Calculate the market size and choose a niche
Market volume (size) is the total number of sales or customers in a given industry or segment over a given period of time. Dropshipping allows the seller's resources to adapt to different consumer trends in the market. In the search for a balance between price and quality, without investing excessive resources in the purchase of goods and their storage, the dropshipper can afford to do many things: experiment with niches, try out different directions.
Every move in business begins with calculations and evaluations. To understand how relevant our offer is today, how many potential customers might be interested in it, whether the business in the chosen niche will grow and bring profit, you can only understand the size and potential of the market. We must remember that the market is a living organism, so the results of all calculations depend on many factors and will always be approximate. So what do you need to do to find out the size of the market?
Use data, sales reports, market trend analysis and industry forecasts to assess market dynamics. Study statistics, trade journals, online resources and analyse competitors. Identify key trends, growth prospects and market size. Try to map the market by placing competitors' products on the X (price) and Y (quality) axes according to their position in the market.
Define your target audience
Clearly define who your products or services are aimed at. Research their demographics, interests and needs. This will narrow down your potential customers and help you determine the size of your market.
Find out who will be interested in your product or service. Identify your target audience: age, gender, interests and needs.
Research the market
Use analytics tools
Use online tools to find out how often people search for the products or services you offer. Check the popularity of your chosen niche using search engines such as Google Trends. Enter keywords related to your niche and study the volume of searches over time. This will give you an idea of how relevant and in demand the niche is at the moment, allowing you to predict its potential in the future.
Determine the size of the market
Based on the data you have collected, work out how many people might be interested in your product or service. Use the following formula: Number of target users x number of expected purchases over a period of time = market size (volume).
To understand whether your idea will be in demand, check its popularity by the number of searches on Google. Type 2-3 keywords into the search box and look for queries in your area. If there are more than 1000 per month, then there is demand. Every hundredth could be your customer.
Direct delivery orders
Study the demand for certain goods by analysing the number of searches on search engines. Then start looking for suppliers you can buy from. It is important for dropshippers that the goods supplied on behalf of your shop and brand are of high quality, have certificates and guarantees. You want your customer to become your loyal customer, and to do that they need to receive not only top quality goods, but also quality service. When fulfilling direct delivery orders, suppliers should be prepared to increase the number of orders and shipments.
Understanding the size of the market will help you answer questions you should not start your business without answering. Is the market big enough? Is it growing? What might happen to it in three, five or ten years' time?
Choosing a niche is one of the most important decisions that can make the difference between success and failure. There is no need to rush into it. The niche must first be analysed in terms of demand and available funds to find out how profitable it is. Retailers usually forecast demand based on experience, sales history, trend preferences and seasonality. If you don't have such experience, the dropshipping business model allows you to test the niche and try out different supply chains. Betonlogos s.r.o. specialists will find you proven partners, monitor the counterparties and their reputation.
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