Setting up an online store isn’t really that difficult once you know what products you are gong to sell, where you are going to get them and how you are going to ship them to your customers. The more difficult part is making the world aware of your online store and that you have the products they are looking for.
Before you decide to leap into the world of eCommerce, it is extremely important that you choose the right product niche. You’ll want to sell things that people are definitely buying online, that have a decent profit margin and ones where you have a chance of competing online.
Get this step wrong, and all the eCommerce training in the world isn’t going to help you. You’ll be building a web store upon a faulty foundation.
In this article I will show you how to…
- brainstorm ideas
- analyze your niche ideas
- choose the best product niche for your online store
The “Big 4” Factors – Overview
Choosing a great product niche and website is one of the most (if not the very most) critical step when building an online business. Many have used Investors Club to help find an ecommerce website but if you don’t choose a winning product niche up front, the chances of a smashing success store are significantly smaller!
In this section, I’ll introduce you to the “Big 4 Factors” but we won’t actually brainstorm niches ideas or deeply analyze our ideas until later on. So at this point, just try to get a basic understanding of each of these 4 factors and why they are important.
Factor #1. Poor Selection with Mega Retailers
The most frequent question I get from newbies to niche eCommerce is “how can I compete with Amazon?” and the answer is “you can’t & you shouldn’t try to!” It’s absolutely critical that we avoid direct competition with major online retailers like Amazon. The “Mega-Retailers” of the world have billion dollar annual advertising budgets, and we don’t, so it’s truly vital that we find a product line that’s being generally overlooked by these major retailers. Later in this article, I’ll go into how to determine whether or not the Mega-Retailers are overlooking a product niche, but for now, just know that this will be a major focus in choosing our niche!
Factor #2. High Price Point
With the type of niche eCommerce store that we like to build, you’re not going to be making dozens and dozens of sales every day. (Sorry to burst your bubble, but you’re probably not going to become the next eBay or Amazon or a household name.) You’re not going to be able to rely on a crazy high sales volume to make up for a low amount of profit per order. So, unless you’re in this for the education and experience (instead of the money – doubtful!), you’ll typically want to sell higher-priced products where you’ll likely net a good $50+ per order. Typically, this means selling products that retail for at least $250 (given the fact that most products are going to have around a 20-40% profit margin when everything’s said & done). Keep that in mind as we move into the brainstorming stage below!
Factor #3. Shopper Demand
Having a product niche that’s “under the radar” is ideal, but at the same time it’s critical to ensure that people are actually looking for the items you want to sell. If you’re selling something that’s too absurd and unusual, there won’t be enough demand to drive the traffic needed to make regular and consistent sales. Later on, I’ll show you how to verify that shoppers are searching for your niche products, but for now just be aware that verifying search volume is vital to choosing a winning niche!
Factor #4. Seasonality
Virtually every niche out there is “seasonal” to a certain extent. Most product lines get a “bump” around Christmas and also sell particularly well during a specific time of the year. You’re not necessarily looking for a niche that has perfectly even demand throughout the entire year. You just need to avoid product lines that only sell well for a short period of time each year (3 months or less!), particularly for your first store or two. The most obvious examples of highly seasonal niches are Halloween costumes and Christmas trees (those that coincide with a specific holiday). But, you also want to avoid product lines that have a sharp decline in demand for long stretches of the year. We’ll discuss this more when we analyze our niche ideas, but try to keep this in mind as you brainstorm niche ideas in the next section.
Conclusion
Again, you don’t need to know how to actually analyze niche ideas yet – we will do that after the brainstorming step – but I just wanted to introduce you to the “Big 4 Factors” that make for a winning niche idea and get you familiar with them. It’s important that you start considering these factors and try to wrap your mind around why they are important.
Step #1: Brainstorm Niche Ideas
Before we jump into the how of niche brainstorming, let me make sure you understand exactly what I mean when I say “niche product line”. That phrase is simply referring to a product type that shoppers would buy. It’s a phrase that represents a “line” of products you would see grouped together in a department store. For example, all forms of cages to house birds would be defined as ‘bird cages’ and all forms of homes for dogs would be referred to as ‘dog houses’. So, don’t over-complicate this; a “niche” is simply the words used to describe a grouping of similar products.
Niche ideas can really come from anywhere, but I recommend using Amazon.com to brainstorm. Why? Well, because Amazon has MILLIONS of products and even though we intend to find a niche product line that Amazon is overlooking – so that we don’t have to COMPETE with them – it’s a great place for coming up with ideas (a.k.a .brainstorming!).
