What is Market Research?

It’s pretty much what the name implies. You’re researching the market, which is comprised of online shoppers and retailers. And Research just means gathering information about the Market, that’s directly related to the product you’re thinking about selling.

The information you gather will show you whether or not you can compete with other sellers of that product on the Internet. It will help you understand what kind of demand there is for that product, as well as its advertising and marketing potential. Since your market is online, the majority of your research is performed online as well. With market research, your ultimate goal is to find out whether or not “Product X” is a good idea to sell, or whether it’s a product you want to avoid.

Most people realize they need to research, but they don’t know HOW to research. Before you can start, you have to understand the basic elements involved:  Keywords, Demand and Competition.

Keywords:

Let’s use eBay as an example for a moment; imagine what a mess it would be if there were no search fields on eBay. Sellers would just throw their products into one big pile, and it would be up to the customer to sift through and find what they were looking for. What a nightmare! Fortunately, that’s not the case because in the online world just about everything gets sorted by keywords.

Search engines, search fields and just about any search function online uses keywords to qualify what results are returned. When you perform a search online, whether you realize it or not, you’re typing in keywords. For example, if you wanted to find picture frames, you’d likely type the keywords “picture frames.”

Bottom line: Keywords are just words we use everyday when we type. Easy enough, right? Well, from a research perspective, they tell us an enormous amount of information, so learn to love keywords. They are our friends. 

Demand:

Simple Definition of Demand: how many shoppers are looking for a product.

A big difference between an online business and a physical store is that the Internet offers you the potential of a lot more customers. You’re not bound by location; your customers don’t have to be within driving distance.

Because the Internet is so massive, finding out how many people are looking for one particular product seems like an impossible task. However, when people search for products online, remember that they’re typing keywords into their search engine browsers.

There are tools available that track the number of unique searches performed on various search engines for any keyword combination. These Keyword Counting tools let you type in keywords, and then tell you how many people searched for them, over a certain period of time on major search engines.

Competition:

Simple Definition of Competition: retailers who are currently selling the products you’re considering selling. There will ALWAYS be competitors selling what you’re selling (unless you make a completely unique product and manufacture it yourself…but that’s another eBook :o) We’ve often heard people say they want to sell something no one else is selling. The problem with that idea is if there was only one retailer selling a Manufacturers’ products that Manufacturer wouldn’t be in business very long. Just like you wouldn’t be in business for long if there was only one customer buying from you. So don’t get turned off by competition. It can be measured, and it can provide you with very useful information during your research. 

Work with REAL Wholesalers so you don’t get false Research Data:

Realize that you can’t sell certain products :

It’s very important to understand that not all Wholesalers are willing to work with online retailers. There are far more Wholesalers who will NOT work with online retailers, than there are ones who will. It’s not uncommon to find real Wholesalers that simply do not work with small businesses, Web Store owners, or auction sellers.

Common Mistake: “You have to sell a product you are Passionate about”

Oftentimes, new retailers are told they ought to sell products they’re passionate about. As a result, new retailers commonly base their product selections solely on what they enjoy. Basing your product choices entirely on whether or not you like a product is a dangerous idea.

Your passion for a product does not (in any way) mean the product will be easy or good to sell. By and large, most people are passionate about the same types of products: Electronics, Designer Clothing, Gaming Systems, DVDs, Computers, etc. 

These products, however, are some of the worst a new online retailer can try to sell because it’s next to impossible to compete in these oversaturated markets.

There are two common supporting arguments for picking products you’re passionate about:

• If you enjoy the product you sell, your business will be more fun to run.

• If you’re familiar with your product, you can talk about it more knowledgeably.

We can tell you for sure, your business will NOT be “fun to run” if you end up spending money trying to sell  products that aren’t selling. The most successful online retailers sell products they never would have thought of when they started. They let their research guide them, and when they started making sales…then their business was fun to run!

As for “talking about a product more knowledgeably,” think of your own shopping experiences. How many times have you decided to purchase a product because the seller really seemed to like it? Probably not too many.

Remember, if you’re using a legitimate Wholesaler, they’ll give you the necessary product descriptions for your customers. You don’t have to be an expert on a product to start selling it. When you find a good product to sell, you can become an expert so you can offer additional tips and advice.  

