Question
The product is a product for all e-commerce users. Like a Google for Product Search. Monetisation is through affiliate fees on completed sales.
How do I determine size of market?
Almost everyone suggests that you need to look at how many users might pay for this. This is not the model. The product is free. Like google. (I have figured out initial customer acquisition)
I want to know this, How do I identity SAM and SOM?
My TAM is all B2C ecommerce users. Technically this is also my SAM and SOM.
Assuming affiliate profit is 10% per sale, my TAM will be 10% of 1.5 trillion ( size of b2c ecommerce sales) = 150 billion.
In the best case scenario where I can ensure that every ecommerce user uses my product this also becomes by SAM and SOM. I know I should focus on a small-niche-ideal-beachhead-early adopter market right now but why can't my TAM be my SOM?
And what is the difference between SAM and SOM in my case?
Please recommend any good books or articles to help me figure this out. Most resources focus on traditional businesses and don't cover this.
Answer
TAM, SAM and SOM are nice terms to put on a powerpoint deck but ultimately they're not useful for you to run your company
Your TAM is huge, that's great, but target a segment where you can make a difference and make that your SAM. Amazon started with books and then expanded, if you start with everything but you only have a handful of SKUs per category you'll get nowhere on revenue, have larger costs, and customer experience will be terrible. Uber started with black car (premium) service only before expanding, amazon books only, Tesla with just one model.
So pick a segment to focus on, do a swag of your TAM, SAM etc... and focus on execution of the business rather than the pitch deck
