Welcome to YourMarketingPodcast. This is Series One – How to Start a Successful eCommerce Business in Less than 30 Days. In this step-by-step guide, you will learn how to quickly launch an eCommerce store and start seeing those sales roll in! And here’s your host…Ishani DePillo.

Hello, hello. This is Ishani DePillo. Welcome to the 2nd podcast of the series “How to Start a Successful eCommerce Business in Less than 30 Days. I’m so happy to have you.

We had such a great start to the podcast. In the first podcast, we covered how to best identify a product to sell. The podcast was full of great tips for discovering a product to sell. You could trend-hunt or use your own passions and interests to come up with a product to sell. If you haven’t heard it yet and you are struggling to still come up with a product to sell, I highly recommend starting with that podcast first and coming back to listen to this one.

Okay, so hopefully, you already have a product idea in mind for your eCommerce store, maybe even a couple of different ideas that you’re contemplating? 

And that’s awesome, because today’s podcast, the second podcast in the series, is all about evaluating your product’s demand, competition, and profitability.

I am going to show you how to assess the true demand of your product idea, how to strategically (and discreetly) spy on your competition, and how to crunch those numbers to ensure your product is going to be profitable.

Profits are really important not only because you need to make money, but it also helps you grow your brand to make even more money. And while money isn’t everything, it does give you the freedom to do what you love to do. Whatever that may mean to you. Anyway, as I mentioned, I will be addressing product demand, competitors, and profitability all of this in this podcast. It’s a LOT so bear with me and let’s dive in.

Skip to 2:16 Let’s get started with the first concept: product demand. 

• How many people actually want your product? 
• What is the current demand out there for a similar product? 
• What can you expect in the future? 

 Those are some tough questions to answer. Especially if you don’t know how or where to find the answers.

Thankfully there are a couple of helpful tools out there to find the product demand:

• The first one that we are going to look at is the Google Keyword Planner. It’s a free tool and super easy to use. But there’s a catch: In order to use the Google Keyword Planner, you will NEED to have a Google Ads account. You just have to enter information about yourself and your business, and you’re in. When you do a search related to your product on Google Keyword Planner you will see monthly search volume for your keywords. Ideally, the higher the search volume, the better. Because that means your product already has demand… meaning that people are actively looking for the product. Anything over a thousand is generally worth exploring in my opinion.
• Another product by Google, that could help you identify product demand is  Google Trends. This is also a free tool and it will show you how much your product has been “trending” for the last few years. You can see whether the interest for your product has grown over time using Google Trends. It’s very helpful in making sure your product is on the rise, rather than on a downturn.
• The two tools that I mentioned by Google are Free, but we also use a paid service called Ahrefs. Let me spell that for you, it’s – A-H-R-E-F-S.com. This tool is pretty affordable and they are currently offering a 7-day trial for $7. And you can use their Keyword Explorer to find searches related to your product, and then get the search volume. We have an SEO expert here, Chris Casarez, who recommends Ahrefs as his first choice when it comes to SEO tools:
  • “I’m a huge believer in Ahrefs. I’ve been using that for years. It’s got pretty much everything that I need. Now, it’s not free, but it’s also not horribly expensive so I would say it’s something within the scope of a small business. You can get your keyword research done, find out what your competitors are doing, whatever it is you want to emulate, you can sort of reverse engineer their strategy. So you’re not reinventing the wheel.”
• So a side note here… Save all the keyword research that you are doing because we will be using this information in the near future. So don’t forget to export and save. Another metric we like on ahrefs is the keyword difficulty. Basically the keyword difficulty tells us how hard it will be to rank in the top 10 organic search results on search engines like Google for any given keyword. It’s on a scale from 0 to 100, so anything below 30, is great in my opinion.  Because if your product has demand meaning it has high search volume (for example over 1,000), and it has a low keyword difficulty rating  (meaning below 30) then you may have a good chance of ranking for that keyword on search engines like Google and actually get free traffic to your website.
• Here is Chris Casarez again with his recommendations on the use of difficult keywords:
  • “In regards to whether or not new businesses should go after difficulty words, I would say it depends. Number one: if those difficult words don’t have a lot of search volume, then certainly not. But usually, that’s not how it works, usually, the more difficult keywords also have greater search volume and possibly better returns. I would say, if a new business has the budget and the time to take the long game, I would say go ahead and do that. If you can ride it out for a year or two, and then start making those huge gains and getting that revenue than I would say it’s a go. If not, if it’s more of a pay-as-you-go scenario and the business needs to see some returns within the first few months, then I would say that’s not a good strategy. Look for low-hanging-fruit keywords where you can start seeing some returns sooner and then start building up once you see revenue come in and then you can just expand to more difficult words that are going to bring in a little bit more revenue.”
• Another tool that’s very popular is SEM Rush, especially amongst marketers. Some beginners may find it a little pricey though, especially if you are funding your own venture.  SEMRush is currently $99/month. Over 5M of us, marketers use it. You can get a free 7-day trial, but you do have to enter your credit card information and remember to cancel within the 7 days if you decide it’s not the right tool for you. 