We’re not suggesting you avoid products you enjoy; just don’t let your passion make your decisions. If you want to sell products you’re passionate about, start researching them. Find out if they’d be good to sell—if it turns out they would be, then that’s wonderful. But if your research shows you can’t compete with those products you’ve saved yourself a lot of money and heartache by finding that out before you tried to sell them.

The most important thing to remember is that if you want to sell products to people, you need to find out what people are BUYING. The only thing that will tell you that is MARKET RESEARCH.

IMPORTANT Tip!

You can save yourself a lot of time and frustration if you ensure that you can find a real Wholesaler for any product BEFORE you start researching it. It’s an enormous waste of energy to research a product, only to find that there are no real Wholesalers willing to work with Internet sellers. Remember, not all Wholesalers are willing to work with smaller online businesses.

Compiling a Research List

Making a research list is your first step in simplifying those ‘millions of product possibilities.’ This is just a list of products you want to start researching. Think of it like a funnel—the wide end represents millions of choices, and the small end is your final selections. This funnel approach will help you organize your research, so you can keep track of where you’re going and, more importantly, where you’ve already been.

- Add products you like

When compiling your research list, start by adding your ‘Passion Products.’ There’s nothing wrong with researching products you like—you just can’t base your decision to sell a product on the fact that YOU like it. The best case scenario would be that products you like are also ones you can compete with, so put them on your list, and find out whether or not they’re a good idea.

- Add products your friends & family like

When you run out of ideas for products you like, draw inspiration from friends and family. You already know the types of things they enjoy because you’ve bought them presents, or received holiday requests for items they can’t live without. When it comes down to it, we’re all consumers, so use your own shopping experiences to help build your list. 

- Add products from Unrelated Categories

This is where you’ll find most of the good products to sell simply because you’re opening yourself up to ideas you hadn’t considered. All products can be grouped into main categories. By researching products from completely unrelated categories, you’ll begin to see niches within those categories. As you delve deeper into each category, you’ll find products that will inspire ideas for other products you’ll want to research.

Don’t Get Discouraged:

As you research, don’t be quick to throw in the towel if you find that products you’re interested in selling don’t reflect the kind of profit margins you expected. You’ll find, in some cases, your wholesale price is HIGHER than what some sellers are selling that product for! That’s discouraging and confusing to most new Sellers. New sellers often think that, because they’re getting true wholesale (if they’re working directly with Manufacturers or Factory Authorized Wholesalers), they’ll be able to compete with ALL other retailers. While it’s crucial that you’re connected with real Wholesalers, remember that not all Online Sellers are new, or are working in drop shipping or light bulk volumes.

Wholesalers give additional discounts to retailers who buy in bigger volumes. Some Internet Sellers buy sizeable lots from Wholesalers, stock large quantities of inventory, and ship the products out themselves. It IS more work for those retailers but they get lots of discounts on top of wholesale costs.

Wholesale pricing is directly proportional to the amount of volume you purchase, so if you have an item drop shipped, you’re getting wholesale on one item. If you buy in light bulk volume, you’ll get wholesale, plus additional discounts. If you buy in larger volumes, you’ll get even more discounts.

Bottom line: If you’re not buying in volume, you can’t expect to compete with Sellers who are. When those big retailers tally their discounts into their retail prices, they can sell for less because they’re buying for less.

This is one of the biggest reasons you want to research . If you find the majority of the current retailers are selling for much less than you can afford to, then you know that’s not a product you can compete with.

Don’t let this discourage you. It’s better to find out you can’t be profitable with an item before you spend money trying to sell it, than to list it week after week and not see any sales. As you move forward researching products, you’ll find ones that you CAN compete with.

Worldwide Brands, Product Sourcing Tool, our Complete Product Sourcing Tool, does all this work for you. Integrated into the tool is a powerful Market Research Engine that breaks down a product’s demand, competition, advertising, and market price, and analyzes that information to tell you exactly what your chances are of successfully selling it online.

Every time you search for a wholesale product in our Tool, it INSTANTLY tells you...

• On a 0% to 100% Scale, how well each product you search for will sell.

• How many people are searching the Internet for your products.

• How many other people are selling your products.

• Who your competitors are, and what their Advertising says.

• What other variations of your product searches are selling well online.

• Which Search Engine Keywords are the most popular for the products you want to sell.

Once again, you can do your market research manually and get the information you are looking for. Our Product Sourcing Tool, though, automates that process, saving you a tremendous amount of time and avoiding costly mistakes.