HINT: The higher the price point of your niche ideas, the better, but for newer online retailers without much experience, I recommend not going much above the $1,000 price point.
As I said before, you can come up with niche ideas however you want to! All that matters is that before we move onto the next step, we have at least a handful of niche ideas written down (4 or 5 is good). Ideally, the niche ideas you write down will be product lines that aren’t too seasonal (not tied to a holiday or specific annual season) and ones where the average order will be $250+ (which should ensure that we net $50+ per processed order – something very important so that you can immediately start turning a profit by covering the costs of online advertising).
Here are ten more methods we like to use to brainstorm possible niche ideas:
1. VISIT ONLINE SHOPPING ENGINES
You can really cruise any major shopping site (or even walk through any of your local retail stores) to get those creative juices flowing, but here are my favorites:
- BizRate’s Sitemap – BizRate is an advertising site where merchants list their products, but it’s also one of my favorite places to brainstorm niche ideas! As you’ll see when you get there, at the bottom is a link for ‘Top Products’. Click that, and you’ll find literally hundreds of product types to go through and consider!
- Shopify Exchange – The Exchange is a marketplace that Shopify maintains, where website owners (like you) can sell their website. For the most part, it’s a website junkyard, simply because people typically only list here as an alternative to close their store, but you can still find some great niche ideas here. And remember, it doesn’t matter where your niche ideas come from, so just looking at online stores can spark ideas (it doesn’t need to be the same product lines you’re looking at!).
- Flippa – This is another website marketplace where website owners can attempt to sell online businesses. Much like the Shopify Exchange, we don’t recommend necessarily buying any websites here, but just cruising through the listings can spark niche ideas!
2. VISIT A REAL MAGAZINE STORE
Every magazine ever created is centered around a niche of some sort. Quickly thumb through magazines, looking for articles about products and definitely look at every advertisement in the magazine. Chances are, you will find an amazing array of products that you never even knew existed!
3. THINGS PEOPLE USE IN THEIR JOBS
Think of all the jobs that exist and the type of things you need to perform those jobs. Get your friends/family involved in coming up with them.
4. THINGS PEOPLE USE WHEN THEY ARE NOT WORKING
Think of all of the hobbies, sports and activities people take part in when they are not working and the various products that are needed to do those activities.
5. TV SHOWS & MOVIES
Pay close attention when you are watching TV shows or movies. Look for items in the background or things that the characters use. Quite often, they are things that you don’t ordinarily see in brick and mortar stores.
6. WHERE DO YOU BUY THAT?
Keep your eyes and mind open for things that seem unusual or that you’ve never really thought about before. Keep your eyes peeled while you are driving, take note of things that people you hire to do jobs use, check out some of the things being used at events you attend or activities your children take part in. If you have to ask yourself, “Where do you buy that?” you might have found an excellent niche idea!
7. VISIT STORES & SHIPPING MALLS
While it is true that things that are available in a wide variety at local stores are never a good thing to try to sell online, there are many products that local stores only have one or two of to choose from. If there is a really wide variety to choose from but local stores only carry one or two, it is a niche made for online shopping. Remember, walmart.com and homedepot.com are not the same as your local Walmart or Home Depot. Be sure to visit the actual store and see what is really available to buy (you can also filter products on those websites by “pick up today” or “in stock at store” to see whether they are actually in physical stores). Many of the products listed on big companies’ online stores are not available in their local stores. They are dropshipping them just like you could!
8. VISIT HAYNEEDLE & WAYFAIR
Hayneedle.com doesn’t have any warehouses, so everything they sell is dropshipped. Although Wayfair.com recently started warehousing some items, more than 90% of the things they sell online are dropshipped. In fact, name a huge online store and you can bet that a huge portion of the products they carry are dropshipped (Amazon, Walmart, Sears, Best Buy, Home Depot, Lowes, Target, Walgreens, CVS, PetSmart, etc.). Of course, be sure that you take into account Factor #1, described below, and that there is not a wide selection of those products available on the mega retailer websites.
9. RANDOM NOUNS
Use Google’s free Keyword Planner and enter any random noun that comes to mind. You’d be surprised at some of the very good niches we have found by typing in single words like “train”, “barn”, “clock” and then looking at the results that it spits out. Many times, we have no clue what the phrases are that it comes up with but when we Google them, we find some very interesting niches (like “barn door hardware” and “train horns”).
