Chapter 3 How to Conduct Online Market Research
In 2011, when Ron Johnson became the CEO of JCPenney, he was already a veteran business executive.
For 15 years, he’d been vice president of merchandising at Target, then worked 11 more years as senior vice president of retail at Apple.
Naturally, JCPenney felt confident when Johnson decided to completely overhaul their business and eliminate all coupons, promotions and sales events.
But instead of growth, JCPenney started tanking. Sales numbers dropped. Customers were lost.
Forbes eventually called this an “epic rebranding fail”.
Why did things go awry? Because Johnson didn’t understand the brand’s target audience. “I thought people were just tired of coupons and all this stuff,” he said in an interview. But it turned out that JCPenney customers loved coupons and sales!
The takeaway from this whole mess is that we shouldn’t assume we know what customers want.
Instead, we should use both quantitative and qualitative research to drive our decisions.
Moreover, we should aim to understand the market as a whole, especially the competitive landscape and emerging trends.
Fortunately, all this has never been easier, since now anyone can conduct market research online.
What is the Purpose of Online Market Research?
Conducting proper online market research requires time and money. But investing those resources into ecommerce research makes sense for the following reasons:
1. Get a deeper understanding of your target audience.
Ecommerce personas also help ensure that you are speaking directly to the customer’s needs and satisfy all of their expectations.
Keep in mind that while knowing the demographics of your target market is important, it’s not enough in and of itself.
In addition to knowing who your target customers are, you should also understand what they think, feel and value.
Online market research, especially qualitative research, can help you delve into the internal motivators that prompt a purchase.
2. Learn customer behaviors.
Understanding how your target customers shop online can help you improve the usability of your website and provide a better customer experience. Every point of friction in the buyer’s journey reduces customer satisfaction and increases the likelihood of cart abandonment, lost up-sale or missed retention opportunity.
Online market research can help you identify those points of friction and common deal-breakers. Then, use this know-how to simplify navigation, facilitate product discovery and improve conversion rates.
3. Find new business opportunities.
Lots of ecommerce business opportunities are out there that can make your company more successful:
Doing online business research and looking at the market data can help you uncover those opportunities that lie hidden in plain sight.
2 Types of Market Research
The idea of doing “ecommerce market research” may be lofty. But when it comes to execution, you need to master just two research methods:
1. Primary research.
Primary research is data collection, done by you, using your internal resources.
Here are a few examples:
- Online surveys and questionnaires.
- In-person, in-depth interviews.
- Online focus groups.
In other words, with primary research, you are the one doing the data collection, then analyzing that data to extract actionable business insights.
2. Secondary research.
Secondary research is using data and insights, produced by someone else.
Here are a few examples:
- Government statistics. For example, if you are in the healthcare industry, then the National Center for Health Statistics can be a valuable source of data.
- Industry statistics. Statista is a great website for learning more about a particular market. The Big-4 accounting firms also conduct a ton of original industry research.
- Industry reports. For example, HubSpot publishes an annual “State of Marketing Report” in which they share their online marketing research and provide an overview of the latest industry trends.
As such, with secondary research, someone else collects the data and then interprets it for you.
Source: My Market Research Methods
How to Conduct Market Research
Market research is essential for understanding the target demographics, market conditions and competition.
Here’s how to do market research for ecommerce to collect high-quality and relevant insights about your target market.
1. Conduct keyword research.
Keyword research can help you figure out whether there’s a demand for the product that you want to sell online.
Even though high search volumes don’t mean the product’s idea is profitable, they do indicate genuine interest among consumers.
Moreover, keyword research is also useful when you are working on your inbound marketing strategy since it allows you to pinpoint opportunities for generating organic traffic with search engine optimization (SEO).
Some of the popular free keyword research tools are:
While Ahrefs is a sophisticated tool that might take time to master, you can learn how to do basic keyword research with it in just 10 minutes.
Simply watch the “Keyword Research Tutorial: From Start to Finish” video in which Sam Oh explains everything you need to know to get started.
This tutorial is particularly helpful for ecommerce entrepreneurs because Sam uses a new ecommerce store that sells computers, computer parts, computer accessories and software to show the ropes of research.
Here’s a quick summary:
- Generate keyword ideas. Start by typing in a few broad keywords related to your business (e.g., “computer”), then go to “Having same terms” report to expand your list of ideas. Then filter those keyword ideas down, group them by search intent (informational, navigational, commercial, transactional) and evaluate their business potential.
- Analyze Google’s top ten search results. See which websites already rank for the target keyword. Pay attention to the content format. Consider using a similar type of content, but look for opportunities to improve upon the published posts.
