Discovering Your Marketplace

I want to offer steps you can apply to develop a good understanding of the market opportunity you are pursuing as you build your business plan to launch the venture. This analysis divides into four areas: Founder, Customer, Industry, and Startup Ecosystem. As discussed in previous posts, the first area deals with the founding team’s passion for the customer problem to be solved, along with the current state of requisite experience, expertise, and market access. The second area focuses on the founders’ understanding of the customers’ needs and satisfaction with existing solutions. This area also investigates customer segmentation, size, and sales potential. The third area facilitates the founders’ understanding of current industry trends, competitive solutions, and key players in the marketplace. The final portion focuses on supporting regional infrastructure to support entrepreneurs in venture realization.

These analyses occur throughout your development and post-launch in our venture realization process. Therefore, in early venture development, you should review these areas at two different points:

  1. You want to look at select aspects of all four areas part of your pre-screening activity to decide if the venture idea is the right opportunity for the founding team.
  2. One conducts a deeper dive during the customer discovery and market research phases of the venture process. Founders combine primary customer discovery and secondary market research to deeply understand the relationship between customer needs and satisfaction with current options.
  3. This research provides a better understanding of the marketplace dynamic.

The former knowledge drives product innovation; the latter supports venture strategy.

For this post, I will focus on select elements of industry analysis for new venture strategy and development. Previous posts have addressed information about the founders and customer profiles and approaches to assess the competitive landscape. This article will focus on industry elements. I will address the startup ecosystem in a future post.

Start with the Right Industry Classification

Understanding how to best classify your startup across several elements has always been an integral part of business planning. One of the central tenets of strategic planning is understanding your internal capabilities and the external environment in your plan to operate. The difference is a matter of control. Your external environment is outside an entrepreneur’s control. As in a traditional SWOT analysis, you look for the opportunities and threats emanating from your outside environment. Internally, entrepreneurs need to assess what resources they bring to the venture.

I believe this is still true today. But the way we classify startups, their industrial position, and new venture status have increased over the past few years, making it challenging to determine exactly where the venture fits. As a result, you will find multiple industrial classification systems, various sector and sub-sector categories, business model types, and general startups. Moreover, there is disagreement among experts on which classification systems are still relevant in today’s business environment. For example, some argue that many enterprises cut across multiple industries, and no singular industrial classification defines these complex sectors.

I maintain that there is still relevance in conducting a thorough investigation of the external environment where you plan to launch and compete. However, it helps to start the investigative process efficiently. So as a starting point, let us look at the essential industry-specific information to capture during your venture realization process.

I encourage founders to identify the industry classification and sector they plan to operate and compete as a starting point. As mentioned in a recent post, I have founders look at one of two classification systems, the North America Industrial Classification System (NAICS) and the preceding SIC code system. Therefore, when you look up your classification, you will start with a primary type. 

As an example, consider that you want to start a venture to offer repair services to e-bike owners. You recently purchased one and started using it to commute to work in NYC. While you know how regular bikes operate and how to maintain them, you quickly realize that e-bikes have different maintenance and repair requirements. You start to look for a local repair shop that specializes in e-bikes to no avail. Finally, you hypothesize that there is a gap in the market, and a new opportunity has presented itself.

Preliminary industry analysis will help you understand the e-bike market’s current state and associated repair services. Caveat. This sample analysis is abbreviated to show you special issues to address in your research. You will need to build on these steps to create a robust understanding of the marketplace. 