10. GOOGLE PRODUCT TAXONOMY
Later, when you start using Google Shopping to market your products, you’ll find out that all products that you list on Google Shopping are assigned special categories, which Google calls their “product taxonomy”. To get your creative niche selection juices flowing, you can visit their product taxonomy page, which lists every type of main product and its subcategory of products.
Again, it doesn’t matter how you come up with the niche ideas, but make sure you have at least 4-5 written down before moving to the next section!
Step #2: Analyze Your Niche Ideas
Alright, now it’s time to determine whether any of your niche ideas are solid enough to move forward with. At this point, we need to truly analyze each of the “Big 4 Factors” for each one of our niche ideas. Let me go into greater detail about each of the 4 factors and explain how to determine whether any given niche idea passes or not:
Factor #1. Poor Selection with Mega Retailers
This might be the trickiest factor to judge, simply because it comes down to a judgement call on your part. As we know, Amazon is by far the biggest retailer online, and we cannot compete directly with them. So, in this step, we need to determine whether or not Amazon is “overlooking” the product niche in question (simply indicated by a ‘PASS’ or ‘FAIL’). Since this is the #1 factor, you can eliminate the niche idea completely if it doesn’t pass this.
The first step is to see how many brands of this product type (aka niche idea) Amazon offers. If there aren’t many available, you can assume it’s being overlooked. And, if there are many offered that span multiple brands, you still need to see if Amazon’s prices are competitive. If they aren’t, you can still consider the niche product line as being overlooked by Amazon! Here’s how to check each and determine whether your niche gets a ‘PASS’ or ‘FAIL’ for this factor:
How many brands are offered on Amazon?
Start off by searching Google for the niche phrase you want to check (i.e. Google search for ‘bird cages’). Ignore the ‘Ad’ results up top, but go into the top couple of high ranking websites that are not ‘Amazon’ and write down the brands they carry on a piece of paper (brands are usually listed in the sidebar or within the navigation menu).
Now that you have an idea of what brands the top couple of ranking websites carry, go search for the same niche phrase (i.e. ‘bird cages’) on Amazon.com and note the brands they offer (also noted in Amazon’s sidebar). If they only carry a couple (or less than half) of the ones you wrote down from the top ranking websites in Google, this means Amazon is overlooking the niche and you can consider this a ‘PASS’. If Amazon does carry most or all of the brands you wrote down, that’s a bad sign, but they still may be overlooking the niche if they aren’t priced competitively.
HINT: Unknown to most, the majority of products being sold on Amazon are not products that Amazon, themselves, carry. Most products on Amazon are being sold by individuals (and other 3rd parties) who are not affiliated with Amazon (other than the fact that they sell products through them!). These individuals and 3rd parties sell as “Marketplace Sellers” and are charged fees upwards of 15% by Amazon in order to use the platform for selling. And, in order to cover those hefty fees, those Marketplace Sellers will often “jack up” their prices and that makes Amazon’s listings quite noncompetitive with other online retailers!
How to determine whether Amazon’s prices are competitive or not
Simply open Google Shopping in one tab, and Amazon in another. Randomly select a handful of specific product models from within each brand name you wrote down and compare the price on Amazon with the prices that other retailers are listing on Google Shopping. (IMPORTANT: Make sure you are noting the final price including taxes and shipping at both places.)
If Amazon is the same or lower than most retailers on at least half of the products you look up, I would consider this niche a ‘FAIL’ and move on. Otherwise, give your niche a ‘PASS’ for this specific factor and move on!
Factor #2. High Price Point
Technically, you should’ve only been writing down niche ideas where you expect the average order total to be at least $250, so every niche idea should get an automatic ‘PASS’ for this factor. However, you may want to check Google Shopping for a few product models from the brands you wrote down earlier to make sure that’s the case. Also, be sure to note that I used the words “average order” and not “average price”.
HINT: Many niche product lines will include products that are sold in quantities greater than ‘1’ and/or sold with almost “must-have” accessories or upgrades. You won’t know exactly what the average order will look like, but right now just use some common sense and give it your best guess.
Factor #3. Shopper Demand
This step is simple, and it’s basically just to verify that the niche product line you’re considering actually gets searched for by shoppers! Unlike the other 3 factors, this one won’t be a ‘PASS’ or ‘FAIL’, it will be the number of searches that are done for that specific niche phrase monthly (i.e. 3,050).
