I recently made a critical mistake in my progression towards business success: I forgot about market research. I had decided that I was going to make some money with an online store. I thought to myself, where should I start? What can I sell? After a bit of brainstorming, I picked a few things that I thought might be good to sell online. I then proceeded to start looking for suppliers. This may seem like a reasonable course of action, but it is not. It is missing a key component of any business plan.

A basic assumption for the purpose of this article is that there is competition involved with any business. Even if you make your own, unique product, similar products will compete against yours. However, the existence of competition is not necessarily bad. The fact that online retailers are selling items similar or identical to your own means that there is demand for your product. Competition is only bad for you, as a retailer, when the market is becoming saturated (or is already at that point).

Check the electronics market for a good example of this principle. Electronics go for rock-bottom prices online because there are so many different stores that sell them. The difference in prices between stores usually comes down to the cost of shipping. The competition in this area is extreme. If retailers cut their prices any lower they won