Step 1. Bicycle Retail & Service Sector Classification

Start with the NAICS industrial category system as a foundation. You quickly realize that this specific service area may cut across a few industrial classifications. Using a google search for the code for e-bike repair and service brings you to the classification: Retail Trade (45) sector, sporting goods, hobby, & musical instrument stores (45111), and finally Sporting Goods Stores (451110). Quite frankly, not that helpful yet. But if you continue to drill down and cross-check with the SIC code system, the preceding national code system, you will narrow down to Sporting Goods and Bicycle Shops (SIC 594100). At this point, you now know that there are approximately 12K U.S. businesses in this classification. If you narrow it down to Bicycle and bicycle parts (59419902), you have narrowed down the potential U.S. establishments to 7.4K. At this point, you have an estimate of the number of U.S. businesses selling bicycles and parts. However, you don’t know how many of these 7.4K also do repairs (and you have no idea if they repair e-bikes).

You may feel like you are making limited progress, but there is another path to explore. Establishments primarily engaged in repairing bicycles are in Services, Industry SIC 7699 classification. Here you drill down to bicycle repair shops (7699090). There is 340 business in the U.S. classified in this category. You must remember that businesses self type, so one assumption is that many of the 7.4K retail bicycle shops offer some level of service. So you can be sure that more than 340 enterprises provide bike repair services. As you move down the sub-code categories, I think the data becomes less reliable. The fact that businesses self-identify the classification leads to these data inconsistencies. The NAICS analysis gives you some top-down numbers, but you must be careful how you interpret the data.

If you search bicycle repair shops in New Jersey using a basic Google search, you find 116 such establishments. Many of these 116 repair shops include many sporting goods stores, so it is difficult to determine how many offer essential repair services. However, if you run a specific search for e-bike repair and maintenance using Google Search and cross-reference with Yelp, you find a list of around 40 e-bike repair businesses in N.J. Now you have a starting database for discovery research and competitive analysis. At this point, I would create a database of these 40 e-bike repair locations and investigate their services in detail. 

One of the first things you want to understand is the current business, including any essential historical data, recent patterns, and information that helps gauge the industry’s future outlook. In our example, you certainly want to validate that the retail e-bike trade is growing instead of declining. For instance, in 2017, 263K e-bikes were sold in North America. According to a Deloitte report, E-bikes sales continued to rise in 2018, with over 400K sold. In addition, the NPD Group reported U.S. e-bike sales in 2018 were up 79% from 2017, estimating a $143 million market. According to Mordor Intelligence, the North American market is projected to grow at a CAGR of 12.51% over the next five years. You also see impressive growth globally. The global e-bike market was valued at USD 23.89 billion in 2020 and is expected to reach USD 47.68 billion by 2026.

As part of this analysis, you will also want to compare the e-bike growth trends with the bicycle industry. This additional information is highly relevant since customers who already purchase and enjoy traditional cycling may be prime candidates for e-bike and associated services. Consumer behavior regarding traditional bicycles (and quite possible stationary exercise bikes) will strongly indicate your available market. When looking at recent comparisons, the latest figures (NPD) show a growth rate for electric bicycles of 240% in the 12 months leading up to July 2021, with non-electric bicycles growing by 15%. Before that, sales of e-bikes grew 145 percent in 2020 compared to 2019, outpacing sales of all bikes, which were up 65 percent. E-bikes are one of the significant growth trends in cycling.

While your competitive analysis will focus on repair services, you must follow and understand what is happening across the manufacturing and retail landscape. You will want to follow the most popular brands and any emerging e-bike manufacturers that are or may sell or distribute in your geographic region.

As part of growth trend analysis, you want to look for any secondary patterns that might influence industry performance. One specific pattern in the bicycle industry is the growth of the direct-to-consumer business, moving bike sales outside of the traditional local bike shop. In general, there is a growing emphasis on direct-to-consumer brands. Bicycles and e-bike D2C brands are following this growth trend. One of the significant trends in this market is the growth of direct-to-consumer brands, most notably Rad Power Bikes and Aventon. These D2C brands are popular and show strong growth in the U.S. market. For an entrepreneur looking to build an e-bike service business, the development of this segment is essential. Most of these companies ship e-bikes that are partially assembled and, even post assembly, need a thorough inspection before road-ready. While the companies claim they are almost ready to go “out of the box,” so far, that does seem to be a valid claim. One of the main reasons people avoid purchasing e-bikes is the concern around the assembly and the inability to do the repairs themselves.