To get this number, go to any free keyword tool (like this one) that pulls Google’s monthly search volume and enter the ‘root phrase’ that best represents your niche in singular form (i.e. ‘bird cage’) and plural form (i.e. ‘bird cages’) and simply note the higher of the two. We like to shoot for main niche phrases that get at least 70 searches per day (or 2,100/month).
HINT: you do not need crazy search volume in order to build a successful store around a niche phrase. We’ve built very successful niche stores that make thousands a month around phrases that show only 3,000 monthly searches, so don’t get too caught up with this number. Also keep in mind that there are usually dozens of related keyword phrases and longer tail phrases that also get searched for in every product niche, so the number of searches for the main phrase is often just a small sampling of the real total search volume for any given niche.
Factor #4. Seasonality
Much like factor #2 (High Price Point), the niche idea probably shouldn’t have made your list if the product line seemed too seasonal. Just ask yourself if the niche product line seems likely to really only sell for a short period of time each year, and if the answer is ‘no’ you can indicate a ‘PASS’ for this factor.
HINT: if you want to get more advanced here and make sure your product line has pretty solid demand throughout the year, you can enter your search phrase into the Google Trends tool and verify that very easily!
Add a column next to each niche idea for each of the “Big 4 Factors” and assign scores (as explained above) for each. As indicated above, factors 1 & 4 will be simple ‘PASS’ or ‘FAIL’ scores and factors 2 & 3 will be numbers (avg price point & monthly searches, respectively).
Another Important Factor…
To be clear, the high ticket item model discussed here is geared toward product niches that can be profitable without ever necessarily ranking well for high volume keyword phrases. That said, it’s even better if the niche that you choose has a chance of ranking for some medium tail phrases in addition to longer tail keyword phrases. There’s nothing in the world better than free traffic and if you find a niche where you can rank organically with some basic Search Engine Optimization, that’s certainly a product niche to lean toward.
Now, no keyword tool is perfect. None of them can factor in the very important user metrics that Google now is weighing very heavily in their algorithm. Still, there are things that tools can measure that do have a direct impact on how well a website might rank for any given keyword phrase.
We highly recommend using the SEMrush tool suite because it not only can help you determine the strength of competition for keyword phrases, but they include a ton more beneficial tools in their package – tools that can tell you your competitors’ backlinks, track the rankings for all of your targeted keyword phrases, show you how to better keyword optimize your pages and more.
That said, the SEMrush tool suite may not be in everyone’s budget. I don’t know if it will always be free, but at the present time, Neil Patel has a fantastic, free keyword tool called Ubersuggest that not only will tell you how many monthly searches there are for a seed keyword and how hard it will be to rank for, it also shows you all of the related keyword phrases that you might want to optimize your website around along with their search numbers and competition scores. Best of all, you can export the entire list and save it. Click here to access the Ubersuggest Keyword Tool.
Step #3: Select a Winner
At this point, we have a list that shows ratings for each of the four big factors that make for a winning niche idea. In order to choose the niche idea to build your next store around, I would start off by eliminating any niche ideas that aren’t clear winners. You can do so by simply crossing off any that show a ‘FAIL’ in columns 1 or 4.
That should leave you with nothing but niche ideas with ‘PASS’ in columns 1 & 4, and positive numbers in columns 2 & 3 (a.k.a. all potential winners!). Now, you can simply choose the niche with the highest number combo between columns 2 & 3.
Select the niche phrase you will build your first (or next) online store around and move on! This should be a niche with ‘PASS’ in columns 1 & 4 and high numbers in columns 2 & 3 (preferably $300+ in column 2 & 3,000+ in column 3).
HINT: Don’t overthink this! To be 100% frank & honest with you, there are many factors you just won’t (and cannot) know at this point, so don’t get paralysis from over-analysis! Just choose the niche you feel the best about and move forward without looking back! If I’m truly torn between a couple niches, I simply choose the one with the expected higher profits. Of course, at this point, we don’t yet know the profit margins but all we can do is assume that they are all at 20%. That being the guess, you can multiply the average dollar per sale by the number of searches and figure out which ones give you the best total dollar potential.
Also keep in mind that you will be needing to write unique, original content for all of the pages of the website, so if there is a niche that you are truly passionate about, you might want to favor it over another one if the numbers are close.