Those are some helpful tools to assess your product demand. But there are some other ways you can evaluate demand. These methods require a lot more effort but could end up being very fruitful if done right. For instance:

• You can run a Kickstarter, iFundWomen, or Crowdfunding campaign to collect funding for your product. There are some category limitations and you will have to put a lot of work into getting it set-up. AND if people are funding your creative product that’s a clear indicator that you will have demand once your product is ready to sell.
  • We connected with Oliva Owens who is the head of Partnerships at iFundwomen, a crowd-funding platform for female entrepreneurs. She shares her biggest piece of advice to those who are starting an eCommerce store:
    • “My biggest recommendation for eCommerce sites that are just getting started is to prove demand for your product or service before you invest in supply. That’s really the genius we see behind crowdfunding. It allows you to test out, ‘okay I have this idea. Our my customers actually willing to pay for it? and at what different price points do they want to come in at?’ Through a crowdfunding campaign, you’re able to test that out and then ultimately use the funds that you need to build out a strong e-commerce platform that you can continue to build on.”
• Another way to figure out product demand is to survey people. But you will likely have to do it anonymously so that they feel they can give their honest opinion without having to worry about hurting your feelings. And if you decide to go down this route,  SurveyMonkey is a great tool to use. Another option for surveying is putting together a focus group. Perhaps select people who have strengths in marketing, product development, funding, etc. The people within your own circle help you discover places of demand in the marketplace. That’s how Charith Perera from TDot Performance started. Here’s an excerpt on their early beginnings:
  • “Then eventually we bumped into a gentleman who said, “Stop selling these lights and start selling the auto products at his local store.” And he had like a small little Flea Market booth at the time. So we went to his store with a camera, my mom’s drapes, and a scale. And took pictures of every single product that he had in the store. Literally created a PDF catalog that we started distributing at school, saved enough money there. And then realized no one was selling Automotive Parts online; no Canadian Merchants were selling it online. And that’s honestly how we started, we just figured out how to create an online store. Our first store was through ProStores. We went to the library, figured out how to launch a site, launched it, and then started adding our products.”
• TDot performance re-sells automotive parts, so researching the demand for each new brand is critical to the success of their business. 
  • “Most of the time I would advise on focusing on a product that already has some search demand. We focus on uploading products that have a brand presence, and we look at the Google search history to see in that there are already a thousand people searching for the product. That way you don’t have to initially create that demand right off the bat. One of the challenges though is you probably have a lot of competition. And you have to figure out how to stand out and how to differentiate yourself whether it’s from a marketing perspective, fulfillment, etc.”

Lastly, you can also do a competitor analysis to assess product demand. And to be honest, you should get to know the competitors in the space anyway to see if your product can compete. 