This historical analysis is an integral part of your overall analysis. However, it would be best to be careful, as there is quite some conflicting information. For example, you can not accurately assess the exact time evaluated, the applicable geographic regions, differences in data collection methods, etc. So I advise you to discover a few credible sources and compare the results to make sure you are building a good set of facts to support planning decisions.

Technology Advances | Proprietary Status

Anything you should know about e-bike technologies, anything that might impact the repair business? As a product category, e-bikes are a hotbed of innovation. As a result, many technical enhancements are driving e-bike sales and usage. Here is a couple to consider in your analysis.

One of the core areas of innovation is recent advancements in lithium-ion battery technology. The batteries are becoming more powerful while shrinking in overall size and weight. These battery advancements will allow cyclists to go longer distances on a charge and make the bikes themselves lighter – both vital product attributes. Some experts predict that e-bikes featuring lithium-ion batteries will account for about 60% of all e-bikes sold in 2023. While these advancements will continue to drive sales, e-bike service businesses will need to deal with the recycling of these larger batteries. Recycling these E.V. batteries can be seen as an additional business opportunity. Companies are already working to create a “closed-loop” supply chain for E.V. battery materials. In other words, not only collect the old battery but recover a substantial percentage of the waste materials. 

Anyone who has ever studied the history of bicycles will recognize a familiar pattern where innovation tends to get ahead of itself in design. The first bicycles were designed based on known transportation modes. The first bicycles were perceived as an extension of walking, and you never had two feet off the ground. Ebikes are still mostly modified bicycles, and current designs will need to catch up with many technological advances. As this evolution continues, the extra power and speed will continue to take a toll on e-bike components, thus increasing the need for parts replacement and service.

Generally, I suggest that founders look at current patent activity using either the USPTO or Google Patents search engines. For example, a quick search on electric bicycles yielded over 80K patents filed in 2021. Patents ranged from new child seats to public charging stations. Suppose you fine-tune the search for electric bicycle repair. In that case, you have 4.5K patent filings with many directed toward battery innovations, more robust and lighter frames, and motor hub covers designed for easy maintenance. 

Founders can learn a great deal by reviewing patent activity. Besides knowing what new technological advances may be on the horizon, you see who drives the industry’s innovations. There can be plenty of surprises with these filings as companies not recognized for the product in question are filing several patents in the area, signaling some strategic interest. For example, Yamaha, better known for its motorcycles, led many e-bike leaders, filing 15 patents in 2020. One patent shows their interest in new bike frame configurations that optimize battery placement on the bike for both aesthetics and battery maintenance. 

Supply Chain Issues

As with many industries, we have become aware of how fragile our global supply chains have evolved, exacerbated during the pandemic. The increase in e-bike interest has exploded during the pandemic, even with problems with lithium batteries and other component shortages. Additionally, most bicycle components come from outside the U.S., thus causing further supply shortages and increased shipping costs. As a retailer or service provider, there will be a need to monitor supplier shutdowns, containers in jammed ports, semi-conductor shortages, and skyrocketing shipping expenses. As a repair service business, you will have to carefully plan and manage parts inventory. 

This category can cover much ground, but it is worth checking each central area for potential impact on your initial business model or growth strategy.

In general, there are a couple of trends that impact the continued growth of e-bikes. First, there is a growing trend where consumers and businesses alike are looking to use their cars less to support the environment. For consumers, e-bikes have become an option to replace driving in specific cases, like short shopping trips and commuting. The main reason for this is that e-bikes have much fewer carbon emissions associated with their manufacturing process than much larger electric vehicles. Additionally, the economic costs of maintaining an e-bike are less than electric automobiles. 

