The first step to ecommerce business success is finding a profitable niche.
Look around you. Every successful ecommerce business owner started in a niche. You may want to blow in and make it all big like Amazon but guess what. Even Amazon started in a niche.
By selling niche products and choosing a targeted audience, you have a good chance of succeeding because you know whom to target rather than the “general audience.”
This article gives a step by step guide on how to find a niche market. Also, I asked some experts what the biggest mistakes are that people make when choosing a niche.
1. Research Product Niches To Identify The Best Ecommerce Niches
Before choosing a niche and the product or service to sell, you need to do your research upfront. You don’t want to spend money on a niche that falls away just after you launch.
Research here doesn’t mean you see the most trending product and decide to sell it only because it trends.
How do you dig deep?
Step 1: Identify Niches That You Can Add Value
Pick a niche that represents your interests and passions. If you’re selling in an industry that you don’t care about, you’ll lose interest along the way and quit way too early. Remember that success is not overnight, you need to add value consistently.
If you want to have a good chance at selling, identify niches that you are passionate about and can add value.
For every niche you can think of, there are online stores already selling its products. You will never beat down the big boys on the web with a general selection alone. Fire-up your chances by adding extras that your competition don’t offer.
You can get ideas from:
- One on one conversations with people
- Quora, Reddit, and other forums
- Amazon products and reviews
Also, think about complementary products or a micro niche. Say bike accessories or boat accessories for example.
Step 2: Evaluate Those Ideas
One big mistake that entrepreneurs make when choosing a niche is not evaluating that niche.
It helps you identify the strengths, weaknesses, opportunities, and threats of your niche selection. Without it, your chances of selling are random.
Evaluation includes looking at:
- Your competition, low or high
- Marketing potential
- Understanding your target audience
- If it’s a steady trend, fad, or growing one
Step 3: Validate Your Ideas With Test Selling
After you’ve evaluated your niche and have a much better understanding of all the factors surrounding your choice, you should then validate your idea.
Not validating your niche before you go into business is a big mistake. It may spell business failure from the start.
To validate, create a real-world online store setting and attempt to sell your product to your target audience. You can use a landing page or mockup store and direct traffic at it.
Since you are just starting, the practical ways to get traffic is paid ads and referral.
As you test those niches, stay true to them.
I think it’s chaotic when a new online business starts with a hodgepodge of products that don’t relate at all. Having one niche category shows grit and proves your expertise.
Be sure to stick to your niche and grow by further establishing yourself as the expert. As you test, you can add in a blog or social media page to further prove your authority.
If you can’t make enough sales during the validation step, it’s a good sign that you’ll have a difficult time entering that niche.
2: Do Keyword Research To Evaluate Your Chances
Don’t go into a niche you have no idea about ranking in.
Too many people watch someone succeed in a niche and assume that they will also. It’s not that easy. You don’t know the background work they had done.
Check out how hard it is to rank in your chosen niche. Don’t get caught in an over-saturated niche/market.
That will certainly make for an insane battle from the start. You’ll be in a tight corner and competing with already established sites. Those sites will have a better ranking and get better pricing on the same products you are trying to sell.
Although it’s possible to compete favorably with them, It will take you much more sweat, guts, and strength to get to that level. For a beginner, target a niche that is not overpopulated.
To find out if big brands are ranking in your chosen niches and if small brands have a chance:
- Use Ahrefs to find out how many high domain rating websites there are
- Check if you can see low domain rating sites as well
- Take note of the keywords of those top domain rating sites
- Research keyword search volume
Tip 1: Don’t Be Greedy
So many people do keyword research and choose a niche all because there is a search volume in hundreds of thousands. It’s exciting, but it’s a mistake that will cost you sales because there is much competition
Search volume is a good trait for a niche to have but generally, the higher the volume, the more difficult it is to rank in search engines – almost to the point where it can become unachievable. While search volume is undeniably important, for me, competition (or lack of) is the most important factor. – Matt Janaway
Tip 2: Find A Balance Between Search Volume And Competition
Whatever you do, don’t get caught at either end of looking for low competition or high volume keywords.
If there’s a LOT of search volume for your keywords, there’ll be HIGH competition as well. In this case, it’s senseless trying to rank for keywords that you have no chances of ranking for, especially as a new brand. On the other hand, if you choose keywords with virtually no competition, it either means they have no buying intent or no brand has discovered them yet. The latter is highly unlikely.
