3 Insights to Identify a Multi-Billion Market Opportunity Even if you aren't a member of the Dollar Shave Club, you know what it is.
By Nathan Resnick •
Opinions expressed by Entrepreneur contributors are their own.
Everybody's been raving about Dollar Shave Club's $1 billion July sell to CPG behemoth Unilever. And for good reason. It's a great market case-study. Scrappy ecommerce firm goes after a large traditional market with high margins, shaving razors and exits with a smash.
Dollar Shave Club's roaring success begs the question -- how do you evaluate established markets in unconventional ways to uncover big opportunities? Big shaving companies were rich and happy. Dollar Shave Club attacked the market in a novel way and became a startup superstar.
Related: 4 Tips for Success From a Multi-Millionaire Serial Entrepreneur
The homeowner market is another one that may be ripe for a similar success. It's no secret that homeowners spend a lot of money on furnishings, appliances and property alterations. The market is dominated by entrenched giants such as Lowe's and The Home Depot. But, digging deeper, there's an unseen opportunity -- new homeowners.
As soon as public records announce a new home sale, homeowners are bombarded with advertisements, thanks to the Super Bowl-sized advertising budgets of the market's dominant firms.
But, just like Dollar Shave Club initially went after the frat dude and then expanded, new homeowners represent a compelling target for home-service vendors looking to wedge into the market. The first company to cost-effectively and scalably reach new homeowners before their info becomes public record unlocks a billion dollar opportunity.
1. Identifying a market.
The home improvement market is huge -- $400 billion huge, at least. It's why Google and Amazon have fixed their rapacious eyes on the market.
Narrowing the market focus on new homeowners is a smart play. Focusing on a high-value segment of a market is one of the proven strategies for a startup win. Dollar Shave Club targeted millennials, GenX males and then everyone else. Start small, then you can boil the ocean.
One of the key identifiers of a promising new market is size. New homeowners provide that in spades. Why? Because there are approximately 5 million new U.S. homeowners each year, and they spend a lot of money during their 11.8 year course of homeownership. The first companies to discover and delight the customer often wins a lifetime of consumer spending.
Related: How Small Business Can Beat the Global Megacorporations Today
What's more, new homeowners spend approximately $60 billion on home-related expenses, that's more than double what existing homeowners spend, according to the National Association of Home Builders research.
The challenge is reaching new homeowners before the well-funded home services companies swoop in after their information becomes public record. Currently, there's no cost-effective way to reach them. Or is there?
2. The opportunity.
Reach new homeowners upstream of their purchase being broadcast to the masses, and you potentially have a big win. Real estate agents offer the perfect glue between homebuyers and vendors. The vast majority of buyers use an agent for their home purchase. Buyers trust them for recommending proven, quality vendors -- such as plumbers, home renovators and landscapers. It makes them look good and facilitates better service.
Agents, of course, know their clients are buying a home before pretty much everyone. While some may have a draft vendor list in a Google Doc, often it's not polished or well-vetted.
If a firm teamed up with real estate brokers and agents and provided them lists of vetted local vendors, both agents and vendors would benefit. Those vendors would have first crack at clients at the top of the home-owning dollar cascade. They then would have a vehicle to cost-effectively and scalably reach their target clients.
Uber provides one example. The ride-sharing service initially partnered with limo services. After gaining trust and market experience, it went straight to consumers and steamrolled professional couriers.
3. Build an effective go-to-market strategy.
A brute force go-to-market strategy is a quick way to break the bank on acquiring customers. Firms will go bankrupt spending their marketing budgets on Google Adwords and Facebook ads in a blink of an eye without a carefully crafted strategy.
Related: Plan How to Take Your Product to Market, Not Just to Protential Investors
A sophisticated path into a new market is best. And there's no better, cost-effective way to do this than with smart partnerships that help build trusted relationships. That's what real estate professionals represent for the promising new-homeowner market.
Agents and vendors will love the service, and so will consumers. Everyone wins, and the company that unlocks a seamless connection between the three sees immense success, ready to follow in the billion-dollar path blazed by next-era digital companies like Uber and Dollar Shave Club.
