E-Commerce Market Research
How to Find the Data Needed to Start and Promote a Business Online
Jun 30, 2009
The U.S. Census Bureau's E-Stats report, released May 28 2009, showed that e-commerce grew faster than total economic activity in three of the four major economic sectors. The market for new online businesses is definitely there; however, many new e-commerce entrepreneurs jump in without sufficient planning.
Some believe their product or service will "sell itself," or that a global market means one that is unlimited. In truth, a wider customer base also means more competitors. A solid e-commerce business plan helps entrepreneurs think ahead to 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 e-commerce business plan is market research. After the planning phase, management regularly use market research to make good business decisions.
What Type of Market Research is Needed for an E-Commerce Business Plan?
E-commerce 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 individual business has specific information needs, and the above list is not inclusive of 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.
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 give entrepreneurs the opportunity 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 e-commerce sales, not the industry as a whole. Also, make sure it is targeted to the right niche or industry, and that it was produced by a reputable research agency.
InternationalBusinessStrategies.com is one such company. They 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. MarketResearch.com is another good resource.
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 else is selling their product or service (or one 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.
Customer Research- Finding Information to Attract and Keep Customers
Customer research has two purposes. First, a new business needs to know who their target customer is and how to reach them to make a sale. Market and competitor research help the entrepreneur discover their customer base. There are also paid resources such as MarketingResearch.com's Demographic Research reports, which 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, prepare for rapid growth or slow starts, and prevent mistakes that could spell an early end to their new business. E-commerce market research is a critical part of the planning and launching stages in any new online business.
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