So you’re looking to start an eCommerce business…Congratulations! The first step, the one that will put you on the path towards making your first sale, is the biggest step of them all… how to find a niche.

Look around you.

Wherever you are right now, look around.

What do you see?

For me, I see a nearly endless assortment of profitable niche markets.

From my view at my desk, I see wall art, coffee tables, computer chairs, accent chairs, a microphone stand, a desk, and some headphones, just to name a few.

Now I’m not saying these are all great niche products to sell, but there’s a good chance that whatever is around you, can assist you in finding a niche.

In this article, you will learn:

  1. How to find a niche market.
  2. The criteria that make a niche ‘good’.
  3. 3 methods for finding a niche and my favourite niche example

 

Before we dive in, let’s make sure you’re up to date on the niche definition.

What is a niche?

In the world of ecommerce, a niche is defined as a specific segment of the market where there is high demand and low supply.

This is also known as a niche market.

When starting an ecommerce venture, your success relies heavily on solving the problem that a specific niche market has.

Niche marketing

Niche marketing is the process of concentrating all your marketing energy on a small, well-defined segment of your target audience.

This niche marketing definition is worth keeping in the back of your head. It’s also worth noting that there is a big difference between finding a niche and niche marketing. Marketing your product to your niche is not niche marketing.

niche definition

Now that you’re clear on definitions of what you are and are not doing, let’s get started learning how to find your niche.

Why You Shouldn’t Rush Finding a Niche

If you’re not sure how to find a niche, one of the first steps in is choosing a niche in a structured and well-planned way… it’s also the biggest point where we see people get hung up. 

While you shouldn’t make finding a niche market harder than it is, it’s more important to not rush the process.

Getting involved with a trending niche might make you some money in the short to mid term, but it won’t help you create a long-term brand that people want to be emotionally invested in. 

To give you a little background, my very first eCommerce store started making money within 24 hours of going live.

I made a sale for $485 the FIRST night that my store was able to accept orders.

Now, I’m not telling you this to show off.

I’m not saying you can decide to open an online store and start making money the same day.

I’m telling you because I want you to know the secret to my niche selection method. The same secret I used to make over $3,000 of sales in just over three weeks drop shipping.

People are often shocked when they hear this because it sounds like I just threw together an online shop and starting making money through luck.

But the truth is I spent A LOT of time researching my niche market prior to launching my online store.

Before my store launch, I did a ton of market research in order to have the best chance of success once I was ready to launch.

There was one reason that I made $485 within hours of launching.

It was because I figured out how to find a profitable niche that fit specific criteria.

Criteria to Help You Find a Profitable Niche

Niche selection can make or break your eCommerce business. When establishing how to find a niche, you should look for niche markets that meet 3 certain criteria.

Now, following these 3 criteria is not necessary to finding a profitable niche market, but from my personal experience, it will yield the most consistent results.

Before we look at the criteria for a profitable niche, it’s important to know why are niches important and the differences between two types of niches:

The bad (non-profitable) niches and the good (profitable) niches.

A good niche:

  • Lots of sales
  • Low amount of customer service needed
  • High profit margins

find your niche

A bad niche:

  • No sales, or many problematic sales
  • Lots of customer service needed
  • Small profit margins

how to find your niche

Now that we know what makes a niche product good and not so good, let’s take a look at finding a profitable niche product.

A good, profitable niche market will meet three pieces of criteria:

Price Point

The price of your product will go a long way in determining how your niche market takes to your product.

The average product price should be $200 or more.

This may come as a pretty bold statement – $200 is a lot of money for some people to spend online.

That’s is because when you establish your pricing, your average profit margin should be about 20% of the gross revenue.

The same amount of time will go into processing an order for $20 as it will for processing an order for $200 or $2,000.

If you’re going to be doing the work you might as well have a chance of making some real money on each sale!

If you want to make money, you need to sell expensive items. Expensive niche products sell better.

Still not sure how to find your niche? Sell a product that’s over $200.

