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How to Validate Your e-Commerce Product Idea?
Have you got a grand e-Commerce product idea? Are you ready to get started building a new online business venture? But, before you dive deep into developing and designing your product, you need to do product validation and some fact-checking. One of the most important things a business owner can do before starting a company is to ascertain that there is a demand for whatever they want to sell. In other words, first, validate your product.
Do other people think your new product is as wondrous as you do? Did you know a lack of interested buyers is the number one reason new companies burn crash?
Although it took lots of trial and error, our website has a few ways to validate a product. Product validation can gain insights on whether or not you are selling something people want.
How to conduct your product validation?
We have a few ways for product validation. Below you will find the best ways to validate a new product.
Steps are as follow for product validation:
1. Porter’s 5 Forces Model for product validation
Competitor analysis is one of the most important pieces of research that you can do. With competitor analysis, you can explore if there is already a demand for whatever you are selling.
During your competitor analysis, look at things like:
Pricing: What kind of revenue and most importantly profit your new idea can derive?
Popularity: Are the items you are currently selling best-sellers for your competitors?
Gaps: Is there anything that your product or service can do that your competitors can not offer?
2. Check Google Trends For Product
Google is a valuable tool for business owners validating their e-commerce product ideas. It can give you insights into how popular your products are by showing you things like top-ranking pages and keyword search volume. Google Trends allows you to check whether people are talking about your products. The easiest way to discover your competitors is through a simple Google search.
You can also check out the social media page of your competitors to see how engaged their customers are with their posts and products. It is a great way to check out negative feedback about a product and see if you can find a way to improve.
Also Read: How to make money on Amazon in 2020?
3. Get Customer Feedback of your Product
It is a great idea to include people who are not your direct family or friends as they may be less biased and provide more honest feedback.
There are two ways that you can get customer feedback during the initial validation stage.
First, you can check some of the reviews and testimonials left by customers on review sites for your competitors. The other option is to send samples of a possible product to a few stakeholders and people that you can trust.
Pro tip: Do not try and gather feedback from your friends and family – you need the information that you collect here to be as objective as possible.
4. Validate through Meeting your customers
Another method we can confidently recommend is to sign up for a craft show or local market. Finally, test different price points to see if there is a price that works best for your product, especially when you are in the early stages.
5. Do The Math for your product
Finally, this might be one of the boring parts of validating your e-commerce idea, but it is also one of the most essential. You will need to figure out exactly how profitable your new product is going to be. You will lose your enthusiasm and interest in the long run if you are not making a good profit and maintaining positive cash flow.
You will need a few pieces of information to create your financial calculations. Such as listed below:
a. Cost– The estimated cost of your business to set up.
b. Price– You should be able to get a reasonable idea of how much something should cost by looking at the businesses that came before you.
c. Startup costs– Finally, once you understand your financials- calculate your startup costs.
Once you have all of the right numbers in place, ask yourself how much money you need to get started and how much money you will be left with when you subtract the price of making and selling the product, with the profits from purchases.
Product validation is a prerequisite before launching your business product. Devise the mentioned steps to validate your product. After all, product validation provides much-needed information about our business and product. It saves costs and time if done in the right way.