Ecommerce has rapidly gained popularity among both buyers and sellers, thanks to its ease of use, reliability, and fast-paced convenience.
According to Sellers Commerce, there are about 26 million ecommerce sites available globally, with new ones being launched every minute. However, due to a lack of proper ecommerce market research, most businesses fail to thrive within the industry.
To boost the chances of sustaining your ecommerce business and potentially becoming the next big brand name, thorough market research is essential. In this article, we’ve gathered all the key aspects of ecommerce market research to guide you toward success.
Stay tuned for another exciting and informative read that will equip you with the insights needed for a successful ecommerce journey!
What is Ecommerce Market Research?
In simple terms, ecommerce market research involves gathering and analyzing data on various aspects of the online retail industry before launching a business or product. This process helps you evaluate the potential success of your business, while identifying gaps within the market.
Below is a chart to show the five core elements of ecommerce market research:
There are various other elements involved in creating a successful ecommerce market research, which we will cover below. So, follow along to learn more!
Why Does Ecommerce Market Research Matter?
Ecommerce market research is the beginning of your long journey towards creating a successful ecommerce career. A little extra effort in this period can help you create a strong base for a sustainable and successful ecommerce business.
Here are some reasons why you should conduct an ecommerce market research:
Finding the Right Product
Choosing the right product is the single most important element in ecommerce market research, yet many entrepreneurs often make mistakes in this area.
This becomes even more challenging when you’re focusing on a single product, as poor decision-making can quickly cause your ecommerce business to stall or lose momentum.
Knowing Your Consumers
You need to have a clear understanding of your target audience or potential customers. With sufficient data from your eCommerce market research, you’ll be able to implement precise, targeted marketing strategies.
This not only boosts your confidence but also minimize the effort needed to reach a larger audience while saving marketing resources.
Analyzing Your Competitors
Monitoring potential competitors is a valuable market research technique that allows you to assess how well your competitors are performing before you even launch your product.
Research their strategies and tactics to gain insights into important factors like sales, marketing approaches, and other aspects related to the product.
This also guides you with certain dos and don’ts in different stages of your business.
Keeping Up with the Latest Trends
New trends are emerging every day in the world of ecommerce. To succeed, you must be quick to identify and adapt to emerging trends—or at least some of them.
Ecommerce market research highlights the importance of this, as users’ behaviors are heavily influenced by current trends, which can significantly impact your sales and the overall market performance.
Making the Business Sustainable
According to the U.S. Bureau of Labor Statistics (BLS), around 20% of new businesses fail within their first two years of operation.
Conducting regular ecommerce market research can help you identify weaknesses in your business strategy and take the necessary steps to ensure its long-term sustainability.
Step-by-Step Ecommerce Market Research Guide
Step 1: Setting Up the Objectives
First, you have to define the context of your eCommerce market research. A single market analysis won’t automatically propel your business to success.
Begin by determining which marketplace (e.g., F-commerce, merchant retail) aligns best with your goals and strengths. At the same time, clearly outline the objectives of your research, such as competitor analysis, trend exploration, or identifying popular products.
Step 2: Select a Product
For your research, there are two approaches you can take. The first is if you already have a product in demand, and the second is if you’re introducing a new product you believe will be valuable to users once launched.
In the first scenario, since you’ve already chosen the product, you can focus on adding a unique touch and finalizing the sourcing details to get started right away.
If you’re dealing with the second scenario, you’ll need to leverage specific tools and techniques to gauge product acceptance. Start by using basic keyword research tools like Google Trends or Google Keyword Planner to gather preliminary data.
You can also use paid tools such as Ahrefs, SEMrush, etc. to get better insights into the product potential and search volume.
Some specific ecommerce platforms like Amazon provide statistical data on how popular a particular product was in a certain period in terms of search volume and actual sales figures.
Step 3: Run a Feasibility Check
The primary motive of any business, including eCommerce, is to generate profit by selling products or services. This can only be achieved when your product sourcing or production costs, along with other associated expenses, are lower than your selling price.
Hence it is important to conduct a feasibility check to ensure the cost of your selected products works in your favor under different circumstances.
This pricing assessment should also include transportation, labor, warehousing, and other expenses. Once you’ve concluded the average price per unit, you have to compare it with the current pricing offered by competitors. To stay competitive, you’ll need to either offer better pricing or higher quality to maintain a sustainable business.
Step 4: Identify the Target Audience
Unless you’re working with a pre-selected product for a particular user base, researching target users is a major portion of ecommerce market research.
Your product may attract a diverse audience, spanning different age groups, classes, religions, languages, cultures, and geographical locations. Each of these factors has equally important influence on the sales graph.
While it can be challenging to understand all these elements at once, by gradually studying their behaviors and preferences, patterns will begin to emerge, and everything will start to make sense.
Apart from these, you can also access tentative data on users’ opinions, expenditure amount, seasons, best practices, etc. through various consumer reports, surveys, and social media insights.
