Back to business! Part II of the Market Analysis in the Business Plan is all about the competition.
- How does my company’s product and service compare to the competition in price, service and location?
- What is the market share and potential of each competitor?
- What is their reputation and image in the market?
The first thing I did to tackle this section was to surf the net for a few days. Ok, I had fun with this one! Since my jewelry will be sold online, I looked at other jewelry ecommerce sites. The more I looked at other sites, the easier it was for me to define what I liked, what made sense for my site – and what I definitely did not want to include on my site. I selected four jewelry web sites to include in my Market Analysis and discussed the pros and cons of each.
Based on my research, my site will include:
- An artistic layout with no distractions – so important when selling art!
- Clear photos with enlarged views (no pop-ups, many browsers are set to block them)
- Concise but accurate descriptions
- Group jewelry by style and also by function
- Easy to find return/warranty/shipping information
- Easy to make a purchase
- Clearly state that customer service is the cornerstone of my business
- Fair pricing
- Sign up option for newsletter/email updates
- Web statistics to see where people click on my site
- Market my capability for commission/custom work
My model will of course be subject to refinement as I understand what works and what doesn’t. The learning never stops!
Market share of the competition was difficult to determine. I’m pretty sure that even if I asked nicely, the companies I researched would still not have shared their annual sales numbers with me. As I thought about it, I realized that market share and potential market share do not rigorously apply to my industry. Art is so subjective – jewelry, especially handcrafted jewelry, may appeal to one person, but not to another. Who knows why? It is such a personal aesthetic that it can not be assumed that $100 spent on one jewelry site will translate into possible market share for another site.
Reputation and image were also difficult to measure in an objective way for my targeted competition sites. However, I do understand the inherent value of handcrafted jewelry. I know the labor that goes into making a wire wrap, or in soldering a bezel. I understand the value of fine stones and materials. I was able to roughly judge the cost of a piece of jewelry and compare that cost to the selling price. Many sites were underpricing their jewelry – these were mostly the sites that were not very attractive, the ones that did not make a shopper want to stay and browse. I imagine they were so desperate to sell that they did not mind making a very slim profit. I must remember to check these sites again next year, to see if they are still in business. Pricing must always be a good value for the customer, but also fair to the artist so that the company may thrive and grow.
There were other sites that priced fairly, including enough for materials and overhead, with sufficient profit to allow for business growth. These sites looked more professional, with testimonials and publicity to enhance their marketing efforts. These higher end jewelry sites really showcased the art of a handcrafted piece and are where I would like to place my company. I would rather take my time on an intricate piece with extravagant materials that will sell for $100 and ultimately be treasured by a customer, than churn out 20 minor items at $5 each.
I am not making generic widgets – I am creating art. I will have to come up with a Marketing Plan to expose as many people as I can to my work. Then the law of percentages will kick in – some will like my work and some won’t. The more people who see my work, the more who will like what they see.
Which will lead us to the Market Analysis, Part III. Stay tuned!