“How do we make it delightful for women — who aren’t obsessed with beauty — to find [and try out] the best products?”
This is the question that Katia Beauchamp and Hayley Barna tried to answer when they were brainstorming business ideas back in 2010.
Beauchamp and Barna didn’t want to spend so much money trying all sorts of makeup sets and skincare bottles only to find that it doesn’t fit their skin or lifestyle.
So they came up with an idea: Subscription-based, personalized samples.
Instead of buying a full set of beauty products, a customer will fill out a personalized form and they’ll receive a box of product samples that matches their preferences. That way, customers can try various products for a subscription fee of only $10.
That business is called Birchbox — one of the first companies to start a subscription-based service in the beauty product industry. At the time, subscribers paid a $10 subscription fee and got a box of 4 to 5 samples of beauty products.
True market gaps can sustain a business for 10+ years
The thing about finding market gaps is that true gaps can sustain a business for a long time.
Data from Fundera shows that about 70% of small businesses fail after 10 years. But Birchbox has been thriving for almost 13 years now. That means they cater to a true market gap.
A true market gap isn’t a gimmick. Juicero is a good example of a company that went for a gimmick-ey “market gap”: A $400 juicing machine that squeezes pre-sold packets of diced fruits and vegetables onto a glass. Because it was built by a tech company, the juicer can even connect to the internet.
But Juicero closed down soon enough. And it got a lot of mocking and criticism. As Bloomberg reported:1Source: Bloomberg
“Two investors in Juicero were surprised to learn the startup’s juice packs could be squeezed by hand without using its high-tech machine.”
The Juicero people created a product to fill a market gap that didn’t exist in the first place. Their juice machine is an overengineered, over-expensive solution to a problem that common sense could remedy.
When you’re searching for your market gap, try to avoid gimmicks and ideas that solve problems in overcomplicated ways.
3 ways to find true market gaps
1. Combine two industries/technologies to form something new
Take AI and customer service, for example. Combine them and you get intelligent bots that can execute mundane tasks. So humans don’t have to do it anymore!
This serves companies that can spend less on mundane work. And people can delegate repetitive tasks so they can do more.
Lucrative businesses don’t have to be “original.” You don’t have to invent a new kind of wheel. Instead, try exploring new things by merging different fields and businesses.
You’ll notice that you can create totally new products, services, and experiences by combining different industries that may not seem related to each other.
2. Conduct your own form of market research
Market research can come in all forms: Surveys, focus group discussions, and interviews with potential customers.
The point is to find out the needs, preferences, and pain points of the customers themselves. Try not to just assume things. Make a hypothesis based on what you know. Then test that hypothesis on the actual responses to your target customer’s problems.
Going back to Birchbox, the founders found their niche when their research showed that people were interested in trying new products, but didn’t want to commit to buying full-sized items.
This idea of “trying them first” is the market gap that Birchbox succeeded in filling.
3. Look at the competition and identify improvements
Unless your idea would turn into the next Birchbox or Facebook, there are likely existing businesses that are similar to your business idea.
An existing business shows that there’s real demand out there. So study these businesses. And try to pay close attention to the following:
- What products/services are they offering most? What product/service makes them the most revenue? Why?
- Is there something they don’t offer that customers are actually looking for?
- What “gaps” do you see in their business? Things that they could be doing better but aren’t? You can build a business that can do those things better and offer it as an alternative.
Avoid something you don’t actually care about
When you’re building a sustainable online business, you’re often bombarded with all kinds of ideas from friends, family, mentors, and the internet.
Take their ideas with a grain of salt. And always ask yourself:
“If this business becomes successful, do I see myself working on it for 10 years or more?”
A great example is Classic Football Shirts by Matthew Dale and Doug Bierton. Founded in 2006, Dale and Bierton were trying to avoid a “real job” after college. And being big football fans, they wanted to attend an event wearing vintage football shirts.
That’s how they found that there was no centralized place for people who wanted to buy vintage or hard-to-find football shirts.
Since they wanted to do something they truly enjoyed, they founded their company. Now, it has become the largest collection of classic, rare, and vintage football shirts in the world. They’ve been in business for almost 17 years.
Building a profitable online business takes time. I only started earning significant money from my online business after 3 years of consistent work.
So if you’re building a business purely for the money, you likely won’t last long. You can only hang on to it long enough if you actually enjoy what you’re doing.
Of course, it’s great when you make a lot of money. But the time and effort commitment is only worth it if you like the process. Entrepreneurship isn’t just a job. It’s a lifestyle.