Are you ready to start an online store, but don’t know what you want to sell? No problem! This guide will take you through the process of choosing an ecommerce niche for your new online store, starting from the absolute beginning.
Let’s get right into it.
List Your Interests
You need a place to start before you can narrow down your niche. Start broad with a list of industries, hobbies, products, or activities you have an interest in. Create as long of a list as you want to give yourself plenty of options.
This list will be your starting point for further research into different niches.
You don’t have to have prior knowledge about a niche in order to sell products in that niche, but it can help. If you’re part of the group of people who may be interested in the products you’re selling, you may have unique insight into what matters most in this target market.
With your initial interests list in hand, it’s time to move on to a much more complex step in the process: the research.
Do Your Research
Research is going to be a recurring theme in this process. Good initial research saves you a lot of trouble and helps you confidently make a plan for your online store from day one.
Here’s how to start your research.
Research Keywords in Your Areas of Interest
Keywords are what Google and other search engines use to show people results when they search for something. These are individual words or phrases that are included throughout the page’s content, which helps search engines understand what the content is about.
Keywords come in 3 types:
- Navigational
- Informational
- Transactional
Researching keywords helps you understand how many people are searching for things related to what you want to sell, and what kind of intent they might have with their searches. Keyword research is simple, but it can take some time.
Here’s how you can do keyword research on your own. For this example, we’ll use the word “lacrosse” as our starting point.
Use the free Google Keyword Planner tool to do your research.
Here’s what it looks like when you open the keyword planner. Select “Discover new keywords”.
Start by typing in the ideas from your list, one at a time, and running them through the tool.
You’ll get some data about the keyword you typed in as well as a lot of suggested keywords.
Compile keywords related to your listed topics. Results can be downloaded and saved as a CSV file.
Look at the monthly search volume and the keyword difficulty.
Check for sweet spots where you can rank more easily.
Make sure you take a close look at long-tail keywords! Long-tail keywords are keywords that contain a much longer, more descriptive phrase. These keywords can be used to help you stand out for very specific searches, which helps you find a niche in a broader industry.
Long-tail keywords are important because they tend to put you in sight of people who are further along in their search journey, rather than those at the top level. This might mean they’re closer to buying, which can be a powerful tool for you to harness and bring them into your online store.
When you’re done, you should end up with a good list of keywords and their relevant stats listed down. From this list, you can judge how competitive a niche is and how much profit potential it has for ecommerce.
Note: You can also do keyword research for other search engines like Bing. Once you’ve done your initial research on Google, you can use this as an outline for the type of keywords you’ll use for Bing.
Research Market Trends
In addition to keyword research, you can also look at trends happening in each of the industries you’ve mentioned.
Here’s how to learn more about the potential of an ecommerce niche by checking out the search trends.
Head to the free Google Trends tool. Go to the explore tab.
Choose the region you want to target and the category of trends you want to see (or leave it on “all categories”), then type in a broad topic from your list.
The results from your search will show up as a graph, a regional summary, and related topics.
Here’s how to use these results for your analysis.
- Graph: The graph shows levels of interest in the topic searched over time. Results show from 0-100%, with the highest sections on the graph showing the time periods where there was the most interest in the topic. This helps you understand how seasonal a trend may be and how much interest there is at any given time.
- Regional Summary: This section will break down how much interest there is in your topic in different parts of the region you’re searching in, where that data is available.
- Related Topics & Queries: These 2 sections at the bottom give you an insight into the keywords people have searched for related to your trend search. You can sort results by “rising” or “top” to better understand long-term vs new trends. Both keyword lists with their data can be downloaded as CSV files.
This analysis will help you see how consistent the interest is in the topics you’re considering for your ecommerce store. You can also see what keywords people are searching for related to the topic, including keywords specific to shopping. You can use this to supplement your keyword research list as well if you’re willing to put in the extra work.
Trend research is important to help you find a niche that sees consistent demand, even if that demand is seasonal. It also gives you a clearer picture of why a topic is trending by showing the most searched keywords around that topic.
Narrowing Your List
Using both keyword research and market trend data, it’s time to start trimming down your list of ecommerce store niche ideas.
You have to decide how much time, effort, and money you’re willing to invest into your ecommerce store before you see any consistent income. The more competitive a niche is, the more you’ll have to invest to get anything out of it.
There’s no bad niche. Some will be more competitive, while others will have less profit potential, and still others will have little traffic. You can take on any challenge, but the sweet spot is usually a niche with low-medium competition and acceptable profitability (whatever that means to you).