Keyword volume and competition tend to operate on different axes when evaluation commercial verticals, however, when it comes to e-commerce I would say they’re more so the opposite ends of the same spectrum, so you have to find something in the middle instead of focusing too much on either end and getting caught – Nick Eubanks
If you fall victim to landing on either end – competition or volume -, you’re going to end up burning out your cash and resources either competing against incredibly competitive keywords or ranking for a bunch of keywords that have do not create sales.
To identify keywords with purchase intent, you need to know your target audience and your competition’s SEO strategies. I have used SEMRush to find profitable keywords. You can also use this search market research tool and use a repeatable process to understand the realistic rank potential of your target keywords.
Tip 3: Know Your Niche Products In And Out
If you are going to rank on Google, you need to know what you are selling.
Writing/buying thin copy isn’t fool-proof anymore.
You need copy that has grit. Meaning, you need to enough about your product to create stories and amazing pieces around them. If you know nothing, you’re probably only going to write bland vending machine content.
Google’s trying to make rankings look good so that they will keep being relevant; they will rank websites with lots of actionable information and expertise over vending machines.
You have to take the time to scheme and write content that shows you care and know a lot about the products and customers.
Consistent pushing is key so just having awesome copy may not get your core products, especially if you have heavy competition. Consider a variety of products that you can add to your core products. McDonald’s for example, have their combo meal.
If you have enough variety and can create sub-categories and products that are unique, you’ll have a better shot at immediate traction.
Let’s say you’re selling guitar picks. You might have your standard thick, thin, and specialty picks as collections pages, but so do your competitors. But you have “outside the box” options – you could create “rock star selections” or “guitar pick jewelry” subcategories – Bill Sebald.
3. Think Beyond A Single Product
Planning around only one product or service limits your business. You’ll take more to the bank when you plan around solving customer lifetime value instead of selling one-off.
As you choose other products and upgrades to increase customer lifetime value, don’t put quantity over quality.
One thing startup founders worry about is the price of their products. In a bid to ensure that price is not a hurdle for customers and they still make enough to keep sailing, they bombard their store with a lot of cheap products.
Know this, there will be a cheaper option, so instead, your strategy should be about offering a better quality experience and long-term value.
Solve for every aspect of your buyers’ journey. That is, from before they purchase a product till after the purchase. Start with your sales interactions, add in tripwires, up-sell, cross-sell, and re-sell to retain customers once you’ve acquired them.
Tip 1: Look Above Only Financial Reasons
One of the hardest things about starting a new store is getting people to care.
People don’t buy products because of a well-written copy; they buy it because it solves a need/want. You need to know what your customers love, the language they resonate with, and the platforms they visit.
If you pick a niche only for financial reasons, it won’t keep you going because you don’t know much about your industry and audience. However, if you’ve picked a niche that you love or know a lot about, you know the TA you’re going after, what they want and how to sell them on it.
Tip 2: Don’t go too big
When picking a niche, you should know your broad industry category, the sub-industry, and your target audience. If you choose an audience that’s too narrow, you’ll have a slim chance of turning your products into a six-figure business. For example, it’s too narrow if only 50-year-old female professors of Art that are living in Reno experience the problem you want to solve.
If you choose an audience that’s too broad, you’re not targeting anyone.
To target your customers right, pick a single pain or an expensive problem that many people have, and build your store around solving that pain. With every product you add, contribute to solving the pain of your customers. From that, you can get your unique offering.
The unique offering should be easy to explain. Some people fill their talk with so much fluff that after ten minutes, you don’t get what their store is about. Explaining your unique offering shouldn’t take that long.
Use the fool-proof positioning statement formula: “My store helps TARGET MARKET solve PAIN. Unlike my competitors, UNIQUE COMPETITIVE ADVANTAGE.”- Kurt Elster
Until your positioning is laser focused, you’ll struggle to market yourself and attract an audience. Do this before anything else
4. Try To Create An Advantage Over Amazon
If people are looking for a product online, they will check Amazon and other marketplaces first. Create a competitive advantage that sellers on Amazon do not have.
Tip 1: Think Of And Craft Your Advantage
You better realize that you need to be different from every other business and offer value enough that customers will move to pay for it. Brilliant customer service and popular niche products are not enough.
