Validating Your eCommerce Product Idea: A Concise Guide
You have a great eCommerce product idea and you’re ready to build a new online business. But before you start developing and producing your product, you need to do some fact-checking.
Prior to launching a company, it is essential to determine the demand for your product. Do your potential customers think your new product is amazing?
While it may be exciting to become an entrepreneur, it is important to avoid wasting time and energy on a venture that won’t succeed. The lack of interested customers is the main reason why new companies fail.
Don’t let that be you.
Figuring out a business’s potential success is easier said than done. There are unconventional eCommerce product ideas, like CBD-infused candies, that have been successful. On the other hand, there are products with great potential that never took off.
Validating interest in your eCommerce products gives you an opportunity to save money and build better relationships with your target audience.
So, where do you start?
The Basics of eCommerce Validation: Understanding Your Product
Before you begin testing validation strategies, it’s important to have the right information. Many business owners don’t fully understand what they’re trying to sell before diving in.
Start by answering some questions about your product:
- Target audience: Who are you selling to? What pain points does your product solve? Are you offering the easiest solution?
- Marketing strategy: How will you sell your product? Will you target people on Facebook or attract customers through Google?
- Special requirements: How will you store and ship your products? Do you need extra packaging for fragile items? Which shipping companies will you use?
Once you have gathered enough information about your product and its purpose, you can begin the validation process.
Step 1: Conduct a Competitor Analysis
Research is crucial for any validation strategy. Understanding the current market helps you identify what your customers are looking for and the existing solutions available to them.
Competitor analysis is a vital part of this research. It allows you to assess whether there is already a demand for your product and if the market is too saturated. For example, if you’re selling fidget spinners in a market with numerous competitors, it will be challenging to stand out.
During your competitor analysis, consider factors such as:
- Pricing: What revenue and profit can you expect?
- Popularity: Are the items you’re considering selling popular among your competitors?
- Gaps: Is there something unique your product or service can offer that competitors cannot?
A quick Google search is an easy way to find competitors in your market.
You can search for #Hashtags on social media or check out what people are saying on forums. Listening to your customer’s complaints and comments about competitors will help you figure out which features you should focus on most with your new product.
Step 2: Check Google Trends
Google is a valuable tool for validating eCommerce product ideas. It can give you insight into how popular your products are by showing you things like top-ranking pages and keyword search volume.
However, Google can also show you if your product is just another trending idea or something that will deliver a solid and steady return over time. Google Trends allows you to track the search volume for a specific keyword over time. You can use this to check if people are talking about your products more regularly, if interest is consistent, or if excitement is dying down.
Let’s look at the rise and fall of fidget spinners for instance. Interest quickly peaked in March 2017 and fell within a few months.
The best ideas for your eCommerce site generate revenue and engagement over time. Look for a trend graph where the line of interest is increasing over time or one that has remained steady over the years.
Step 3: Get customer feedback
There are two ways to get customer feedback during the initial validation stage.
First, check reviews and testimonials left by customers on review sites for your competitors. This is an excellent way to see what other companies are doing wrong with a specific product, so you can make your offering stand out.
The other option is to send samples of a possible product to stakeholders and trusted people. Pro tip: don’t gather feedback from friends and family – you need the information to be as objective as possible.
You can also see what comes in when you type “best online [Product]” into Google to get feedback from influencers and thought-leaders.
The feedback you collect will help you decide if people regret purchasing the product, if you can deliver a better product than your competitors, and if there is enough demand and interest in the product.
Step 4: Build a landing page for pre-orders
Creating landing pages online is advantageous. You don’t have to invest in a product before you do it. Decide on the eCommerce product idea you want to validate, design your website, and then purchase supplies only if you get a significant response.
You can even run Google ads to drive people to your landing page and then retarget them without making a lot of initial investment.
Running a landing page allows you to get insight into the response you’ll get from customers when you launch your new product. Keep in mind that various things can affect the performance of your landing pages, including your wording, layout, and CTA buttons.
One excellent option is to add a button to the page that allows customers to sign up to be informed when your new product is ready to purchase. This will give you a list of customers that you can immediately expect sales from when you’re ready to launch. At the same time, you gain greater insight into the kind of people interested in your items.
Step 5: Do the math
This might be one of the most essential, albeit boring, parts of validating your eCommerce idea. You’ll need to figure out how profitable your new product is going to be. If you aren’t making a good profit and maintaining positive cash flow, you’ll lose your enthusiasm and interest in the long run.
You’ll need a few pieces of information to create your financial calculations, including the price of your product, the number of customers you think you’ll get (based on your landing page tests), and the cost of your goods sold. Additionally, consider the cost of any extra expenses like building and running an eCommerce website, logistics, marketing, and paying for staff.
Price
If you’re not sure how much you should charge for your new product, check out the competition. This should give you a reasonable idea of how much something should cost. Then, check if the price of competitors can cover all your costs and that you can still make a profit. If not, consider what extra you offer to charge a higher price.
You can also track down case studies from other growing businesses online that might help you make a more informed pricing decision.
Startup costs
Once you understand your financials, calculate your startup costs and how much money you need to get started. Building an eCommerce website can be expensive, especially if you decide to hire a professional company to build it for you. Don’t forget costs such as branding, graphic design, photography, and content writing; they all add up to your startup costs.
Once you have all the right numbers in place, ask yourself how much money you need to get started and how much money you’ll be left with when you subtract the price of making and selling the product, with the profits from purchases.
Is the effort worth it?
Only you can make that decision.
Are you feeling validated?
Validating your eCommerce product idea before launching your business is like creating a full business plan. It can be a time-consuming process, and it requires effort. However, it’s also one of the best ways to ensure that you’re investing in something that will pay off. It’s better to know before you’ve spent your life savings on a new product idea, whether it’s a good idea or not.
If you discover that the item you planned on selling isn’t as valuable as you thought, don’t despair. You can always go back to the drawing board and consider something new. You may even discover new sales ideas during the validation process by checking out the gaps in your competitor’s portfolio or examining the latest trends.
Remember: imagine, plan, validate, and then implement.
Hello!
I’m Andrew Brooks, a seasoned finance consultant from the USA and the mind behind phonenumber247.com.
My career is built on a foundation of helping individuals and businesses thrive financially in an ever-changing economic landscape. At phonenumber247.com, my aim is to demystify the complex world of finance, providing clear, actionable advice that can help you navigate your financial journey with confidence. Whether it’s personal finance management, investment strategies, or understanding the nuances of market dynamics, I’m here to share insights and tools that can propel you towards your financial goals.
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