How To Select A Good Niche For Your New Business
Some experts may tell you that selecting a product is the first step to starting an E-commerce business from scratch.
However, the facts and statistics show that selecting your niche/audience you’re speaking and selling products to is the most important first step.
Just think about it for a second, a single product can be great, and may even end up making you some decent money in the short term, but in the long term, the companies that succeed are those who have built BRANDS.
If you’ve ever watched Shark Tank, you’ll often times hear the investors tell the entrepreneur, “I can’t invest in XYZ because all you’ve got is a product. You haven’t created a BRAND, and this is exactly what investors are looking for.
So, if you’re interested in creating a successful e-commerce business, and would like to build a business that will provide for you and your loved ones for many years to come and eventually get acquired (if you choose to sell), then we want to focus on building a brand.
So, how do we build a brand from scratch, if we don’t have the faintest idea of where to begin or what to do next. I’m going to cover exactly that in this step by step guide and I’m going to show you everything you’ll need to go do in order to build a highly successful e-commerce business.
Selecting The Right Niche For Your New Business
Selecting your niche can be a very controversial topic. It seems to be that half the experts you talk to will tell you to choose a niche that you love and have passion for, or something that you’re good at. The other half of the experts will tell you to simply choose a niche you’ve researched and has proven products to ensure you generate the most amount of revenue possible.
From over a decade of experience, with failures and many great successes, I can tell you that it should be a combination of the two. My team and I are constantly looking for new businesses to launch, so I keep a list of every idea in the notes section of my iphone. This way, whenever I come across a problem that needs to be solved, or a product that I believe can be improved upon, I can just go right into my phone while it’s still fresh on my mind and add the idea.
When I’m ready to launch something new, my partners and I will have a strategy session where we’ll go through the list of ideas, and we’ll narrow it down to our top two choices. Once we’ve done this, we’ll begin to do our keyword research, or I prefer to call “Search Analysis” inside of these niches. At this stage, we simply want to determine which niche is going to have the greatest chance of success, which really comes down to two things. First, we need to know that the audience/target market is big enough for us to be successful with just a small piece of that market. However, the size of the market is just the first thing we look at. The second step is to ensure the amount of competitors who are also targeting the same audience is not too strong. You can choose between many different tools to conduct your search analysis. Here are my top 3 choices. (Insert Affiliate links for Ahrefs, SEMrush, etc)
So the point here is, it’s great to first think of niches you’re passionate about and categories you have extensive knowledge on as this will give you the advantage of being able to teach or share your expertise with others. At the same time, the niche you select must prove to be profitable. If you come across a topic that checks both boxes, great. If not, always go for the profitable niche over one you are passionate about.
When you’re researching and deciding on your niche to pursue, there are a few more critical things to keep in mind:
- What Differentiates You From The Competition – Make sure you can offer something different than what currently exists in the market. There’s a famous saying within the marketing community, “Different is Better Than Better.” Often times, I’ll see businesses fail because the entrepreneur is so focused on building a better product, when in reality better is subjective. Your target audience may not even care enough about the improvement you made in the product, and if you don’t give the customer a big enough reason to buy your new “mouse trap” they will continue using what they already have. However, if you can bring something different to the market you’re serving, you will have an immediate leg up on the competition. Always remember to ask yourself, what is the key differentiator that sets my product apart from the competition and is it different enough to make the customer feel that they need yours.
- Identify problems you can solve -This has always been one of the best ways to create products and build a brand. Discover the problems your target audience is experiencing, then determine whether you can solve their problems. Here are a few tips to identifying problems within a niche:
- Ask your target market. Yes, this may sound oversimplified, but that’s because it really is that simple. Just be sure you ask the right questions to uncover your prospects pain points.
- Become Active On Forums. Search Quora, or any other forums you can find specific to your niche, then spend some time reviewing and interacting on the discussions taking place. What problems do people have? What questions are they asking?
- Do Your Search Analysis. Research the keyword combinations related to your niche on the keyword planner tool by Google Adwords and also Google Trends. This will help you find the most popular search terms within your niche.
At this point, you should have narrowed down your list significantly. Maybe you’re not down to single niche yet, but you probably have a few ideas you feel confident about. Now it’s time to confirm there is money to be made in the niches remaining on your list and which of your top choices will do the best. I like to spend an hour or two just browsing sites like Amazon and Google to look for both products and magazines or trade publications on your topic. If you are unable to find any offers, that’s a sign you need to look for a new niche. It means that nobody has been able to monetize the niche.
However, if your research does reveal a fair amount of products — but not a ton of products — you’re on to something solid. Pay attention to the price points of the different products you come across. This way, when you are creating your own unique products you’ll be able to price them in a competitive manner.
It’s now time to put your final contenders to the test. I do this by setting up a landing page using ClickFunnels which you can build in less than 30 minutes, even if you have no experience or have never built a website. After I have a simple landing page built, I’ll typically spend $100-200 running paid traffic to this site. My goal in doing this is not to make a profit but simply to see if there is any interest or demand in the market I’ve selected.
Keep in mind, you will be pre-selling the product so you’ll have plenty of time to fill the orders that come through your landing page. You’ll want to learn how to fulfill pre-sale orders also.
Now that you have an actionable game plan for selecting a profitable niche, it’s time to get to work. When narrowing down your options, just make sure you choose a category that’s broad enough to give you the room to niche down and create new products as you grow. For example, let’s say you decide to go into the pet space. Instead of creating dog treats for Diabetic Golden Retrievers, it would make more sense to start with Dog Treats as your primary niche. By doing this, you will be better focused on building your brand. Otherwise, if your niche is too small, you will limit your chances for success right from the start. Remember, creating your own product/brand is just one of the Online Business Models to choose from. You can also setup an affiliate business, dropshipping business or subscription service in addition to white labeling or creating your own brand. Learn how to choose the best online business model for you and your desired lifestyle.
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