How To Test If Your E-commerce Idea Will Make Any Money
Provided you found the right business idea, creating an e-commerce business can besimple. You can leverage a solid e-commerce platform such as Shopifyandhave your business up and running in under 24 hours.
But how do you validate your business idea? More importantly, how can you evaluate whether your business will earn a profit?
In this article, I will share a step-by-step guide for how to quickly test your e-commerce business idea. This will ultimately help you decide whether it’s a worthwhile venture to pursue.
Evaluate your product idea
The first step in testing your idea is to see if your product has enough market demand. You can do this by using tools like Google Trends to analyze Google search volume over the past few years (more on this later). If it’s a steady or growing Google search trend, then you’re on the right track!
Your product should ideally solve a new or existing problem better than other products on the market.
Are you passionate about the project?
Starting any business, whether online or brick and mortar, involves a lot of determination and hard work. There will likely be late nights and stressful situations. Perhaps you might have trouble getting your first few customers. You must be passionate about your idea to stay motivated.
What’s your professional experience?
Do you have any professional experience that gives you edge in your niche? Do you have more knowledge on the topic than most people? These can all provide you an advantage starting out.
Have you identified a new trend?
Be careful not to confuse a trend with a fad. A fad is a short-term trend usually created through marketing or word-of-mouth promotion. Although fads may present significant marketing opportunities, the demand usually fizzles out quickly. If you build your business purely based on a fad, it may not last.
A trend, on the other hand, is a gap in the market, which your product can satisfy. The demand of a product that follows a trend will last much longer.
Is Your Product a Best Seller?
You can find the best-selling items in your niche on platforms like Amazon r eBay. There is a good chance your business will be successful if the product or service to already a top seller on other platforms.
See If Your Idea Exists
If you wish to sell a new product, conduct a Google search to see if any of your competitors have similar or closely related products. Competition can be considered a good sign as it proves there exists a market for your product.
Go Through Reviews
Just because customers are buying a product, does not mean they are in love with it. Focus on selling a product that people will buy today and in the future.
Reading product reviews is a great way to test if a product will do well in the future. It can also tell you where competitors’ products are lacking. This could reveal an opportunity for your business to capitalize on.
Research your Competition
Research is useful in many ways. It allows you to know how your competitors’ products work. It will also help you discover key data such as if your rivals are making profits, how they are making it, and how you can optimize your e-commerce idea to gain a competitive edge.
There are two questions that you should answer in the research stage:
1) Are your competitors making money?
Just because there is competition does not mean your online business idea is rock solid. You need to ensure that competitors are also making money.
Here is how you can determine their success:
- Going through product reviews – The more positive reviews a product gets, the more people are likely to buy it.As a result, the more money a business likely makes.
- Gauge their site traffic – You can always gauge how well an e-commerce business is doing by reviewing its website traffic.Website traffic often directly translates in to conversions. To that end, you can use web-based traffic estimate tools such as:
- Similar Web (free tool – my personal favorite)
- Uber Suggest
- Ahrefs, and more.
2) How can you be unique or add value?
After confirming your competitors are making profits and determining how they are doing it, the next step is to focus on product.
Figure out what your competitors’ products are lacking. Then use that information to improve your product. Negative customer reviews are invaluable for discovering ways to make your product stand apart.Make sure to go through them in detail.
Developing and Testing Your Landing Page
Your landing page is not your website. It is a single page with the relevant details for your prospects. Visitors on your landing page can evaluate whether they like your product or services.
Your landing page should be easy to set up and collect the data you need to test your business idea. A good landing page should have three key aspects:
- A headline – The headline should be brief, catchy, and clearly tell the visitor what your product is about. Think of this as your business tag
- Your product’s benefits – How do customers benefit from your product? What problem does it solve? How does your company compare to your competitors? Make sure you list all the essential benefits down as well as highlight the key selling points of your product.
- A call-to-action (CTA) – You should use an easy CTA, such as “Get Our Weekly Newsletter for the Latest Offers”, “Register up for Early Access”, or “Shop Now”. A CTA will help you to get emails(which you can use in the future) or ultimately purchases.
