Hello Powerful Sellers,
I receive a variety of questions about doing market research. Questions like, "How does it work?" or "Why do I need to do research?" or "How often should I do research?" I have tried to answer most of these questions in past Auctionographies, but there is one lingering question that I need to address: "How much time should I spend doing research?"
Here´s a guess: how much time you spend doing research is determined by a large, complicated mathematical equation that finds the ratio of time needed to perform accurate market research!
WRONG! There is no set answer to this question, but instead is individually answered by asking another question: "How much money do you want to make?"
How Much Money Do You Want To Make?
I met a woman at eBay Live! in Las Vegas who goes around to thrift stores and garage sales to source her products. She pays about $3 on average for each product and sells them for about $35 on average. This is a huge profit margin, one we wish we all had. But I asked her if she would like to make an extra $10 to $20 per sale by using HammerTap. She said, "No, I don´t have the time. I´m making all the money I want."
If you are like this woman and are satisfied with making the average sales amount for your products, then you don´t need to spend any time doing research. If you´re comfortable with your current profits, then why do research? But, who doesn´t want to increase their sales on eBay?
The point is, the amount of time you spend doing research is directly related to the increase in your total sales volume and revenue. The more you do research, the more money you can make. Of course, though, we want to create a healthy balance between new research and our already demanding eBay schedule.
Mixing Research into Your Business Schedule
After you know how much money you want to make, the best way to determine how much time you need to spend doing research is to determine how much time you can budget towards research. If you say you don´t have time, sit down and carefully plan out the business activities that you are already engaged in. Budget the time you allot for your business carefully, then start looking for time—even a few minutes—that you can spend doing your research.
Sometimes it may even be helpful to, say, set aside the first Thursday of every month to doing research for the month. Or simply conduct research when you are getting ready to list a new product. Remember though, the more time you spend doing research, the more you will understand the market, and in the end, the more money you will make. If you are serious about making the highest profit for each product, I suggest setting aside at least one hour per week doing research. (Of course this depends on how many sales you make a week and how many different products you sell.)
Essentially, depending upon how much time you can budget toward research, you can perform either quick-shot research or executive research.
Quick-shot research is for those of you who have little time to do extensive research, and the Five-Minute Research Recipe is perfect for this. This type of research is also perfect for consignment sellers, or those of you who sell a large variety of single-item products. You don´t want to spend 30 minutes doing research if you have only one widget to sell. You want to just get a quick glance to see your chances of selling and how much it will sell for. All of this information can be found with just a quick glance at the Findings window. See the screenshot below.
In less than 30 seconds you can find out that you have 55.8% chance of selling with an average sales price of $9.55.
Now, if you have just a minute longer to do some research, you may want to find a few features that will help optimize your listing. In other words, things that will help you make more money.
Within just five minutes you have the research that can increase your Average Sales Price and your Listing Success Rate. In the example above, ending your auction on Wednesday increases you success rate to 65% and your sales price to $11.09. (Now that wasn't all that painful was it!)
What is executive research, you ask? Executive research is more in-depth research used to make business decisions. As the executive of your business on eBay, you can make better business decisions based upon this type of research. (Unfortunately, unlike an executive of a large company, you need to conduct your own research. You may want to think about hiring an intern, like that one on "Seinfeld," and they can do your research and get your coffee too!)
Executive research is best for those who have a large inventory of the same product. If you are trying to sell 1,000 widgets, you will want to know how you can sell more of them and make the most money on each sale at the same time. This is when you need to set aside more time to do research.
If you take the time, you will find that spending just 30 to 60 minutes doing research pays off. If you could make $5 more per item after doing your research, and you sell 100 items, you just made $500 for that one hour of research.
Now you can ask yourself as an executive, "Can I afford to spend one hour per week doing research?" The answer to that of course is that you can´t afford not to spend an hour doing research! (A double negative I know, but I´m trying to illustrate a point here.)
Tips for Budgeting Research into Your Business
Here are just a few tips as you begin to determine the amount of time you want to spend doing research:
- Write down all the time-demanding activities of your business, and see where an hour or so of research can fit into that schedule.
- Determine whether or not you can benefit solely from doing quick-shot research or if you need to take the extra time to perform executive research.
- Once you start fitting research into your schedule, monitor your change in profit. Calculate that into a dollar per hour amount for each hour you spend doing research.
- Once you perform executive research, save your report. Go back a couple weeks later—all you have to change is the dates of research. Keeping these executive reports up-to-date will cut back on the amount of time spent doing research and will help you stay ahead of an ever-changing eBay market.
- Always research a new product line before you begin listing.
- Always research your product during seasonal and holiday trends to watch for changes in the market.
- If you list a single item on a regular basis, frequently check to make sure that the demand for the product is still as high, and that the competition hasn´t dramatically increased. (When demand begins to decrease and competition increases, you´re getting close to a dramatic change in the market.)
Remember to just start slow, with just a few minutes of research at a time. Once you see how it affects your profits, you will be able to spend more time using research to find out how to make each sale more profitable.
If you have other questions like this that you want answered, please feel free to send them my way.
Hope you have a very successful week!!