Building A Successful Ecommerce Business: Find A Niche – Part 1

Over the years of running my own ecommerce businesses I have learnt to find markets, rather than create markets. Finding profitable niche markets is the smarter option than to create a new untested market. Many ecommerce businesses fail because they tried innovating new products that no one wanted and spending all their time and resources on a product they wanted for themselves. I can tell you from experience that I have tried an unknown product in some of my ventures and unfortunately they did not take off the way I hoped. I also did research but not thorough enough and I went by instinct rather than relying on the facts. The facts told me that it was not going to be viable and I was forcing myself to make it work. When you have a feeling of uncertainty, it is a signal to say get out or do not do it.

I want to show you how to find profitable niche markets and how to overcome some of the mistakes I had when I was starting a new ecommerce business.

Find Your Niche

Research is the key to your success in finding a profitable niche market. No matter how good a product sounds or how good someone else says about your idea, you need to do your own thorough research. Sometimes just reading one article or hearing a few testimonials from others is not enough. There are 3 major qualities to determine a profitable niche market:

1. Exists already
2. Easily identifiable
3. Marketable and targeted

Looking for a profitable niche market is about finding the buyers first. Most people start off with the wrong idea and look for a product to sell first. Find out what their problems or needs are and then provide a solution. A classic example from my experience is how I started the Dragonboating business. I was frustrated to not find any company in Australia offering carbon fiber paddles to the dragonboat teams. Furthermore, to order and delivery one from overseas took months. So I decided to create a company and become a distributor of carbon fiber paddles in Australia and guess what happened? Paddlers came flocking to my company and buying dragonboating gear from me and I made money whilst I continued to dragonboat.

Determine How Hungry Your Buyers Are?

Once you can determine whether or not your idea or passion works, then it’s time to really test the market and see how hungry these buyers are. The easiest way to determine how strong the demand will be for your idea is to do research on keywords in that market. Here are the 3 steps in determining if your idea is viable:

Step 1: Investigate Traffic Volumes.

This is the first and most important step. If you find out that your keyword only has 20 people searching for it, it may not provide a good income from that niche. To investigate how much traffic you will get for your niche market keyword, go to http://freekeywords.wordtracker.com or any other similar site and type in a broad term such as golf. The site will give you a list of the top 100 search results for that word. For example, you will find golf clubs, golf carts, golf buggies, golf gloves and so forth. Next to each phrase you will see the number of daily searches. Using this list, select the results that have enough searches to determine your targeted niche market.

Step 2: Determine The Amount Of Competition.
Your next step is to find out how many people are competing for the keyword you are wanting to market your idea to. Ideally you want to find out who are the advertisers and marketers and take note of this:

• Few competitors = great keyword
• Lots of competitors = not a good keyword

To determine the level of competition, go to Google.com and type in each of these potential key phrases from step 1 and make a note of how many competing sites there are in that market. See the number of results near the top right of your Google results page? Write that number down next to the keyword you searched.

Step 3: Find Out If There Is Money In This Niche.

The final step is to find out if the buyers you are targeting are willing to spend. There is no point targeting a market where everything is free because these buyers will expect this as well, meaning it is not a good market to target. Continuing your Google search from Step 2, record the number of advertisements that appear for each keyword that you search. If there aren’t any ads, then it is not a niche worth targeting.

I would suggest spending at least a few hours and compiling the information together as part of your research. This will help you determine if your idea is viable for your targeted niche market. If you follow this to find out if there is a niche market for your idea, then you will be on your way to building a successful ecommerce business.

Follow on to the next post as I will show you how to create the content to market your idea: Building A Successful Ecommerce Business: Creating Content – Part 2

Tyrone Shum
Building Niche Ecommerce Businesses