> On a more serious note, I am not selling out or going to ask for capital ever.
You are thinking a TON of steps ahead. You have nothing. Ideas are cheap.
> I didn't feel the need to do research to prove that people are interested in selling things online and e-commerce is hard and if you are a merchant
That is NOT what it means to do market research. There are always competitors in 99.9% of startup businesses. And the 0.1% that actually are truly unique don't just magically stake their claim and stay that way forever-- imitators and competitors emerge.
The most basic market research you need to do is to identify the size of the market you're attacking. Put a real number on that somehow. It may be guesswork, but do some serious digging.
Then you want to figure out how much your competitors are making: estimate their costs, their profit margins, etc.
Based on where your competitors fit in, you may decide that you can't compete on price and that changes your whole approach. If you have an idea to open a 24/7 grocery store in a town that has a Wal-Mart, you're probably not going to be able to beat a 2% profit margin coupled with specially negotiated prices. You may however be able to cater to a niche audience like college students by offering additional services, like making hot sandwiches (drunk kids love chicken parms at 3am).
These are the kind of decisions that affect the entire direction of the company.
> If they aren't selling it online already, it's only because the services aren't up to the mark, and that would be a good thing for me.
No, actually there are myriad reasons why someone would not be selling online right now. Maybe they haven't ever heard of Shopify? Or maybe they don't trust Shopify to handle their setup? These are marketing challenges, not necessarily technical ones. Just being a great, determined coder does not guarantee you will be successful.
Also:
You mentioned you're quitting your job in 2 months to do this full time. Why? Do you have a ton of cash that you can do that? When do you expect to break even? How long can you survive on no salary? What are your expenses?
Don't let me (or anyone else here) discourage you. Just have a real plan and put some real effort into the business side of things or make a disclaimer that tells us you're rich and aren't in it for the money. :)
"The most basic market research you need to do is to identify the size of the market you're attacking."
I'm sorry but that's wrong. These numbers you mention serve no purpose whatsoever. "Online commerce is a x billion market and x% of people aren't happy with current options", that's just marketing speak (and I mean that in a bad way, this time).
I outlined other extensions, but that is the very start of all marketing research. I don't see how you can possibly just launch into a project without having any clue of how much money there is to be made in the area.
The approach above is important because you need to be able to estimate how much revenue you should expect at various levels of growth. I suppose for me it's about whether I just want to have faith that my product is viable because I would use it, or I want to have a ballpark estimate that tells me how much I can realistically expect to get out of the company.
How much can someone make at selling online commerce software? Don't you think that's an important question to have some handle on?
> but that is the very start of all marketing research.
Call it marketing research, but I am just interested in the potential market. I am reasonably sure there are many people who want to sell things and there are many who already are trading online.
For me, the crux is how do I attract people who need this service but aren't aware of it. Unfortunately, I don't know how to go about it. In other thread, it is suggested it's mainly trial and error and I go with talking to actual customers and figuring out why they aren't selling/buying online. Things would be easier if I figure out my niche market and there needs.
I respectfully disagree with your number analysis. My analysis is going to be vague. I have calculated the initial development cost(which is just the cost of living of 2 partners; we are paying our own expenses, no overheads for the product) and the server cost for initial days. I have plans for bootstrapping. I am reasonably sure the number analysis or the focus group stuff never translates to real figures. Shopify is at 6000 which is far, far less than any number analysis will come up with. In short, I know my investment, I have a vague idea how much I am going to charge and how long it will take for me to break even. Other than this, the only research I will be putting on will be in finding a way to reach out to potential customers.
> The approach above is important because you need to be able to estimate how much revenue you should expect at various levels of growth.
I would say that sounds good in theory but never works in practice. Can you point out some evidence(anecdotal) that things worked out as per the estimates? I am talking about the revenue estimation. I think there isn't a way to actually, successfully predict it. You can make an educated guess, but that's that.
> How much can someone make at selling online commerce software?
I honestly think there isn't a correct answer to that question. And I am not selling commerce software, I am offering software as a service over the web.
> You are thinking a TON of steps ahead. You have nothing. Ideas are cheap.
Agreed.
> The most basic market research you need to do is to identify the size of the market you're attacking. Put a real number on that somehow. It may be guesswork, but do some serious digging.
I will try. For now, I don't see much traction in Asian sub-continent in selling or buying things online. I will try to do some research and convert it to real numbers. I have been researching people's horror stories about selling/buying things online. The primary reason generally boils down to late payments from the payment gateways. I am considering acting as a payment gateway to have the clients out of the inconvenience loop.
The other reason is people don't have much faith here in Asian sub-continent in buying goods online. That is changing and I hope to tap into it.
> Based on where your competitors fit in, you may decide that you can't compete on price
The current plan is to compete primarily on price. Of course, that implies that the services are at par with the competitor.
> Then you want to figure out how much your competitors are making: estimate their costs, their profit margins, etc.
I have done some cost analysis based on my server costs and how much I am going to charge. I am hosting on Google App Engine and I am calculating the server costs based on that. We are developing without salary so the dev costs are zero. I am planning to compete on price.
> Maybe they haven't ever heard of Shopify? Or maybe they don't trust Shopify to handle their setup?
Both of the reasons are true for the demographics I have digged into.
> You mentioned you're quitting your job in 2 months to do this full time. Why?
Technically, I already have resigned. But the legal notice period is 2 months.
> Do you have a ton of cash that you can do that? When do you expect to break even? How long can you survive on no salary? What are your expenses?
I am bootstrapping. For 2 months, I would be working nights to build it. After that, I would be looking for some freelance work to sustain me. I have a miniature services profile http://defiance.in and I know a couple of people who can use my services. That's not a priority. The work division would be 70(product)-30(services).
> Don't let me (or anyone else here) discourage you.
Nah, it's good to see a varied response(mostly negative). Keeps me on track.
EDIT Somehow the formatting got screwed. Correcting it.
You are thinking a TON of steps ahead. You have nothing. Ideas are cheap.
> I didn't feel the need to do research to prove that people are interested in selling things online and e-commerce is hard and if you are a merchant
That is NOT what it means to do market research. There are always competitors in 99.9% of startup businesses. And the 0.1% that actually are truly unique don't just magically stake their claim and stay that way forever-- imitators and competitors emerge.
The most basic market research you need to do is to identify the size of the market you're attacking. Put a real number on that somehow. It may be guesswork, but do some serious digging.
Then you want to figure out how much your competitors are making: estimate their costs, their profit margins, etc.
Based on where your competitors fit in, you may decide that you can't compete on price and that changes your whole approach. If you have an idea to open a 24/7 grocery store in a town that has a Wal-Mart, you're probably not going to be able to beat a 2% profit margin coupled with specially negotiated prices. You may however be able to cater to a niche audience like college students by offering additional services, like making hot sandwiches (drunk kids love chicken parms at 3am).
These are the kind of decisions that affect the entire direction of the company.
> If they aren't selling it online already, it's only because the services aren't up to the mark, and that would be a good thing for me.
No, actually there are myriad reasons why someone would not be selling online right now. Maybe they haven't ever heard of Shopify? Or maybe they don't trust Shopify to handle their setup? These are marketing challenges, not necessarily technical ones. Just being a great, determined coder does not guarantee you will be successful.
Also:
You mentioned you're quitting your job in 2 months to do this full time. Why? Do you have a ton of cash that you can do that? When do you expect to break even? How long can you survive on no salary? What are your expenses?
Don't let me (or anyone else here) discourage you. Just have a real plan and put some real effort into the business side of things or make a disclaimer that tells us you're rich and aren't in it for the money. :)