Updated: September 17, 2020
How To Find The Actual Market Size of Your Product and How To Overcome A Small Market That Limits Your Growth
You have the product(s), the price point(s) and you set up your online store with all the bells and whistles of any e-commerce power player (I suggest WooCommerce). But do you know the true opportunity you have available to you? Do you know how to prepare to scale your sales and customer base across your demographic? Have you written down reasonable expectations for the year of sales ahead of you?
It’s difficult to accomplish those things without knowing the overall value of your niche market. If your market size nationwide is $80 million for an extremely specific niche product, you can walk into this endeavor with a practical understanding that hitting $8 million in sales a year means you control a massive 10% of your niche market. That’s incredible! You also know not to expect your new business to turn into a unicorn ($1 billion+) because that’s not possible even if you control the entire market.
It’s highly likely that you’ll realize you are entering a market that is worth billions with major and well-financed players (meaning you’re going to have to stand out in a big, bold way). Of course, the opposite can occur, and you may learn that the market you assumed was mammoth and value is in truth only a few people, meaning it’s probably not worth entering unless you’re going to be content with a few sales a month.
I have proudly had clients with super successful products that took only a few months to build sales and get some attention, but I’ve also had a few who were too stubborn to succeed and refused to accept that their market was either too small or even existed in the first place.
I always tell clients that the first thing you must do is to step away from your passion. It’s hard to do, after all, that’s why they got into this niche to begin with – passion and determination. But passion on its own doesn’t create sales.
To succeed online these days, you must be flexible – you must set aside the ego and stop listening for what you want to hear and focus on the data. The numbers will tell you where to put your passion.
What Do I Do If My Market Turns Out to Be Too Small?
As with most things in life, this is one of those easier-said-than-done answers. The answer itself is simply that you must expand your product line.
If you have a strong niche product with a total annual market size of no more than 3,000 units (with a little competition but not much as the market size is so small) you need to realize that the product you’re so passionate about must be the first of several products you sell. Essentially, there will come a time when you must expand and evolve your business to grow.
You chose a small niche because you care about it, you know it well, and you don’t want to deal with massive competitors who have large marketing budgets. It’s a good call, but be prepared to expand your niche – to reach out with both arms and make it larger.
For example, you manufacture hand-made glass beads for serious artisans who make amazing DIY jewelry. The market for premium hand-made beads is small, but the market for a premium and well-known player in the DIY jewelry niche isn’t that small. Expand your product line and expand your profits!
Never Be Afraid to Choose A Large Market
You did a little research, and you found out that the market size is huge with major competitors who have major marketing budgets – household names that everyone recognizes. You shrink down, concerned because how could someone working from your garage compete against them? Well, you can. In fact, several of those other big competitors haven’t always been so big – all big companies started out exactly where you are right now.
What did they all have in common? No fear! Never be afraid to take on the giants in your market. Oftentimes, the fact that they’re so large and so well known is your greatest advantage and their largest weakness. Sit down and write up a list of every complaint, service issue, product problems and any other weaknesses you were able to determine. At first glance, we all think only about the size of their marketing budgets, but for many of the brands these days that’s their only advantage over you.
Thankfully, the internet in all its social media splendor has made it possible for even a brand-new upstart to compete directly with the heavyweights.
To learn more about differentiating yourself in your market to compete against your biggest competitors and win, please see my related article.
Let’s Determine Your Actual Market Size
Focus on data and research that has already been done. If someone else spent the money to put together your market size for you, why not use it. The first step most budding entrepreneurs takes is to check out information freely available by the government, non-profit organizations, and data analysis companies such as Statista. Make sure you look up any organizations devoted to your general market, as they often have accurate and helpful data.
Helpful Sites for Market Analysis:
Now you have a general idea of the overall size of your industry opportunity, so it’s time to move to the next step because you are likely competing in a niche market within that consumer segment you researched above. It’s time to determine your specific niche submarket of that larger market segment.
The Top Research Methods I Recommend to ServerWise Clients
Publically Traded Competitor Required Financials
Is there a publically traded company that has a similar product? If there is, you get to use their own investor information against them by downloaded their financials, printing it off (because they’re usually massive spreadsheets) and highlighting the specific branch of their overall business that you’re competing against. This will tell you how much that one portion of their business adds to their profit each year, giving you a more detailed understanding of your market size.
Private Company Research
Use Amazon Books to identify interest in your product line. This one is a bit unusual, but it does work, and I’ve suggested it to many ServerWise clients over the years. You want to sell a video course on a specific type of dance, but aren’t sure how many people may be interested. Head over to Amazon and type in the dance style you’re selling and search only for books. If you see books that have sold well for the dance niche (1,000 sales is good for such a narrow niche) you most likely won’t have a problem selling videos. Keep in mind, video learning format outsells books on the same subject by a considerable magnitude.
Google Ads Keyword Planner
This handy (and free) tool will give you a real sense of the value of your market and how many others are competing for clicks. You know your product keywords, so type those in, and you’ll find out exactly how many people are searching for your product in your niche each month. If there are 1,200 searches a month for your keyword phrase, all you need to do is get your product in front of those hungry buyers, and you’re going to get sales.
All those techniques will help you drill down the feasibility of your product. They’ll help you determine if you have a market to begin with, and to an extent a fairly accurate idea of the size and scope of the opportunity in front of you. Google searches of your product type with the words ‘market size’ are always the first place to start, but make sure you follow it up with some basic Amazon research and always include the Google Ads Keyword Planner.