Monday, January 29, 2007

Why a niche market?

If the UI is awesome, why choose a niche market when you can go for the whole cake? Because niche markets can grow into large markets... And why would you want to start out in direct competition with someone? Our whole premise is that wanted ads can be applied to a market in order to create a more efficient marketplace.

If we break down the current "wanted-ads" niche, there are roughly 1-2 million listings per year. That may be from individual people, or dedicated users - it's simply hard to gauge with the lack of dedicated services. I think the market potential is much larger than that.

For starters, I think the existing wanted-ad-solutions are rather obscure and under-explored, so the numbers could already be on the low end. The people that are most likely to post a wanted ad are those who 1) know what they want and don't feel like searching, 2) are seeking items that are hard to find, and 3) want sellers to compete on price and cater to the them.

Doing a quick survey, half of the people I surveyed fit any combination of those three stereotypes above. Even if the numbers aren't that good, you're still probably talking about a solid 5% of the buyers that use eBay. That doesn't really translate into revenue amounts, but I'm sure it would be at or below eBay's revenue-per-listing, since we'll likely be going with a CPA type of model.

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