Analyzing the market

A great way to figure out what is in demand is to have a look at what's trending right now. Google Trends and reading around the web, in general, is a great way of understanding the market in which you wish to enter.

It's no secret we are currently a bit restricted, due to a thing called Coronavirus, thus not only people are forced to choose e-commerce shops, but most of the products they purchase are related to their home from work lifestyle, however, as it seems the pandemic might be coming to an end, it might be a good idea to keep an eye out on other niches as well.

The most trending categories of products we found online are:

• Smartwatches
• Bonsai
• Home office supplies
• Water bottles
• Pet food

And here are their trends for the past year on Google Trends:

However, selling a product in an oversaturated market might prove difficult. When choosing a popular category you put your brand new and yet unknown shop in a difficult position. To compete with others you would have to improve or innovate on what already exists.

Thus for a newcomer, it might be easier to try the waters out with something less trendy or that is only now beginning to catch on. Moreover, if you are not aiming for the global market straight away, look for opportunities that your local competitors may have missed, perhaps those trendy water bottles are nowhere to be found on the local e-shops or you have a strong chance of presenting, marketing, and pricing the product in a better way.

Pricing

Product pricing might be the most crucial element after figuring out what you wish to sell. While shopping online, most people try to look for the best deal possible, thus you need to offer a better deal than your competitors while still trying to make a profit and attract buyers.

There are various pricing strategies like:

• Cost-based pricing
• Competition-based pricing
• Value-based pricing

It's also important to understand consumer psychology when pricing the product, as there are tricks that might be able to aid in selling a product. Some of such examples are:

• Quantity or time constraints - where you emphasize that a deal for a certain product might expire soon or only a few are left in stock.
• Charm pricing - choosing a price of $39.99 vs $40, which is proven to increase sales numbers by numerous studies
• Innumeracy - instead of giving 50% off when buying 2 products, give 2 for the price of 1. Most consumers go for the latter due to being unable to apply basic math principles or choosing not to inconvenience themselves with it. A good real-life example of innumeracy in product advertisement.

The only sure way to know if one strategy or trick works better than the other in your specific scenario is to try it out and adapt depending on the results. In the end, you should not focus on how much you could sell the product for but how much the customer would willing to pay for it. In other words, it's about the value you bring to your customer, as no pricing strategy or psychological trick will be able to justify an absurd price of a product.

What are we going to do

After overviewing the arguments that were listed before, we decided on going for the local market. The decision came to us as we have no plans (at least for now) of attempting to grow a huge business, thus the local Lithuanian market is more than enough for us.

Moreover, we at Baltic Makers saw more opportunities in the local market, as for one, there are fewer competitors here and there are more areas in which we could improve compared to the current ones, like overall shop design & flow, SEO, etc.

Analyzing the trending searches in Lithuania, we can see that the top product categories are similarly popular, thus there is no clear winner here. Either way, we have decided to move forward with what seems to us as categories which got a new following during the quarantine and we will try to keep an eye out on specific products which could be used as gifts, as this search term was almost always the most popular throughout the years.

Plants

It should be no surprise that this search term was among the most popular ones, considering that many are looking for a way to bring more life to their homes when they are spending so much time in them.

Various products fall under this category such as plants themselves, pots, soil, fertilizers, and so on and on, which are already being sold by most big retailers here. But only few offer social media worthy little house plants, moreover, in foreign markets "grow yourself" plant kits are becoming popular which seems like a great product for us as we couldn't find them on Lithuanian e-shops.

Another scarcity which we noticed in our market are "Smart Garden" products, like sensors that display your soil's moisture levels directly on your smartphone or other techy gadgets that may assist in growing all the plants that you bought during the quarantine.

Vitamins & Supplements

As of writing this article vitamins were the most trending search term of the all and one which has seen an increase throughout the years. Combined with supplements such an e-shop would attract a lot of traffic, and of course we are not the first ones to see this. But looking trough possible future competitors we can see that although it might be difficult to compete with them regarding supply and product offering, we could possibly outperform them in other fields such as user experience and SEO.

Moreover, in order to sell supplements in Lithuania there are extra legal questions that have to be settled with the State Food and Veterinary Service.

Sports

Sports is a niche that we came to after analyzing the rest of the trends, as its clear that if vitamins, supplements and sports wear is trending that people are most likely working out in some ways. There are various products which could be sold in this category but regarding our possibilities we have settled at equipment which could be used to work out at home as it might take some time until people will be able to go back to gyms.

This market might be the most difficult for us to enter as there is a lot of competition and our ability of storing and supplying various equipment is quite limited, however, at the same time there is a possibility to change the product offering to other sports related goods or even expand it and offer supplements if such a need ever arises.

What's Next?

In the coming segment of the series, we will choose a specific niche and its products to sell depending on the available supply that we can find, decide if we are drop shipping it and whether we will work with local suppliers or no. All of this will have a big impact on how we will be able to price the products and thus determine our competitiveness in the market.