorithm ranks listings based on their likelihood to result in a sale. More often than not, the first three listings showcase the types of products that are most sought after by buyers.
In ShelfTrends Top 500 report, pay attention to:
How are the top 3 listings different to each other?
Consider if they might serve different types of customers (or in this case, animals)?
What are the words used in their titles? This is useful for understanding both functional and emotional requirements, and for SEO.
Figure 4: ShelfTrend’s Top 500 report - Review top 3 listings for differences in product features and wording.
In our example (Figure 4), the top 3 are different in important ways:
The first listing is for high-drive dogs. Words used include No-Pull and Control. Features include being reflective and adjustable.
The third listing is the same as above, but a multi-pack offering – targeting buyers with 2 dogs. Useful intel!
The second is for small or very obedient dogs – it’s more about comfort and care. Features include being breathable, padded, soft, and made of mesh.
To compare the demand of each product, use the same search criteria but choose ShelfTrend’s Average Weekly Sales report. Obviously, you may choose to sell on other marketplaces or through a stand-alone store, but the comparison between product types is still useful in guiding your product decisions.
In ShelfTrend’s Average Weekly Sales report, pay attention to:
Each top listing’s average sales per week (#sold/wk) to see how they compare to each other.
Figure 5: Compare demand for products with ShelfTrend’s Average Weekly Sales report
In the example, the listing for the high-drive dog harness is selling, on average, 158 units per week for the single pack, and 45 per week for the 2 pack. The mesh harness is selling only 14 units per week on average. The high-drive dog harness is a clear winner.
What did I learn?
Harnesses for high-drive dogs achieve higher sales
Emotive feature: confidence to control your dog
Functional features: No-pull, adjustable for a good fit, reflective.
Compliment with a 2-pack offer.
Researching Price
Pricing decision can significantly impact sales, but it’s not always the cheapest product that gets the highest sales volume. Market research can provide insight into which price range will deliver the best sales and/or revenue.
Questions to research:
What price point delivers the optimal balance between sales volume and price?
How much are people currently paying for your products (or similar substitutes)?
Are there product features that people will pay more for?
Getting the answers:
Using the same Average Weekly Sales table, look at the relationship between price, number of units sold, and sales revenue achieved by similar products (Figure 6).
In ShelfTrend’s Average Weekly Sales report, pay attention to:
The Price and #sold/wk columns to see how sales are changing with price.
Figure 6: See pricing and sales achieved.
In this case, I’m narrowing my focus to harnesses for high-drive dogs. Similar products are being sold for between $9.99 and $19.95, but a mid-range price of $13.95 is delivering the highest sales volume and value.
What did I learn?
Mid-range pricing achieves higher sales volumes than budget or premium pricing.
Offering a 2-pack allows the buyer to get a discount due to combined shipping costs.
Research the Competition
Competition isn’t necessarily bad; it’s often a sign that a market exists for your products. It is helpful to know what you’re up against so that you can decide how to compete, and to also learn what is working for them.
Questions to research:
How does your competition price their products?
Do they sell branded, generics or self-branded products?
What are their best sellers that they will likely fiercely defend?
Figure 7: ShelfTrend’s Average Weekly Sales report reveals the seller with the most sales.
Getting the answers:
We can continue to use the Average Weekly Sales report to learn more about our immediate competitors by using the in-report filters to narrow the list of products to those that are relevant. Then use the Seller view to get the list of Seller IDs that have high sales (Figure 7).
Look for the seller IDs that have significantly higher sales than the others.
In regards to my example, I can see 4paws… is the largest seller of the high-drive dog harnesses.
Figure 8: Create a Seller Report
To learn more about each seller, create a new Average Weekly Sales report using just their seller ID (Figure 8) and choose the chart view for some quick insights (Figure 9).
In ShelfTrend’s Seller Report, pay attention to:
The Total #Sold/Week and Total $Sold/Week overview boxes to see if their sales indicate a large retailer, or a small to medium sized business?
The donut charts to see if the seller specialises in a certain category or offers a broad product range that spans multiple categories.
The Leaderboard to see which listings are driving their sales.
What I learned:
Small and medium sized sellers can achieve strong sales; my main competitor on eBay isn’t a large company (although they appear to be successful).
On eBay, the largest competitor specialises in dog harnesses and collars.
Their best-seller is the dog harness for high-drive dogs.
Researching Buyers
What can you learn about your potential customers so that your products, marketing and communications are a good fit and convert sales?
Questions to research:
Who is currently buying similar products?
How do they use the product?
Do they tend to fit into certain demographics and life stages, and have certain beliefs or values?
What media do they absorb?
Getting the answers:
As we saw at the beginning of our research, ShelfTrend’s Top 500 report can allow us to see the differences between sought after product offerings, and the words used in the titles can give great insight into the emotional and functional requirements of the buyer.
While this is a great starting point for understanding your buyer, further research may provide deeper insights that you can leverage.
Here are 3 budget-friendly ways to learn more about your target customer:
Facebook Groups – Tap into Facebook Groups that revolve around either your product category or your suspected target customer. First, just absorb the conversations to learn about them. Once you’ve become familiar with the group, and possibly even selflessly contributed, you can then start asking questions and gathering feedback. Everyone will have a different opinion, but you can suss out the preferences of different types of people, and what’s driving those preferences.
Many Facebook Group members tend to be quite generous in their support of each other and will likely be a useful source for feedback on your branding, marketing material, and also as a source of sales.In-depth Interviews - In-depth interviews allow you to get into the nitty gritty of preferences and the decision making behind it. You’ll be asking a lot of open-ended questions – the ones that start with why, how, when, who and what.
Although you can start by asking relevant friends, also ask to interview their friends that are outside of your network and more likely to be objective. If you aren’t recording the sessions, make sure you take excellent notes.Observation - Observation is another way to understand who your buyer is. Simply hightail it to the local mall or shopping strip and loiter in the stores that sell similar products to yours. Who is buying versus just looking? How would you describe them? Are there any similarities among the interested shoppers? Do people with similar characteristics purchase products with certain features?
When you’re in the early stages of planning and creating your business, it can feel like many decisions are based on gut-feel instead of actual facts. Market research can take away much of that guesswork - and risk - by enabling you to understand more about what buyers want, how much they’re willing to pay, who your competitors are, and the general movement of the industry. Armed with that knowledge, you’re better positioned to be successful.
Whilst historically market research has been prohibitively expensive to many start-ups, ShelfTrend can provide many of the answers to your business critical questions –
Try ShelfTrend Free. Upgrade only when you need more. No contracts or commitments. Cancel anytime. Check out our pricing page for more information.
About ShelfTrend
ShelfTrend is the go-to market research tool used by over 35,000 online businesses, both large and small. We deliver real-time eBay marketplace data - where over 170 million people buy - so that you can research products, prices, sales and your competition.
By using ShelfTrend you can:
Get visibility of what over 170 million buyers are purchasing from the world’s largest marketplace - the product range, pricing and sales performance.
Discover an untapped niche with proven sales.
Watch competitors and get to know their selling strategies.
Troubleshoot business issues by checking yourself against others selling in the same space.
Get to know your online buyer and their product preferences.
Learn to spot a trend before it happens.
Know more. Sell more. ShelfTrend.