- Assess how hard it will be to rank on Google for that keyword. Take a look at the number of referring domains and the domain ratings for the top ten search results. Competing with websites that have a similar domain rating (DR) to yours is the best strategy.
- Analyze topical relevance. See how your website compares to those in the top ten search results. Are you in the same industry? Is it a commercial domain? Is it a niche publisher, covering the topic exclusively? Doing so will give you more insights into the difficulty of ranking for that particular keyword.
- Reverse-engineer the topics that are driving traffic to your competitors’ websites. Go to Ahrefs Site Explorer, enter a competitor’s domain name and go to the top pages report. Then look at the traffic, the top keywords and the referring domains.
Sam Oh also emphasizes that keyword research isn’t about search volume alone. Your goal is to find topics that potential customers are searching for, create educational content around them and soft-pitch your offers.
At the end of the day, traffic quality beats traffic quantity. When you are considering a particular keyword, ask yourself whether ranking for it will lead to more sales, not just extra traffic.
2. Scope out the competition.
You can learn a lot about a market by analyzing the competition, so figure out who your main competitors are and scrutinize them.
Note that even though you are doing market research for ecommerce, you shouldn’t only look at ecommerce businesses.
For example, LARQ sells water bottles online, but they are also competing against online marketplaces as well as niche online stores. Before launching the business, Justin Wang did a lot of market research to verify that there isn’t a direct competitor with the same offering.
Once you have a list of the key players in your industry, you should look into their:
- Business model. How are they sourcing their products? Are they dropshipping or carrying inventory? Do they use third-party logistics (3PL) services? What is their pricing strategy? What is their marketing strategy? What is their returns policy? Jot down all the answers.
- Sales funnel. How do they attract potential customers to their website (content marketing, paid advertising, SEO, etc.)? How do they convert those site visitors into paying customers? Do they upsell? Cross-sell? Down-sell? Do they send automatic abandoned cart emails? You may want to go through their entire sales funnel to see how everything is set up.
- Website. Which type of ecommerce platform do they have? How long does it take for their site to load? Does their online store design look professional? What branding elements do they use? How does their checkout flow work (the number of steps, the number of field forms, etc.)? Overall, do they provide a satisfying user experience?
Researching all this will help you determine:
- What works. You shouldn’t outright copy your competitors. But there’s no need to reinvent the wheel either. Cherry-pick the best practices and apply those to your own business.
- What doesn’t work. You might come across common frictions such as slow loading pages, confusing navigation, low-quality product images, etc. Take note of all that and make sure that you don’t make the same mistakes in your business.
- What can be optimized. When you dig into the logistics of a competitor’s business, you might uncover optimization opportunities that can then help you offer better products, lower prices and faster shipping.
And don’t be intimidated by established companies.
Remember that even the largest corporations in the world, such as Google, Facebook and Amazon, were once fledgling startups.
You too can carve out a space for yourself in your industry. In fact, extensive market research is precisely what allows small businesses to compete against big companies. You just need to uncover something that will give you a competitive advantage.
3. Research current trends.
When you are doing product research for ecommerce, you should always look into the latest consumer trends. Use Google Trends to uncover those.
Here are the two questions that can help with online product research:
- Is the interest in this product declining, stable or growing?
- Is the interest in this product seasonal or does it remain the same all year?
Simply type in a relevant keyword and pick a time period.
For example, if you type in “artificial plants” and pick “Past 5 Years” as your timeframe, you will see that the interest in this keyword has been stable, with a noticeable increase in the last year.
A moderate but stable level of interest like that may indicate an opportunity for building a sustainable, long-lasting business.
Check your assumption with a quick google search for such businesses. And yes, we have Autograph Foliages — a company that has been selling artificial plants for over 40 years!
Also, when you see an upcoming trend, analyze it from different angles. For example, CBD is a promising new market with a diverse range of business opportunities. So rather than doing CBD-everything, consider niching down.
Lab to Beauty, for instance, saw great success with selling CBD-infused beauty products.
Also, be wary when a trend has a crazy upward trajectory at the moment. Because a real-time spike in interest might turn out to be a short-lived fad.
While it’s okay to capitalize on hot trends, you shouldn’t build your entire business around them. Make sure that your foundation is stable.
4. Utilize social media.
Social media is a treasure trove of consumer insights. It’s the place where people broadcast their complaints, wishes, preferences and aspirations. But to find those golden nuggets of wisdom, you need to go on a deep dive.
To avoid getting too deep down the internet rabbit hole, keep your online business research focused on:
- Following influencers in your industry. Analyze their opinions, conversations and past partnerships with brands.