That is something some new ecommerce entrepreneurs don’t think through, and they get frustrated as their business fail to gain traction.
If you have a business with no competitive advantage and can’t think of any reason for someone to buy from you, then you are not ready to start a business.
Also, find out if your products are on Amazon. In many cases, people or Amazon itself already sells them. The reason why anyone would leave an already established Amazon with tons of product reviews for you is your competitive advantage. Have a pricing edge, or offer more in quality and use that is nowhere else. Whatever the reason is, you should have one, or else Amazon will steal your thunder.
Note that even with a competitive advantage, you may not sell immediately. Approach marketing from a brilliant angle. Look at what Dollar Shave Club did with that video that made them stick in our minds. Be consistent with your voice and marketing on a long-term and adjust to the market as you go.
Way too many people don’t stick to their advantage and idea long enough or adapt to market changes. As a result, they end up stuck and frustrated. If you see that a particular item is getting a ton of sales, or people are interested in something else, don’t be afraid to adapt.
Tip 2: Continue To Invest In Your Brand
The best ecommerce niches do not have more competitors than demand. If you find a niche market not already infiltrated by Amazon and other mighty brands, it won’t be long until tough competitors spring up. Anything that’s successful will be copied.
Invest heavily in every aspect of your brand; you need to keep customers loyal to you and be ahead of your competitors. You can’t bank on doing the same thing in the same way forever.
Scheme and strategize at every moment. It may be expanding your product offering or adding subscription boxes to an industry where no one offers it. You can also try out channels your customers visit that most of your competitors haven’t tried yet.
5. Find Out The Margins To Evaluate The Profitability Of The Niche
The end goal for starting an online business is profit-making. As such, before committing to a niche, you need to know if you will make enough turnover from your niche products.
Choose niche products that have enough margins. You can get a rough calculation from suppliers of your niche products and your competition. If similar products are sold at $20, and suppliers sell at $10 per unit, you can say your potential margins can fall between $5 to $15.
It’s tough though because you can’t find out the exact cost of manufacturing your products from the suppliers and look credible without setting up a website.
You might have to set up several basic websites for the niches you test and contact suppliers before getting attached to any idea.
Don’t get discouraged if your first few ideas don’t have good enough margins. Keep pressing on.
6. Test With Ads To Be A 100% Sure It Is Profitable For You
Tip 1: Set up ad campaigns
Test with ads to promote what you are selling and figure out if people are willing to buy from you.
Use ads to figure out if there’s enough demand and commercial intent for the niche you’re testing. – @larrykimCLICK TO TWEET
You can send test traffic to landing pages through social media ads to collect email addresses and see what the interest level is. Depending on the number of impressions, clicks, and conversions, you can figure out if there is enough demand and commercial intent for the niche ideas you’re testing.
Tip 2: Test the readiness of the market
Customer acquisition is one of the hardest parts of running a business. You could spend hundreds of dollars on testing with ads but get no results and think the niche ideas have no demand, but your problem could be wrong marketing strategies.
You don’t have to spend so much money on testing your ideas. Instead, spend time thinking through your offering and strategize towards building a loyal customer base.
Also, use marketplaces or sites like Kickstarter to get a feel for market readiness.
Build your community first, launch with them, and you’ll already have a loyal base, and a tested, tried and true product. That’s the way to success – Tracey Wallace
7. Plan Towards Getting Customers Not Playing At Business
Fancy business cards, SEO, all important things, but prioritize every step right. Some people think that showing to others that they now have a business is more important than choosing the right niche and crafting a business plan that gets customers and kickstarts a profitable business.
Acquiring customers is essential. To get them, you need to know the platforms they visit, their pain points, how you come in, and how much they are willing to pay for a solution.
These days, most people are on at least Facebook, Twitter, LinkedIn, Instagram, and Pinterest. That doesn’t necessarily mean you need to be on all. Your content type, industry, and product also come in place here. If you sell athleisure, LinkedIn may not help you. If you send short, actionable content to the service industry, you shouldn’t ignore Twitter.
8. Choose Trending Niches Not Trending Products
When deciding products to sell online, choose trending niches, not just trending products because the use of a product might fade away or be replaced with another product at a certain point. That isn’t the same with a niche. For a niche to disappear, it means one whole industry is fading out which for trending niches would take years if ever to get to.
