I recently made a critical mistake in my progression towards business success. I had decided that I was going to make some money with an online store. After a bit of brainstorming, I picked a few things that I thought might be good to sell online. I then started to look for suppliers. This may seem like a reasonable course of action, but it is not. It is missing a key component of any business plan: Market Research.Competition is involved with any business. Even if you make your own, unique product, similar products will compete against yours. But
existence of competition is not necessarily bad. The fact that online retailers are selling items similar or identical to your own means that people want your product. Competition is only bad for you when
market is becoming saturated.
Check
electronics market for a good example. Electronics go for rock-bottom prices online because there are so many stores that sell them. The difference in prices between stores often comes down to
cost of shipping. Competition in this area is extreme. Electronics dealers depend on volume, and very good suppliers, to make their money. Small retailers cannot sell at those prices and turn a profit.
In order to be successful it is essential that you know what you’re up against. If you are selecting your products, then you need to know which stores already sell those products. You need to know how many stores there are, how much they are charging and, if you can find out, how well they are doing. Could you sell for less (if only a little)? What are other ways you could differentiate your store?
If you already have your product, then you need to know where and how your competitors are advertising. Are they concentrated in one location? Are there good places that they have overlooked? How much is it going to cost to compete with them for prime ad space?
So where do you begin? The answer is Overture. Owned by Yahoo, Overture is one of
largest pay-per-click advertising services. What you need for research are two tools in
Overture Advertiser Center. The first is
Search Term Suggestion Tool. This tool allows you to look up a keyword, like “digital camera”, and find out how many searches there were for that term last month. The tool will also suggest a list of related terms, like “digital camera review”.
The number of searches per term comes from Overture’s partners like Yahoo, MSN, AltaVista, CNN, etc. This is critical information because it tells you whether or not people are looking for your product online and, at
same time, shows you how they are searching for it. This indicates a certain interest for your product. You may be able to judge
amount of interest by
number of searches for your terms. For example:
Digital Camera – 1,337,422 (high interest) Used Car – 890,346 Mountain Bike – 133,553 Blender – 26,648 Bubble Gum Machine – 1,502 Chapstick Raspberry Vanilla – 25 (very low interest)
Tip: Users searching for ‘digital camera’ are not necessarily shopping for one. They may just want information.
Also: If people are searching on Yahoo and MSN, then you can bet that even more people are searching for
same things on Google.
The second tool Overture provides is
View Bids Tool. This allows you to take
keywords that you found and see how many ads there are for each term and how high
bids are (higher bids get top listings). This can help you judge your competition.