Starting a New Business in a Crowded Market
Right now, I'm working on a new business idea for an over-saturated market that has multiple industry leaders sitting on (nearly) untouchable thrones. That's right, I'm building my own premium themes shop, a one-stop site to buy WordPress templates that make running a professional-looking website very easy. If you're not familiar with the premium themes market - specifically WordPress themes - I'll do my best to explain why this overcrowded market is still worth pursuing (at your own risk).
The premium WordPress themes market is a relatively new one, with most of the bigger sites having established themselves over the past 2 years. The growth rate for these sites have been unimaginable, many are among the top 10k sites in the world (according to Alexa) and see hundreds of thousands of unique visitors per month.
- WooThemes - Industry leader, started summer 2008, 250k+ uniques per month
- StudioPress, iThemes - Sites with comparable traffic (minimum of 120k+ uniques per month, according to compete)
- Templatic, WPZoom, etc. - Sites with 60-70k+ unique visitors per month
- OrganicThemes, UpThemes - Sites that are less than 2 months old
If typical e-commerce conversion rates of 1-2% hold true to the premium themes market, the traffic stats alone should be convince you enough that this is legitimate market to pursue. As stated above, WooThemes has openly stated their revenue numbers but I've been able to gather the following stats as well from sites selling on Flippa:
- WooThemes - Alex Rank: 1,802 - Revenue: $2mil/year
- WPNow - Alex Rank: 22,400 - Revenue: $4,000/month
- ThemeWars - Alex Rank: 45,585 - Revenue: $2000/month
- Zidalgo - Alex Rank: 97,101 - Revenue: $2300/month
- ThemeGalaxy - Alex Rank: 217,850 - Revenue: $1000/month
So far I've found at least 20-25 premium theme shops that have decent to great traffic and offer high quality products. It seems like one or two new ones are popping up every month, some of them quickly picking up traffic (i.e. OrganicThemes and UpThemes).
Recipe for Success
For the bigger players, timing was huge - they entered the scene when there were very few competitors and high demand. To have a remote shot at achieving success now, you need to offer either (a) a highly specified theme framework, like Thesis or Headway Themes, or (b) offer several high-quality themes built on a solid theme backend/options panel. To stand a chance in a crowded market, you have to stick out among your many competitors by offering something newer, cooler or better.
You also have to understand what you're after. Your game plan will depend on how big of a market you're targeting and who your real competitors (within the same market) will be. You may just want to earn some passive income, like Khoi Vinh and his Basic Maths theme, or may be after the market leader, in which case you better have something completely game-changing.
Why I've Decided to Start My Own
There are a few reasons I have decided to work on a premium themes shop, namely:
- Client Demand - several of my repeat clients have requested a more streamlined, cheaper solution to getting their website up
- Proven Market - After months of research, I've found that selling premium themes can be very profitable granted certain standards are met
- Passive Income - Selling digital goods online is an incredible opportunity to generate passive income (i.e. make money while you sleep)
- Backlog of Themes - I have several unreleased and unused themes, remnants of past projects
One of my hopes is to refer existing and new web design clients to these highly customizable themes, resulting in less work for me and cheaper developmental costs for them (win-win situation). At anywhere between $50-100 a theme, selling a dozen themes can easily add up - my goal is to generate enough passive income to replace freelancing completely (or at least in part). This also gives me a chance to build up my sales and support skills!
Should You Take the Plunge?
If you're considering entering a market that is crowded, such as the premium WordPress themes market, consider all of the underlying factors, know your competitors (do your research) and try to figure out how you can stand a chance against an army of sellers after the same customers. In a lot of cases, it may not be the wisest decision, as the time it takes to establish yourself will outweigh the value and your time, time that could have been better spent building something else (opportunity cost).
If you do take the plunge and build your "yet another" product, be sure you:
- Make something better than most of the competitors
- Offer more at a competitive price
- Have a strong marketing plan
This post is in response to a HackerNews thread on Khoi Vinh's theme - while it doesn't cover everything I've found so far, it gives you a preliminary look into the WordPress premium themes market from a business standpoint. I'll have another post soon with updates on my own theme project, possibly with screenshots. My goal with it is to be as transparent as possible so stay tuned for more information on that.
As usual, if you have questions fire away!