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How to estimate future online sales and cost of customer acquisition?

I have a new product coming to market this year called Sabertron at http://sabertron.com. I am putting together my business plan for the next few years. I have no idea how many of these things I can sell on my own website, on Amazon, and with other online partners. How do I figure out this number? Do I look at the market size and make assumptions, or look for data on similar products and see what happens if I have similar sales? How would I find that information?
How can I predict the cost it will take to acquire a customer? If I just keep spending, will I just keep acquiring more customers?
I am selling a set of these toys/games at $99 for a basic pair, up to $199 per pair for a premium set.

4 Replies

Aditya M
1
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Aditya M Entrepreneur
Full Stack Engineer
Hey David, I'd suggest reading up on some of the postings by this SEO blogger called Viperchill (http://www.viperchill.com/). He writes serious, fully researched, compelling and useful posts on SEO, estimating market sizes, and more. Also, check out Mixergy (http://mixergy.com) to see if you can find any nuggets of knowledge there on this topic.

I really like the product and demo video, what a fun thing. Good luck!
Eoin Matthews
2
0
Eoin Matthews Entrepreneur
Cofounder at Point
Hi David,
The volume will really depend on the channels you use to sell it (and how it is being sold on those channels). There are a few different approaches I'd recommend:
a) take preorders (most ecommerce solutions have preorder solutions built in and, in true valley style, there's a startup that only does that --https://www.trycelery.com/ -- if you have woocommerce or shopify, don't know that celery offers much extra in its preorder solution but check it out)
b) kickstarter volume can probably be extrapolated into broader market potential -- ask some folks who've gone that route to see if there's a correlation/formula you can use to gauge market volume from kickstart demand
c) approach the toy buyers at a couple of retailers you'd want to work with (esp. TRU and AMZN). see if they'll take a call although you may not be far enough on. they have their finger on the pulse of the market.
d) to complement c, approach some toy distributors or 3pl's that focus on toys -- the woot team was a toy/electronics distributor before woot was born, i think etoys still does it and there are other toy distis out there who may give you some market guidance.
e) look at comparable products on the channels you want to sell on. (NOTE -- there's a significant difference between amzn selling your product and being a 3rd party seller on amazon so caution with this.) from the number of reviews and popularity of those products, you can probably gauge a decent sense of the market (there's usually some current research out there pegging the number of reviews on amzn to order volume),

i can't underscore enough how you build your channel will impact margin and volume. selling wholesale will give you volume and some early market validation but radically alters the margins. also, you'll need to manage your reseller channel or have someone do it for you. selling direct means you now have to figure out marketing+fulfillment+cs as well as everything else but your product margins are better (net margins might blow if marketing and fulfillment are more expensive than you anticipated). doing both is possible but you'll probably end up not being particularly strong at either.
Sara Frankel
0
0
Sara Frankel Entrepreneur • Advisor
Member at Astia Angels
Hi David,

If you have a good idea how you will market and promote your product (very cool, by the way), you can build a pretty robust user acquisition model to get rolled-up sales estimates from different sources. It's not written in stone by any means, but it can be very helpful. If you'd like some help figuring out what yours should look like, feel free to get in touch.

Best of luck!
Sara Frankel

Rob Gropper
0
0
Rob Gropper Entrepreneur
Director at PetHero, SPC - Member at Eastside Incubator - Principal at Tuxedo Technologies Group
David;

Eoin is right on. In the toy/entertainment market your forecast depends heavily on how you plan to sell and distribute your product. if you work through a distribution channel the distributor(s) will focus on marketing and sales and your job then is innovation and production. Any way you slice it it is hard to predict future uptake. Also, in my limited experience in the toy market, toys are ephemeral - if you are successful then count on very rapid growth and sourcing problems followed 1 or 2 christmases later by a very sharp drop into the abyss unless you can continually reinvent. Either way it might be a good idea to try to find a partner/advisor with experience in the current toy market to help navigate.
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