8 Tips for Choosing a Niche for Your Online Business
Online sellers have faced fiercer competition in recent years. Even so, there are still opportunities to sell online for those who are willing to take a more strategic approach to choosing a niche and starting an online business.
Choosing a niche is one of the major challenges that people face when they decide to start an online business. Some people quickly pick a niche and dive right in without doing their homework. Others may spend weeks or months racking their brains, trying to come up with an idea. Below, are eight strategies you can use to help you get started in picking a viable, profitable niche.
1) Pick a Narrow Niche
When starting the process of brainstorming niche ideas for a new online business, most people think of commonplace items, such as pet supplies, jewelry, or t-shirts. Although there may be opportunities within these niches, they are very broad and already highly saturated. This means you’d be facing some stiff competition. It would be very difficult to carve out a place for yourself within these markets.
If you have a niche in mind that’s somewhat broad, try to drill down a little deeper. Maybe there’s a segment within a niche that you can target. For example, say you’re interested in selling kayak gear and supplies. Instead of targeting all kayakers, maybe you could focus on kayak fishermen. Although you could still pick up other customers, kayak fishermen would be your primary target audience.
2) Consider B2B Products
Another common pitfall for those in the beginning stages of starting an online business is to only consider B2C products. Sure, there are plenty of opportunities in this area, but don’t forget to consider B2B products as well. When you go to different businesses, like a restaurant or hotel, notice some of the equipment and supplies they need to conduct business. For example, restaurants often serve soda. They need special equipment for their soda fountain systems — that could be a potential niche. Try to think outside the box. Consider what consumers want or need, but also consider what other businesses need.
3) Sell Something You Can’t Buy Locally
Most people aren’t going to get online to browse for and purchase something they can buy at a local store. Many of the items that are successfully sold online are difficult to find locally. For example, if you need to buy streamers and blow-up balloons for an upcoming birthday celebration, you might go to a local Walmart or Target. However, if you wanted to purchase a medieval sword, you would probably go online.
4) Pick a Niche with Demand
You can discover what you think is the world’s greatest niche idea, but if there’s not enough market demand, then it’s probably not worth pursuing. There are a lot of differences in opinion about whether you should pick a niche based on data or a niche you’re passionate about. If you happen to find a profitable niche, with demand, that you’re passionate about, then wonderful! However, you should never start an online business without researching market demand first.
Market demand includes the number of people searching for your item in search engines. There’s no magic number that will guarantee success. However, as a general rule, you should stay away from items with very low or very high search volumes. Very low search volumes indicate there’s not enough demand. High search volumes indicate there’s a lot of demand, but that means there’s a lot of competition too.
Google AdWords Keyword Planner can be used to help you determine keyword search volumes. Although Google recently changed the Keyword Planner to only show search volume ranges instead of specific numbers (e.g. 100K – 1M, 10K – 100K, 1K – 10K, 100 – 1K, etc.), it can still be helpful. For example, if the search volume range for an item is between 100K – 1M, that means there’s a lot of demand, which means there’s probably a lot of competition. If the search volume range is between 10 – 100, then there’s probably not enough demand.
5) Research Keywords
This strategy relates back to strategy # 4. In order to get search volume data, you need to know which keywords people are searching for. For example, say you’re interested in selling indoor gardening supplies. Indoor gardening supplies could be one of the key phrases that searchers are looking for, but they could also be looking for hydroponic systems. To get a clear picture of the search volume data for a product, you need to know the key terms that searchers are entering in search engines.
Fortunately, there are a few different ways you can do this. One way is to start typing your keyword in the Google search bar. Google will often autocomplete the search bar based on common key phrases searchers are using. You can also try clicking on a keyword or phrase. If you scroll down to the bottom of the search engine results page, you’ll notice other related keywords that searchers are using. You can also use online tools like WordStream or Wordtracker to help identify terms or phrases that people are searching for.
6) Target Repeat Customers or Hobbyists
The best kind of customers are repeat customers. If you want to ensure that your business remains successful in the long run, then try to find a product that people have to purchase again. Examples may include vitamins, protein supplements, or skin care products.
People with a hobby or passion can be another great target audience. Hobbyists are usually quick to drop money on products related to their hobby. Most hobbies also have several different accessories, equipment, or gear that can be purchased. People into photography, for example, may purchase a camera, different lenses, a tripod, and a camera bag.
7) Research Your Competition
Researching your competition is essential before starting an online business. As you research your competition, think about what you can offer that they’re not. Take a look at their websites. Are their websites user-friendly and easy to navigate? Do they offer educational resources and information about their products? Anything that’s lacking could be an opportunity for you to add value to the market.
8) Research Selling Prices
Generally speaking, products between $100 – $200 are usually at an ideal price point for selling online. Items below that don’t have very good profit margins. You would have to sell less expensive items in bulk to make money. When you start selling products over $200, people usually become more hesitant about spending their money.
Most people wouldn’t balk at purchasing an item between $100 – $200. However, fewer people will be as quick to spend over that amount. People who make higher purchases online often have more questions and are more likely to want to speak with a sales or customer service representative. That’s not to say you can’t sell a lower or higher priced item, but make sure to research selling prices and profit margins. You want to be armed with as much information as possible before starting your business.
Bottom line — do your homework. Research keywords, search volume data, competition, selling prices, and so on. Don’t make the mistake that a lot of people make by jumping in head first without knowledge of the market or your target audience. Any research or prep work will only help you to be more successful.
Happy niche picking!
Photo credit: HubSpot