A competitor can be someone with a completely different product than you are offering but addresses the same needs as your product. So anything that’s remotely similar and competes with your product, that someone might contemplate and/or buy over yours, is considered a competitor. So let me give you an example, let’s say you want to sell stretchy jeans, you should consider brands that sell leggings, tights, and regular jeans as your competitors. Ok so that wasn’t a great example, but you get the point. You need to realize that they are still your competitors, they may not sell the same product as you, but they are definitely targeting the same audience as you. I’m not saying you need to fear them. But just that you need to do your research and maybe even learn from them!

So let’s dive a little bit deeper into competitor research. The first step in competitor research is obviously discovering who your competitors are:

You need to realize that they are still your competitors, they may not sell the same product as you, but they are definitely targeting the same audience as you. I’m not saying you need to fear them. But Instead may be you can learn from them!

So let’s dive a little bit deeper into competitor research. The first step in competitor research is obviously discovering who your competitors are:

• The easiest way is to just do a simple search on Google. Type in your keywords related to your product, and then see which brands pop up. Most of you know what a sponsored ad looks like on Google, but for those of you who don’t know The listings at the top, with the “Ad” label are paid ads also known as sponsored ads. They are going to be your main competitors because they are spending money on ads to gain traffic to their sites. You may even see Amazon on the top – don’t fret, we are going to have a whole podcast dedicated to paid advertising and we will show you how to get your ads up there as well. 
• When you are navigating through your competitor’s websites, you’ll want to keep a running list and jot down all the competitor information you are gathering in one document:
  • • First thing’s first, pricing. 
      • How much are they selling the product for? 
      • Are there specific quantities, or colors, or variations? 
      • Jot these down. This information will be helpful when you are pricing out your product. It also helps you understand where you fall on the pricing scale compared to your competitors- 
        • are you on the higher-end, like will your product be a luxury item 
        • or on the lower, like will your value proposition be that you have the best prices 
        • or right in the middle AND you just have a unique value proposition?
    • Charith from TDot Performance explains how critical it is for his industry to constantly be evaluating the competition:
      • “Most of the manufacturers in the US have a MAP policy (minimum advertising pricing policies), where you have to respect the pricing. That creates a challenge when you’re entering the market because there are probably several other vendors who are already selling at that price. You have to be creative in terms of how you can be competitive or how you can differentiate yourself. That’s a challenge for our industry and it’s very tight margins. But if I were to start in a different industry or start over again, I would focus on finding that sweet spot where there is just enough demand, not too much competition and enough margin, so you can just focus on that right target consumer who’s willing to buy your product.”
    • Now take a look at your competitor’s value-propositions. Are they offering free shipping? Or are they offering an incentive like 10% off for email newsletter sign-up? Make note of their promotions and sign-up offers while you are navigating through their site. Also, pay attention to whether they have seasonal promotions. It’s good to mark future promotions you might want to run because you need to evaluate them in your product profitability calculations, like can you afford to offer free shipping? Can you offer a discount? All of this, we will cover in product profitability. But start gathering your competitors’ value-props.
    • Next, you want to evaluate your competitors’ brand voice, their style, and the feeling you get when you visit their website. So why is evaluating their brand so important? Because eventually, you will need to come up with your brand guidelines: like your voice, style, and the feeling you want your customers to have. So Knowing how you differ is very important and “borrowing” ideas can help your brand be successful.
    • Another component you will want to pay attention to is Customer reviews – take a few minutes here to really read them. What are customers saying about your competitors’ products? What do they like about the product? What do they wish they could change? The more reviews your competitors have the better. Because 1. There’s product demand, 2. You have access to free customer feedback to make your product even better. I highly recommend that you take the time to go through these competitor reviews and jot down customer likes and dislikes so you can make your product even better! 
    • And Lastly, take a minute to check out this free tool called SimilarWeb (it’s free). Type your competitors URL into their search bar and it will give you a high level breakdown of your competitors site. You can get information on estimated website traffic, audience interests, and which marketing channels they are going after.