- Monitor relevant hashtags. Identify the most relevant hashtags for your products and then make it a habit to monitor them regularly.
- Analyze competitor sentiment. Keep an ear on what people are saying about your competitors. This is a great way to figure out what their strengths and weaknesses are. Note that the most valuable information often lies in posts that mention a competing company or their products but don’t tag them.
Text analysis can come in handy here. This machine learning technique helps analyze massive quantities of textual data and extract relevant information from it.
For example, text analytics software could analyze all tweets with a specific hashtag. Then let you know whether the overall sentiment was positive or negative, which words appeared most frequently, etc. Investing in text analytics software would give you a much more accurate picture of the market and analyze a wider range of ideas shared online.
Picking out the language your customers use — words, slang, metaphors — to express their preferences is a short-cut to writing better copy. By infusing the voice of customer data into your messaging, you make your pitches feel more personal and relevant.
5. Build an online ecommerce store and test the waters.
At some point, it’s time to move from theory to practice. Once you’ve accumulated enough insights, test your business idea by presenting it to the market. Ultimately, the target market response is the only thing that matters.
Here’s how you should go about it:
- Pick an ecommerce platform. Popular options include BigCommerce, Shopify, WooCommerce, Magento, etc. Do your research and pick a solution that suits your needs best.
- Set up your ecommerce website. You will need to sort out web design, write the copy and create product pages. You can do all this yourself or hire agency partners to help.
- Drive traffic to your online store. SEO, content marketing and social media are all great, but they are long-term strategies that require time to work. Meanwhile, if you want to put your products in front of your target customers quickly, your best bet is performance marketing.
Don’t wait until everything is “perfect” to launch your business.
In fact, doing so would be a mistake. Because without first hand feedback, you won’t be able to right-size your offer anyway.
At launch, you need to make an educated guess based on your market research as to what will resonate with potential customers and then put your products in front of them.
That way you will start learning what works and what doesn’t and will be able to adjust your approach accordingly as you grow your business.
6. Leverage forums and customer feedback.
Niche online forums are another leeway into learning about your customers’ preferences.
To get the best scoops, do the following:
- Find out which online forums are the most popular in your niche.
- Register to those and check back regularly.
- Contribute to the discussions to build up your credibility.
- Pose questions and engage in conversations to better understand your audience.
Alternatively, you can ask your current customers to provide feedback.
That’s even easier to do:
- Send an online market survey using SurveyMonkey or Typeform to your most loyal buyers.
- Conduct one-on-one customer interviews. Ask super-fans to jump on 15-minute calls with you. People love to express their opinions and want to feel heard. So getting some respondents might turn out to be easier than you think!
- Send automated emails asking for feedback. After you buy something from Amazon, you probably get an email asking you to rate it. You can do the same in your ecommerce business. In addition to receiving feedback on your products, you’ll also generate customer reviews.
And yes, you can also use text analytics software to analyze customer feedback, too. An automated solution can be especially helpful if there’s a lot of data (e.g., you want to go through all the customer emails that you have ever received!).
Finally, pay special attention to unsolicited customer feedback, even if it’s negative. People voicing their opinions online must have felt that something was important if they decided to go through the trouble of reaching out to you.
We are tempted to think that we “just know” what our target customers want.
But that’s how biases kick into our thinking. Rather than “guesstimating” what your target market wants, do the fieldwork and prove your assumptions.
Use relevant quantitative and qualitative data to formalize what your target buyers like, dislike and miss. Then take action!
Online Market Research FAQs
1. What is online market research?
Online market research is a type of market research that leverages two types of data available online — the data you own and the data published by others. Collecting and analyzing this type of information can help you learn more about your target audience and right-size your offerings.
2. How do you do market research?
Market research consists of primary and secondary research. Primary research involves collecting data yourself through surveys, customer interviews and focus groups. Secondary research involves analyzing data that was collected by someone else, such as government statistics, industry statistics and industry reports.
3. Why does market research help ecommerce success?
Market research allows you to understand your target audience better. And the better you understand your potential customers, the easier it is to come up with viable product ideas, write compelling copy and launch effective marketing campaigns.
4. Can you conduct surveys to do market research?
Yes, surveys are a valuable market research tool. You can gather both quantitative and qualitative data that way, directly from your customers or prospects. Consider using survey software to streamline the process.
5. Is Quora a great place to start for research?
Quora can be a great place to conduct market research because it lets you know exactly what your customers think. Consider subscribing to the topics relevant to your niche and participating in discussions.
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