Here’s an example of a consumer survey report conducted by TGM Research.
Step 5: Monitor Your Competitors
The next step is to closely monitor your potential competitors. As previously mentioned in the pricing evaluation, the strategies and actions your eCommerce competitors have much to do with your ecommerce market research.
The primary goal of this research is to analyze competitors’ products, variations, quality, and pricing. By comparing these factors to your own offerings, you can gain valuable insights into which products to introduce, what variations and quality to provide, and, most importantly, how to price your products competitively.
Step 6: Implement Emerging Trends
Catching current trends means aligning your product with popular topics and consumer interests. For example, when the latest iPhone was recently launched, there was an immediate spike in demand for related accessories like cases and screen protectors.
This also applies to upcoming festivals, social media trends, or changes in eCommerce regulations. As soon as you catch these trends and apply them to your business with special discounts, customized variants, etc. there is a high chance your product will be a hit!
Step 7: Finding the Ultimate Platform
While you can sell nearly anything online, as long as it complies with platform policies, it’s important for merchants to remember that each eCommerce platform attracts a different audience. To succeed, your product needs to align with the preferences and behaviors of that platform’s users.
If your goal is to scale your eCommerce business, selecting the right CMS or framework becomes a critical decision. This is where WordPress shines, offering a user-friendly solution that allows you to build a website with ease—even without any coding experience.
Additionally, WordPress offers dedicated ecommerce plugins like EasyCommerce, which provide a comprehensive set of tools to help you build a robust, fully functional online store with ease.
Step 8: Gather the Findings
Your eCommerce market research should conclude by summarizing your findings and forming a clear understanding of the key insights. Keep in mind that while market data is constantly evolving, it often follows patterns that can help guide your decisions.
If your business targets a local market, you may already have some familiarity with it. However, if you’re aiming for an international audience, conducting thorough and detailed research becomes even more important.
Expert Tips on Ecommerce Market Research
Researching on ecommerce market requires a comprehensive understanding of certain parameters. Even the experienced ones fail to execute the task successfully sometimes.
Let’s hear out some of the expert suggestions on the do’s and don’ts of ecommerce market research.
- Put Yourself in the Customer’s Shoes
The most important aspect of eCommerce market research is putting yourself in the shoes of your customers.
This perspective helps you answer critical questions, such as: Why should someone buy this product, especially from you? Is the pricing reasonable for your target audience? Does your site offer the payment options they prefer?
- Simplifying Consumer Reports
For entry-level eCommerce market researchers, analyzing consumer reports can feel overwhelming. With numerous metrics and figures to sift through, it’s easy to get confused about which data points matter most.
It takes time to learn which criteria are essential and which can be set aside. Also, be cautious of discrepancies in data from different report providers for the same criteria.
- Take Calculated Risks
Running a business is all about taking risks, but such risks should be taken with calculation, not on wild assumptions.
Every decision you make should be guided by potential outcomes. This way your initiatives will always bring a result regardless if it is good or bad. Even if a decision has a negative impact, it offers valuable lessons that help you improve and make better choices in the future.
- Break Free from Strict Formulas
There are no rigid rules when it comes to conducting eCommerce market research, nor is there an obligation to follow a set formula. You can adapt the process to your unique situation, even skipping certain steps if it makes sense based on your insights.
Experimenting with various sources helps you gain a deeper understanding of the market and shapes you as a skilled and adaptable researcher.
That’s a Wrap!
Ecommerce market research revolves around analyzing data on best-selling products, pricing strategies, risk factors, competitors, sourcing ease, and growth potential. This research is not just important but also essential for launching and sustaining an ecommerce platform or product.
However, at the end of the day, it’s your responsibility to take decisive action by combining data-driven insights with your personal experience to steer your business toward success.
Frequently Asked Questions (FAQs)
What are the 4 P’s of marketing in ecommerce?
Product, Price, Place, and Promotion, are the four P’s of marketing in ecommerce. It was first introduced in the ‘Basic Marketing: A Managerial Approach’ by E. Jerome McCarthy in 1964.
Here’s what each of these elements mean:
- Product: Goods or services offered by a business to meet customer needs.
- Price: Amount of money customers must pay to acquire the product.
- Place: Distribution channels and locations where the product is made available to customers.
- Promotion: Activities and strategies used to communicate with the customers to purchase it.
What is ecommerce product research?
Ecommerce product research is the initial step in identifying products that have consistent demand, a large user base, are easy to source, and offer a strong potential for return on investment along with a profit.
How do I research market demand for a product?
You can start with keyword research (Google Trend, Ahrefs, SEMrush), as it will give you a clear idea of how many people have searched for it on the internet in a specific period.
Next, you can analyze consumer reports to gauge how much customers are spending on this product. You can also use trending data from social media can provide valuable insights into current consumer interests and preferences.