Competitor research and analysis can be quite cumbersome and, as you can tell, involve a lot of different aspects that you’ll want to pay attention to. We’ve created a Competitor Analysis template for you. To get this free template, sign-up for the series 1 emails at yourmarketingpodcast.com/letsgo.

Okay, so now you should have an idea of how much demand is out there for your product and you know a lot about your competitors.

Skip to 19:59 So let’s dive into product profitability:

A really important measure of profitability is Gross Profit Margin (or GPM for short). Gross Profit Margin is such a vital component in eCommerce. Maybe you’ve heard this before or maybe this is a new concept for you. But if you are starting an eCommerce store, you’re going to hear it a lot. And as an eCommerce business owner, you need to fully understand it to be successful.

To calculate Gross profit margin, you first need to calculate your Gross profit. So what is gross profit? Gross profit is your revenue from product sales minus the cost of goods sold. So this is not the total cost of operating the business, like overhead cost, it’s just the cost of the goods you sold.  Simple enough, right?

So next to calculate the Gross Profit Margin (GPM) you take your gross profit and divide it by the sales revenue. Gross profit margin is expressed in terms of a percentage, so multiply this by 100 to get your GPM. 

For example. Let’s say you are selling watches. And you purchased 10 watches from a manufacturer for $10/piece. These are just random numbers and I’m keeping it really simple here. Then you take those watches and you turn around and sell them on your website for $30. And let’s say you sold all of the watches within the first month. So let’s first calculate your gross profit is your revenue from product sales minus the cost of goods sold. So you sold 10 watches at $30/each to generate $300. The cost of goods sold is 10 watches times $10 which is $100. Then you take the $300 which is your sales revenue and subtract the $100 which is the cost of goods sold, and your gross profit is $200. Then to calculate the gross profit margin, you take the gross profit of $200 divided by your sales revenue $300 and you get  0.66 and you need to multiply by 100 to get the percentage which equals 66%. So your gross profit margin is 66%.

Like I mentioned before Gross profit margin does not take into account other expenses involved in running your business. Purchasing the product is one expense, but you will have other expenses like the cost of shipping, overhead, third-party fees, eCommerce software subscriptions and dues, packaging costs, and much more. It’s a lot to measure to keep track of to calculate your actual profit or bottom line.

When we were determining the product profitability for our Roam Often jewelry travel case, we put together a very detailed document with all our projected expenses including our ideal GPM and then determined at what price we would need to sell our product to reach sustainable profitability.

The lower your gross profit margin, the higher the chances of your product NOT being profitable because of all the other expenses. If your gross profit margins are low, and you still love the product, then you need to see if you can make up the profit with a high volume of sales. It’s something you seriously need to consider because It’s a large risk to go after low gross profit items with little to no reward. I recommend staying above 20% GPM. But you also have to see what the market rate is for your product. So going back to the competitor’s list again. What are your competitors selling their product for? You have to be realistic. For instance, if competitors are selling a similar product to yours at $40, you can’t come into the market with a price tag of $250 unless you can convince customers why you are that much more expensive and why your product is worth that price. Don’t get me wrong, you can price it that high if you can convince your customer. We have had plenty of high-end clients who sell a product 10 times their competitors. But their product is also far superior to the competition. Perhaps it’s the material? Added functionality? Maybe it last-longer? There has to be enormous value for your customer if you’re going to price your product much higher than your competition.

Ok so in this podcast, we covered:

• Product Demand 
• Competitor Analysis
• Gross profit margin

That was a lot of information. 

Stay tuned for our next podcast where we will cover some business fundamentals. And I promise I’ll try really hard not to make it as boring as it sounds. We’ll cover setting up a company and go over ways to fund your new product and business venture. Stay tuned for the next episode.

And if you’re just starting out on your eCommerce journey, we urge you to sign up at yourmarketingpodcast.com/letsgo to receive email alerts. It’s so easy to get distracted and derailed. And we want to see you launch your eCommerce store and crush your goals! These emails will keep you on task and come with even more resources because we can’t cover everything on the podcast. Thank you for listening to yourmarketingpodcast. See you next time!