Market analysis is divided into two steps: market evaluation and competitive product analysis.
Market evaluation, that is, analyzing what kind of market is a potential market? In which field should sellers choose products?
Before answering these questions, let’s first introduce three concepts in economics: perfect competition market, oligopoly market, and monopoly market. Perfect competition market, also known as pure competition market or free competition market, refers to a market form in which there are many production and sales companies in an industry, and they all provide similar and standardized products (such as grain, cotton and other agricultural products) to the market in the same way. Neither sellers nor buyers can control the prices of goods or services. In this competitive environment, since both buyers and sellers have no influence on prices and can only be price acceptors, any price increase or price reduction by the company will lead to a sharp drop in demand for the company’s products or unnecessary loss of profits. Therefore, product prices can only be determined by supply and demand.
Oligarchy market refers to a market in which the products of each company are not unique and the number of competitors is limited. Its characteristics are: basically homogeneous products, such as basic chemicals or gasoline; relatively few sellers, such as a few large companies and many small companies that follow the large companies; and clearly inelastic industry demand curves.
A monopoly market refers to a market structure in which there is only one supplier and many demanders in the market. There are three assumptions for a completely monopolistic market: first, there is only one manufacturer in the market that produces and sells goods; second, the goods produced by the manufacturer do not have any close substitutes; and third, it is extremely difficult or impossible for other manufacturers to enter the industry, so the monopoly manufacturer can control and manipulate market prices.
Referring to the above three types of markets, we can judge what kind of market it is on the Amazon platform based on factors such as the number of product reviews, the number of pages on the search page, and the time the product was on the shelf.
For example, search for “Sweater Cardigan” under the “Men’s Fashion” category on the Amazon platform, and the first 3 rows of product screenshots of the search results.
After analysis, it can be found that this market segment has the following characteristics:
●The top search results have a high duplication rate of products (fierce competition, repeated product information, and transparent prices).
●The top search results have fewer product reviews but are evenly distributed (buyers have no obvious preferences, and the star ratings of purchase reviews are evenly distributed).
●The number of search pages is large, with a total of 19 pages (indicating that there are many sellers and many competitors).
It can be seen that the market in this category on the Amazon platform can be classified as a perfectly competitive market.
Similarly, search for “Ruffle hem” under the “Women’s Fashion” category. Sweater”, screenshots of the first 3 rows of products in the search results.
After analysis, it can be found that this market segment has the following characteristics:
● Low duplication rate of products in the top search results (product information is not repeated, and competition is not fierce enough).
● The number of product reviews in the top search results is concentrated on a few products, and other products have no product rankings, that is, no sales. ● Small number of search pages (small number of sellers).
It can be seen that this category market can be classified as a monopoly market on the Amazon platform.