Analyzing competition and market demand for ecommerce store

[eniven]

Hi!

My wife has an idea for an ecommerce store. It seems to us that she's defined a pretty good niche. The niche seems to be emerging and trendy, but not a fad.

We've been searching for direct competitors, and there are a bunch. Using compete.com/alexa, we've found that most of these competitors don't do much traffic, with a few notable exceptions that appear to do quite well.

However, despite this: we're not sure how to properly assess the market demand. I've looked at the google keyword tool and it does seem like there is demand for the niche. Are there any other good ways of determining market demand for an ecommerce store?

But, the main thing we're worried about is: What if there is too much competition? And how should we assess the level of competition? Like, I said, we've done a bunch of googling and looked at alexa/compete.com profiles of these websites, but we're still not sure.

Any tips on analyzing market demand vs. market competition for an ecommerce store?

[incrediBILL]

The only real way to easily sample the "demand" would be testing a PPC campaign and using an affiliate program as your landing page would give a clue if people are clicking through to convert the sale.

There's a few other clues for anything that's truly in demand you'll find community discussions, review sites and the more reviews, the more people are actually engaged and buying.

The bigger the niche, the more sites you'll find.

Look in Amazon to see if anyone is selling the products there and see how high it ranks on Amazon's Rank scale gives you some clue if they sell any.

Does your ecommerce store require you to hold inventory or are you drop shipping/reselling on demand?

This makes a huge difference because if there's no inventory involved, just throw a site online and see what happens.

Alternatively, if any of the competition have affiliate programs you could start as an affiliate site with no risk whatsoever and still earn money which is safer than stocking expensive inventory just to test the waters.