Coming up with a product idea for your new online business can be difficult. More difficult still is building the confidence to make the jump and go through with your idea once you do have one. Will anyone care? Will anyone buy it? These are common questions you’ll ask yourself at some point in your journey.
Truth be told, you’ll never know with 100% certainty how well your product idea will do until you actually open up shop. However, by validating your product idea before jumping in head first, you can mitigate risk and build confidence in your idea before investing too much time and money.
In this post, we will look at a five strategies you can use right now to validate your product ideas.
Let's find out how.
1. Analyze Your Competition
You’re in all likelihood not the first person selling your particular product online. Therefore, a good first step is to look to your competition to better understand demand and potential product appeal.
Although you’ll probably never know exactly how well your competition is doing, there are things you can uncover that can give some indication.
Uncovering Your Competitors
The first step is to first determine who is currently selling your potential product. The easiest way to discover your competitors is to do some simple Google searches for your product idea. It’s important to think like a potential customer and search for terms that customers would actually use.
Once you uncover a few key competitors, you can use free online tools like SimilarWeb and SEMrush to uncover others.
As an example, I searched for "Hair Extensions" in Google. Once I found a few of the top ranking online hair extensions stores, I searched for them in both SEMrush and SimilarWeb to get the following list of additional online hair extension retailers.
Competitor Analysis from SEMRush
Competitor Analysis from SimilarWeb
SimilarWeb and SEMrush can also provide a wealth of additional details about your potential competitors including:
- Traffic Overview
- Geography of Traffic
- Referring Websites
- Search Keywords (Organic and Paid)
- Social Referrals
Reviewing the information with these tools is a good place to start understanding all of your competitors to get a good overview of what you’re up against.
Some additional things to look at in your competitors include:
1. How long have they been in business?
Businesses that don't make money don't stay in business. You can use a service like Who Is to lookup information on a particular domain and see when it was registered. Additionally, both Twitter and Facebook will show you the creation dates of accounts. Understanding how long a business has been around can better help you understand it’s success.
In the example below, we can see that the domain was registered April 22nd of 2010:
Note: Keep in mind that the Creation Date doesn’t always represent the date that the business was started, as it could have been registered, bought and sold long before the business.
2. What does their social following/interaction look like?
Social following and interaction doesn’t necessarily correlate to sales but it could be a good indicator of market interest. One of the most important things to remember here is that you can’t take the number of followers for face value. It’s easy these days to purchase thousands of even tens of thousands of fake (robot) followers inexpensively on services like Fiverr. Because of this, you must look past just social following and look at how much interaction they actually receive on posts and the sentiment of responses.
In the example below (which will remain unnamed) this business seemingly had a strong social following on the surface:
Although these numbers look impressive, it’s easy to see that this account isn't totally authentic and the numbers are inflated. All of their posts and status updates have almost no interaction on them. In fact, at best, posts received one or two likes/favorites.
You can use a service like Status People to review Twitter accounts for fake followers. This can give you a better idea of it’s authenticity.
Looking at the same account mentioned above on Status People returned the following results:
3. Traffic and Backlinks
Traffic and backlinks can be an indicator of overall competitive strength and success in the market. Although it's not possible to know the exact amount of traffic a particular website receives, there are tools that help you gauge the approximate amount of traffic a site gets, along with the number of backlinks pointing to it.
SEMRush and SimilarWeb are again great tools for looking at a competitors traffic, traffic sources and backlinks.
In the example below, we can see that this online store gets nearly 100,000 visits per month and has over 500 backlinks pointing at it.
Note: Many of these services can only determine traffic for established websites. Therefore if you're looking for information on relatively new competitors, there may not be traffic information available yet.
2. Understand The Market
Now with a better understanding of your competitors and some indications of how well they are doing, it's time to look a little closer at the market and direct interest from consumers.
A great place to begin is to see what customers are saying about your product idea as well as their sentiment around it. Topsy is perfect for searching for information surrounding hashtags to learn more about what customers are talking about in relation to your product idea.
The last thing you want to do is jump head first into a declining market. Google Trends is a really simple and free web application that will allow you to search for keywords related to your chosen product to better understand the trend based on Google searches over time.
Is your product idea trending up, down or is it stagnant? Knowing where the market is going can help you make a more informed decision for your idea.
In the example below, a search for hair extensions showed steady growth from 2004-2011, with a sharp incline in interest followed by a slow decline for the last two years. Would you enter this market at this point?
Understanding your product's trend is a good start but it's also important to know how many people are currently searching for your product idea each month. That's where Google's Keyword Planner Tool comes into play. The Keyword Planner Tool allows you to search for keywords and phrases related to your product and then displays the total number of searches each money for the chosen terms.
In addition, the Keyword Planner tool will also display the level of competition in paid search for each term. This can allow you to better understand how lucrative the keywords are, which can also be an indication of profitability of the product.
For a step by step guide on how to evaluate your product idea through keyword analysis, check out: How To Evaluate Market Demand For Your New Product Idea.
3. Survey Your Target Market
After gathering secondary research, it’s important to gather your own, based on your exact product and target demographic. There are multiple ways to approach this. The quickest and cheapest way is to create a survey yourself using a simple survey tool like Survey Monkey and send it out to friends and family in your target market. Survey Monkey even has a expert engineered product survey template to get you started.
If you don't know anyone in your target market there are other paid services that can help. Services like Survata or Google Customer Surveys allow you to create surveys and they then distribute the surveys to people in you defined target audience to gather responses.
4. Create A Crowdfunding Campaign
One of the most popular methods of testing these days is to set up a crowdfunding campaign on sites like Indigogo or Kickstarter. Setting up a crowdfunding campaign not only helps you to validate your product but allows you to collect money upfront. However, crowdfunding campaigns are usually reserved for new/interesting or innovative products so simple re-selling another brands products or products you have imported from overseas won’t quite make the cut.
5. Open A Test Store
Finally, one of the best and most reliable ways to test demand for your idea is by setting up a test store. This popular method, which has been discussed in books like The 4 Hour Work Week, involves setting up a store with your product and driving traffic to it to test consumer interest. This can be done by either pre-selling products or even simpler, gauging interest by collecting email address for more information.
Note: Keep in mind that according to most laws in most places, when selling items as a pre-order, you're not supposed to capture the payment immediately. It's usually alright to authorize it, but you're only supposed to capture it just before, or soon after, shipping.
Starting a new business can be a little scary especially when you're unsure in your product idea. However, taking the time upfront to better understand your competitors, the market and doing some testing can help build confidence and save you time as well as money down the road.
Do you have another method of validating a product idea that has worked well for you? Please let us know in the comments.
P.S. For more information on choosing the best product to sell online, check out How to Find The Perfect Product to Sell.