Customers will arrive at your test landing page at various stages of the purchase process. You can consider testing out different CTAs for this reason.
For example, a customer who is ready to buy would be more than willing to click a “Buy now” CTA. However, one that is still researching and comparing products might find a “Contact Us for More Details” CTA suitable.
Testing Your Landing Page
You may have created the best landing page to test your business idea, but how do you drive potential buyers to your page?
1) Use ads to drive traffic to your landing page
Run ads on different platforms like Facebook and Google to drive traffic to your landing page.
Facebook users are passive: they may come across your ad while browsing. Google users, on the other hand, are more active.They may be explicitly searching for products or services that you are offering.
You should ensure that you appeal to both the active and passive audiences during your testing phase. Invest some money in ads on different platforms.Then, take note of how many people see your ads and visit your landing page.
This is your click through rate (CTR). It is an indication of how people value your product or service.
Note that today various ad networks such as Facebook, Google, and Instagram offer comprehensive campaign data that you can use to test your idea.
For example, you can find out the number of males and females who clicked on your ad, their age, and the region where they reside. Make sure to check out the reports offered to you by various ad networks.
2) A/B Testing to determine the best-performing landing pages
When people visit your landing page, they may decide to do business with you. They also have the option to leave your page immediately. If they leave, you need to ask yourself the following questions:
- Is your e-commerce idea interesting?
- Is your content weak?
- Is your landing page design confusing?
- Do you have a clear CTA?
A/B testing helps you to test your idea and know whether it is your idea that is not selling. Or are there other factors pushing customers away?
The easiest way to figure out if people are interested is to develop multiple landing pages. Then, you can evaluate the performance of each page over time.
Change one variable at a time – the value proposition, photos, or headline – and see which version leads to the most conversions. Then remove the worst performing pages and continue to change one variable at a time. Eventually, you will improve your conversation rate (CVR) and generate more sales.
3) Measuring the CVR and CTR
Now that your ads are driving people to visit your website, measure your conversion rate. For example, you may find that your CTR is 2% on Google ads and about 0.35% on social media platforms.
Track your CTR overtime and try to improve it by trying different ad types and creatives.
An even more important figure is the conversion rate (CVR). This represents the number of people who click on your ad and go on to become your customers. The higher your CVR, the better your ads and landing pages will perform. And ultimately this will drive more sales for your business.
Talk to Your Potential Customers
Who are you creating your product or service for? How old are your potential buyers? Where can you find them? What are their challenges and desires?
Take part in online conversations with your potential customers. Search for Facebook groups or topic related to your online business idea and other social media portals. You can also conduct polls, ask questions, message members privately, and try to find out what they like. If you can meet them in person, that’s even better.
What you are trying to do is to test whether there is a real demand for your e-commerce business idea. In the end, you want to find out whether you are solving a real problem.
Listen to your potential customers. How are they reacting to your business idea? Take note and learn as much as possible from your future customers and optimize your product until you get positive responses by creating your minimum viable product (MVP).
Analyze Potential Market Size and Growth Opportunities
This is another route you can follow to test your idea. Use different tools such as Google Trends to determine how the market is doing and how it might do in future.
Google Trends indicates how a search phrase or keyword has risen or fallen in ranking positions within a specific time period. For instance, research some phrases that relate to your online business and find out how many individuals are searching.
Now that you know how to test your business idea, it’s time to get the ball rolling.
Remember to first evaluation your product idea and make sure you are the right person for this business. By researching your competition, you can find if others also making money and where the opportunities lie in the market.
Building and testing your landing page will ensure customers are more likely to make a purchase. Then you can drive traffic to your landing pages with Facebook or Google ads.
Finally, don’t forget about your customer. For your e-commerce business idea to do well, it ultimately should address real customer needs.
The process can be time-consuming, but it’s much better than investing in a bad idea.The extra time you put in today will pay off dividends in the long run.