This focus on sustainability goes beyond consumer use as companies looking to go green are exploring ways to transport goods and people in more sustainable practices. For example, urban delivery and courier services use e-bikes at an increasing rate. In addition, as commercial usage grows, demand for more repair and maintenance services will increase. 

On the political front and also driven by environmental concerns is the creation of the bill introduced in the House of Representatives to provide refundable tax credits for 30% of the cost of qualified e-bikes. However, the tax credit is limited to $1,500 per taxpayer, less all credits allowed for the two preceding taxable years. A qualified electric bicycle is a two-wheeled vehicle that is, among other things, equipped with an electric motor of fewer than 750 watts that is capable of propelling such a vehicle. This Electric Bicycle Incentive Kickstart for the Environment Act or the E-BIKE Act is an example of how political actions can impact one’s industry, in this case, positively. 

Additionally, like New York, many states are looking at new regulation strategies to support e-bikes by both consumers and businesses. For example, new York has recently legalized e-bikes heavily used by food and other delivery services. If you are in the retail or service e-bike business, you will need to monitor the outcomes of these regulations. A positive scheme will increase e-bike sales for delivery workers, urban commuters, and e-bike ride-sharing companies.

Recognized Domain Experts | Influencers

As you continue to research, you will repeatedly find specific sources quoted by other sources. Frequency citations should provide some evidence of credible information. For example, several well-established media outlets provide cited data from NPD. In addition, Dirk Sorenson is a well-respected industry analyst in The NPD Group’s Sports practice, covering the bicycle, outdoor, and team sports equipment categories. 

Many well-known bloggers, youtube stars, and journalists focused on this industry. It was easy to find a list of top influencers and blog sites as I looked. You need to have a strategy for what you want from a specific influencer, ranging from knowledge to advocacy. My suggestion is to have particular goals in mind for why you may want to follow and engage particular individuals. 

When following important events, experts, and influencers in any industry, I would be remiss if I did not mention “Google Alerts .”This Google free service allows you to create email notifications of specific topics using associated keywords. I am always surprised when I ask students who use it to discover that most have not heard of it. Alerts is a handy research tool that allows you to stay on top of current events through articles posted all over the web and social media. For our e-bike example, I would suggest creating alerts for “e-bike,” selecting major e-bike manufacturers and prioritizing industrial analysis and influencers. Additionally, for e-bike repair, you can add specific competitors that you identify as essential to watch. 

Step 3. Competitive Analysis

Understanding the competitive landscape is a critical element of any industrial analysis. I have addressed the steps to conduct robust research of individual direct and indirect competitors in earlier posts. First, you will want to create a database of all significant direct and indirect competitors. This initial listing is an important step and will serve as the foundation for subsequent competitive analysis. In our example, direct competitors will certainly include bicycles and e-bike retailers with direct repair services on-premise and mobile bike repair enterprises. In addition, the indirect competition includes “Do It Yourself” resources such as youtube channels dedicated to e-bike repair. 

We know from our earlier industrial classification work that approximately 116 potential bicycle retailers provide repair services in New Jersey, 40 of which have customer reviews specifically about repair work. So as a starting point, you will want to create a table that outlines the salient business model elements for each of the 40 service businesses initially identified. In this analysis, as I have suggested before, you are not just focusing on the specific product offerings, in this case, repair services, but all aspects of their business model. For example, where do the repairs take place? There are several options to explore, especially with e-bikes heavier than most traditional bicycles. Does the competitor do all the repairs at their location? Do they offer e-bike pick-up? Do they have mobile repair services where they come to the customer’s location? The detailed analysis of competitors’ business models will help identify potential gaps in the marketplace for you to exploit in new innovative ways. 


This post illustrates a path to learning about specific industry elements of the marketplace you plan to enter with your venture. While there is no shortcut for this type of analysis, these categories should help you organize an efficient search. In a future article, I will walk you through how to assess the local entrepreneurial ecosystem and leverage its available resources.

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