The dropshipping market has increasing popularity in recent years. The global dropshipping market size was more than USD 102.2 billion in 2018. The growth rate of this market is predicted to be around 20 – 30% per year until the year 2020. This significant growth of the dropshipping market is owed to the increase in online shopping, e-commerce trade, and any other technology around this industry. You need to have a deep market analysis to choose the right dropshipping niche for yourself.
What Is Market Analysis?
A market analysis is a procedure that you need to increase your chance of getting a successful dropshipping business. It is a qualitative and quantitative assessment of the market. When using this analysis, you are going to look at the market size in both volume and value. You will also analyze some other important details, such as customer segments, competition, buying patterns, economic environment (in terms of any barriers to regulation and entry), etc.
The comparative market analysis may seem complex for you who are a beginner in this dropshipping business. However, this step is very important to lead your business in the right direction of success. Your market analysis will break or make your start-up company depending on how you are going to do this analysis for your business. Analyzing the market for your business can help you reduce the overall risks in your business. You will understand your potential customers, their needs, and also the market conditions.
Creating a deep market analysis requires you to spend some time and do some research about the industry itself. It is not something that you can complete in one single day. In this article, we are going to discuss some useful tips on how to do a market analysis completely. These steps are very easy to follow, so you will never have to get any problems when doing this market analysis. You will also find the best market analysis example from this page.
5 Easy Steps to Do a Market Analysis
1. Determine the market size
Before you enter any market or industries that you like, you are going to determine the overall market size of your target market. Your approach will also depend on the scale of your business. For example, when you are opening a new local coffee shop, you may want to use the local approach for accessing your market around you.
When determining the market size, you also need to take a look at both value and volume. The volume will refer to the number of potential customers for your business. The value will refer to the overall value of the market itself. You can also buy a market research report for finding the exact value for your industry. Determining the market size of your business can help you create a clear plan for your business.
2. Do a market segmentation
This is another easy way for you who want to do a market analysis for your business. The best practice to start this market segmentation process is by examining the market from the demographic perspective. By looking at this data, you will get surface-level insights, so you can find out the best ways to where you are going to bring your business in the long run.
There are several types of segmentation methods that you can use for your products or services, for example, behavioral segmentation, geographic segmentation, and also psychographic segmentation. It is a good idea for you to combine several methods for finding the right segments for your products or services. You are going to use different perspectives, ads creatives, and offers for different segments from your customers.
3. Create a clear target market
This is another useful tip that you can follow, especially when you want to have a good target market analysis for your dropshipping business. A target market is a group of customers in which you will focus on the market. Your marketing efforts and your business approach/strategies will depend on the target market of your business.
For example, as a coffee shop owner, you are going to target people who are looking for general and affordable coffee drinks, or you can choose to focus your business on expensive and high-end gourmet coffee. The choice is really up to you. You can classify your target market, based on some factors, such as location, gender, income, age, education level, marital status, etc. As your business grows, your target market will evolve and change. You can revisit and rethink your target market from years to years for ensuring that you still have the right target market for your business.
4. Find your market needs
We are going to move to the qualitative assessment of your market. You will learn about the market needs in your industry. In this step, you will go into any details that will drive demand for any of your products. You need to understand why people are going to buy your products, what problem your products can solve, and how your products are different from any other competitors on the market.
It is recommended for you to do complete and deep research about the existing competition on the market, so you can find out their relevant weaknesses and strengths. This step will give you complete information about the overall market positioning. You will focus on any areas where you can provide better services than your competitors.
5. Get any updates from any resources
When you look on the Internet, you can find a lot of resources that are available today. The more information you can gather from the market, the better your business will be. The data you collect from the market should be relevant, factual, and unbiased. Trusted resources allow you to get factual data for your target market. It is a good idea for you to gather some data from credible sources, such as the Census Bureau, The Bureau of Labor Statistics, trade journal articles, state and local e-commerce websites, etc.
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Wrapping up
Doing a deep and complete market analysis is very useful to give a lot of information for your business. You will be able to boost the performance of your business by doing complete market research or analysis for analyzing any potential opportunities for your dropshipping business. You can determine the right steps that you are going to take for growing your business on the market now. Use a market analysis template for any businesses you have for helping you create this analysis easily.
