How do I validate the idea that it can be something consumers and vendors want? How can I make this company work?
First of all, the fact that you are talking about market validation is great. I've seen so many startups invest time and money, only to find that no ones wants/needs their product, or that they only want a certain aspect of it (whilst the startup spent money developing a whole bunch of other features), or that they aren't willing to pay the requested price. So you're already one step ahead.
Also, the sooner you validate your product, the better! That said, the version you are validating needs to be representative of the end product, or else the validation isn't reliable.
So, how should you validate it? The best way, is to see whether people are willing to pay for your product/service (in some cases, other actions may be considered a conversion for the validation stage).
This is how you find that out:
1. Create a business model canvas (which is what all startups should start with before creating a business plan),
2. Setup a Wix or Wordpress website (this can be done for free / very low costs) or if your venture is a mobile app, then create what’s called a Clickable Prototype (“CP”) (a visual of the app in which the images change when you click – you can do so using the Apple Keynote tool or Microsoft PowerPoint). On the website, or the download page for the ‘app’ include the price of the product/service, and enable people to order/use it (YES, even if it doesn't really work/exist yet!). I am happy to explain how this can be done whilst still being fair to your potential customers (the people who click the "buy/download” button).
3. Determine your target market/customers.
4. Spend a small amount (say $100 - depending on your budget) validating the idea (promoting the product/service that you listed in the previous stage).
This way, after only spending a very small amount, you will be able to know (if you did it right):
a. Do people like your product/service
b. Do people want/need your product (not the same as 'a').
c. Are people willing to pay for your product? (this being the most important stage)
d. How much are they willing to pay? (you can check this by having 2-3 landing pages with different prices on each).
2 last important points:
a) In order to rule out external factors like an unattractive landing page or advertising campaign, and assuming you have the time, create multiple landing pages / advertising campaigns, with different designs.
b) During the above process, don't forget to check how much it costs you to get each user/customer to click the "buy" button. If for example each click on your promotion/advertisement costs you $2, and only every 10 people who click go on to the "buy" page - that means each sale is costing you $20. Then check what your average profit per sale is, and then you'll know if your service/product is worth pursuing (obviously there are additional factors like return customers, referrals etc, but you will get a good estimated/validation of the idea/business).
I’ve successfully helped over 300 entrepreneurs and I’d be happy to help you. Doing validation correctly can save you a lot of time and money. Before the call, and in order to make the best of your time, please send me more information about your product/service and your target market.
Best of luck!
Marketplaces can be wonderful but they are a challenge as you face Chicken V Egg.... you need supply and you need demand. Typically supply (product/ services) are easier if you keep the 'cost' really low (time, effort, content, set up, charges) as they are all looking for new sources of revenue and customers... the real challenge is CUSTOMERS.
If you could wave a magic wand and be successful at just one of these - I would pick customers... as IF you have customers the vendors will be there..
So focus on the customer - why they need or want or find value in your decor marketplace vs other options. And if you figure that out then next is thinking thru a strategy to make customers aware you even exist (as you now have a great value proposition). In todays world best (especially local) is if you can get a customer or anyone who likes what you are doing to share (socially).. could be something they saw or something fun etc...
Bottom line: figure out if the consumer wants, needs would find enough value in your concept - if you figure that out then the vendors will line up. Then the only last part to look at is the value equation - can you create enough value to consumers and vendors to enable you to BUILD and maintain a successful ($) business (IE: consumers or vendors may love it but enough to pay a price to fund your efforts)
I like to validate business idea with REAL market data now. I found it save a lot of time and uncertainty.
The best way is to use Facebook or Google ads and bring traffic to a landing page related to your Home Decor Marketplace and spend $200-$300 on ads to see the result you get. (Hint: You can target your city only with the ads for even more accuracy)
Do they engage with your ads? Do they visit your website? Do they contact or click on "Add To Cart"?
Getting real data from your target market is the best way to validate the idea you have and see if it can work in your city.
Best of luck.
Xavier
Before you launch your first product:
1. Talk with 10 consumers you think might buy. Confirm your assumptions, gain insight about buying preferences you didn't know before, and document the process. This doesn't need to be a formal survey. This could be conversational interviews.
2. Talk to 10 more consumers to validate the assumptions you gathered from the first 10 people you talked to.
3. Repeat the same process for your expected vendors. Note their key needs and desires. If there's a pattern plan to align your home decor marketplace features to fit those needs.
Most Viable Product
4. Launch a marketplace sample (MVP) to approach the needs and desires of the consumers and vendors. Don't confuse sell with install -- after launch, you may find that the needs play out very differently that when interviewed. Don't sink too much into your MVP. Consider the fees to build on WordPress or Shopify vs. something more templated like Etsy.com. Be financially and mentally/emotionally prepared to pivot your product or features for better alignment in your V1.
5. Pivot towards the most valuable problem/solution that the marketplace has demonstrated. At this point you will have pivoted your products, strategy, and/or model the 4th time. These pivots essentially setup your intangible "barrier to entry" and this type of socratic (hypothesis-driven) method is best practices for your future products.