You can use Google trends to find out which of your niche ideas have a steady and growing trend. Don’t go for a fad or spike in interest.
In addition to the points above, your chosen niche should have good growth ticks in:
- Market data or forecast
- Customer interest and growth rate
- Search volume
Some of the trending ecommerce niches to build your online business with are:
- Baby Care Products
- Organic and natural beauty
- Men’s grooming products
- Subscription boxes
- Pet supplies
1. Baby Care Products
The baby market is booming as millions of babies are born every day. There will always be parents looking for products like diapers, cribs, clothes, shoes, wipes, body care products, feeding accessories and so on.
From an expected US$73.86 billion this year to a forecast of US$85.51 billion in 2021. Although that’s a CAGR of 5% year on year, it’s a steady trend for this growing niche.
There’s one easy way to differentiate here – innovation. Although there are about 6000 businesses selling baby care products online, the manufacturers are few. The baby niche doesn’t see innovation often. Think of things you can improve. You can capitalize on the biodegradable baby products and make them even better.
This is one of my favorite ecommerce niches. I love to lounge in my gym shorts, and some people go out with it. This sizzling trend isn’t showing signs of slowing down; even Amazon and Target have their private-label lines.
- Athleisure sales are strong and growing impressively. Athleisure brought only $46 billion in 2016. By 2020, it will reach $350 billion in sales
- Fans are loyal and very passionate: You are working with lifestyle apparel here, and you already have a passionate audience. It’s turning into a cult.
- A lot of celebrity endorsement: It’s not like people don’t relax in yoga pants or baseball shorts in the past, but celebrities are increasingly turning this into a trendy lifestyle.
- Social media influencers and bloggers: Athleisure is a niche that has one of the most social media influencers. New ones come in almost every month.
- Margins look good: You can get up to 20% or more from Yoga pants. Products in this category usually sell around 4K per month on average. The shoe section has even more. Fans are willing to pay more, so you can define your price when you offer unique.
3. Organic and Natural Beauty
The organic and natural beauty market is set to grow 8 – 10% annually to $22 billion by 2024.
If you have been paying attention to social media and some online news outlets, you’ll notice the growing dislike for inorganic beauty care products. People are shifting towards healthier alternatives. One stable micro niche here is natural face masks.
The trend shows steady growth. This product is not new, but the demand is growing. It is one of those micro niches where you can also get more products defined by what you put in the mask, coffee for example.
Some other products to look into are:
- Coconut oil
- Bamboo toothbrushes
- Charcoal beauty products
- Natural facial powder
4. Men’s Grooming Products
The men’s beauty niche is upswing right now. We are looking at a CAGR of 5.2% year on year to reach $60.7 billion by 2020. One of the biggest products here is beard oil.
There are multi-million dollar businesses here. There is much competition as well, but you can still make it. Look for a gap that you can leverage to be unique.
Despite the rave for beard oil, that’s not all there is for this niche. You can still add these to your niche site:
- Shaving creams
- Aftershave facial wash
- Men body wipes
5. Subscription Boxes
Nothing screams constant value as much as recurring billing. With subscription boxes, you get that until they cancel.
Popular websites offering subscription services have seen up to 3000% increase in traffic since 2013. Also, the niche grows at a 200% rate annually. People are crazy about subscription boxes, so there are chances that you’d get customers even when one pulls out.
You can specialize in:
- Mom and baby
- Men’s grooming
- Female beauty products
- Prepackaged healthy food
For more good ideas, look out for an audience that will benefit from a continuous discovery, recurring need, way of life (health and fitness for example), or an emotional connection.
6. Pet Supplies
Like baby products, the pet industry is growing steadily. I read a study once that there are more pets than babies in America. Pet owners spend money on handmade items like natural food and treats, supplements, toys, and accessories and these items continue to trend.
The global industry is expected to net $202.6 billion in 2025 with a CAGR of about 5%. The US market is booming, taking the bulk or about 50% of all that.
You have a passionate audience in need, and many upsell and cross-sell opportunities in this niche.
What Is Your Ecommerce Niche?
Let us know in the comments.
If you need some help coming up with a good idea, feel free to download our e-commerce niche report. It’s over 100 pages of in-depth niche research. Let me know if you decide to start an ecommerce store.