This usually means cutting out a specific niche in an existing industry. Instead of focusing on lacrosse gear in general, you focus on lacrosse gear for women or carbon fiber lacrosse sticks.
Your goal is to find 2-3 niches within your broad list that match your requirements for an ecommerce store. This includes PLR product stores and digital product stores. Plan your niche around what you want to sell. These are the niches you will investigate further, to both confirm their suitability and narrow down your best choices to the single niche you’ll pursue.
Evaluate Competitors
Some competitors are in your exact niche specifically while others are there incidentally while they focus on a different niche. You need to understand what your potential competitors are doing and how strong their grip is in a specific niche before you take them on.
To evaluate your competitors, follow this 4-step process:
- Search for products that you want to sell. You can do this using simple Google searches and looking at the first page of results.
- Compile a list of the main companies selling those products, based on the results you find during your searches.
- Check their product range & differentiation points. See if they’re selling a broad range of products or a specific niche. Compare stores against each other to see what they are doing to differentiate themselves and stand out from the crowd.
- Look at SEO, social media, and other marketing strategies. See how active your competitors are online and how they’re marketing their products. Are they advertising? Do they rank well? You can use the Keyword Planner tool to analyze your competitor’s ranking and SEO performance.
If you’re going to rely on SEO to bring traffic to your store, it’s better to look for competitors without a strong SEO strategy or who don’t actively work to rank highly for multiple keywords you’ll be using. It’s easier to rank quickly for keywords when your competitors are focused on other keywords.
Check Product Profitability
To make ecommerce worth it, you have to be able to make a profit from what you’re selling.
Do some research to see what the market rate is for what you’re planning to sell. This will give you a good idea about how to price your own products. From there, you need to see what the cost will be to supply those products to your customers.
As a good rule of thumb, an ecommerce business should aim for a gross margin of 30-40%. This means the gross profit you get from each item you sell should be at least 30-40% of the total cost you sell it for.
Example:
You’re buying a product wholesale for $15. To get a good gross margin, you need to be able to sell this item at a retail cost of at least $21.50. If the market won’t support the price you need to charge, it may not be a good industry to jump into, unless you can operate on slim margins.
Note: This is a simplified example that only considers the cost of purchasing the items you’re selling. Other costs associated with packing and shipping items should be considered, but you can get a rough estimate by just comparing the wholesale price and retail resale value.
Check Product Availability
Before you decide to sell something to people, you need to know that it’s available for you to get from a reliable supplier. Whether you’re sourcing wholesale flipping, private labeling, handmade products, or POD, check that there are suppliers for what you want to sell.
PLR products are often the simplest to source as they’re usually digital products. Just make sure you can get the products you want before you decide to go that route. You can look at a company like PLR Hustle to get a good feel for what digital products you’ll be able to source.
If you’re struggling to get products, it will be difficult to not only maintain your shop but also to scale it up as you go. You need reliable access to good quality products, no matter what niche you’re in.
Keep in mind that if you plan to order items wholesale, you may need to register a business to work with a good supplier. You can easily do it online in a matter of minutes.
ZenBusiness
Register a business in minutes for any US state.
When you’ve gone through the evaluation process of each niche left on your shortlist, you can make a final decision about the best niche for your ecommerce business.
Bonus Niche Selection Tips
Need a little more help narrowing down your niche? Here are a few extra tips to get you on the right path!
Don’t Follow the Crowd
If you see a specific ecommerce niche on lists of exciting or growing niches there’s a good chance you’ll have trouble entering that market. While there might be growing interest in that area, the fact that it’s on a list that anybody can see means you’re likely to face competition entering that niche.
Instead of trusting someone else’s research, do the legwork on your own to find a good industry. You’ll be able to learn more about a potential market if you do the research on your own to find a suitable niche.
Use niche lists as a way to stimulate your creativity and open your mind to new possibilities. Don’t just take ideas off the list at face value.
Listen to People
Go out of your way to see what people in your potential niches are saying about their needs. Look at forums, check out social media posts, and find as much content online as you can from the people who will be buying your products.
If you can listen to the concerns of your target audience and create something that fills in the gaps for them, you’re more likely to find success in your niche.
Know Your Market
Along the same lines as listening to people, you need to keep up with your target audience and understand where people’s heads are at. It’s good to put yourself in the shoes of your target audience and try to get their perspective on what you’re selling.
What needs do they have? How would they prefer to have those needs met? What are they trying to accomplish with their purchase? How are their opinions of the niche changing?
The more you know about your target audience, the better you’re able to sell to them and earn a consistent income.