Not that complicated, right?

Target Market

Next, I tend to select eCommerce niche markets that appeal to upper-middle-class families and individuals.

That is because products that appeal to ‘discount’ niche markets tend to require much more interaction with the customers while yielding their fair share of complaints and returns.

On the other side of that, products that appeal to luxury markets will bring your customers that expect to receive lots of individualized attention, resulting in more work for you.

Part of what makes a profitable niche ‘good’, is it requires as little effort, while generating the most sales possible.

Don’t start a drop shipping business with a niche that requires a lot of individual attention with your customers.

When finding a niche, look for products to sell online to single people or families with disposable income who are used to shopping online and comfortable making large purchases over the internet.

how to find a niche market

Once again, expensive niche products perform better.

Brand Loyalty

What kind of computer or cell phone do you have? Is it the same kind of brand as your last one?

Chances are if you own a Mac, the next computer you buy will also be a Mac.

Why?

Brand loyalty.

When selling online, you want to avoid selling products that customers already have brand loyalty for. I like to pick niches where the customer doesn’t care what brand they buy, so long as the item looks and functions the way they want it to.

When the customer does care about a brand, for instance with sunglasses, it is usually hard to be approved by major suppliers like Oakley or Chanel.

Plus, it’s hard to convince people who are looking for a specific brand to shop generic instead.

How to find a niche example:

Let’s say I live on a lake and I decide I want to get into stand-up paddle boarding.

I know I need a paddle board and a paddle but I have no prior knowledge of this sport or what brands are well known.

I can care less what company makes the board as long as I can find some good reviews and the price is right.

This is a great example of a niche product to sell online.

The average cost of a stand-up paddleboard and the paddle is over $700, the average customer does not care what brand they are buying.

What’s more, this sport is part of an obscure niche, and is likely to appeal to the upper middle class that would be purchased with disposable income.

How to Find a Niche: 3 Methods That Work

Now that you know what makes a niche good and highly profitable, it time’s for the fun part: searching for a niche.

These 3 methods are highly effective for researching and finding a niche that’s good for any business model, but especially drop shipping!

finding a profitable niche

Find your Niche Method #1: Focused Brainstorming

Before you can test different niches for profitability you need to take some time to think of niches to test.

This doesn’t mean you think about it on the ride to a friend’s house, you need to block off some time and focus on brainstorming ideas.

If you’re after some great niche market ideas, sit down and make the time to concentrate.

When first brainstorming profitable niches for online stories, make a list of at least 50 popular niches that fall into the criteria above: pricing, target market, and brand loyalty.

To brainstorm new ideas, I often think of things that I’ve recently bought online. As well as asking family and friends what they’ve recently purchased.

Also, think about what you’ve bought in the past. Think about all your family and friends and what they have in their houses.

Write everything down, even if it seems questionable at the time. I then take this list and begin running them through my “lenses”. Tons of niche markets are profitable, but that doesn’t mean you should rush into them.

Once you have your first list of niche products to sell, view them through these five lenses:

Competition – Scout out other stores and see what products are over-saturated. You don’t want to sell those, no matter how niche they are.

Loyalty – Don’t go for a niche market or product that is dominated by a national brand(s).

Pricing – It’s easy: the higher the price of the products, the greater your profit margin will be!

Weight – Shipping is expensive but a winning combo is a high-priced product that has low shipping weights.

Returns – Don’t pick a product with sizing and style preferences, that will test your return and refund policy.

Find your Niche Method #2: Think Just Outside the Box

When people pick their niche they often fall into one of two categories. Either people choose a very common niche idea or obscure niches, ones that are too ‘out there’.

The common niches are often over-saturated. Leaving you in a highly competitive marketplace that you’ll struggle to thrive in.

The other mistake is choosing an outlandish niche. Something that is very specialized, making it very difficult to make consistent sales without a ton of extra work.

Again, if you research properly you’ll see that popular niches like this feel more like a boutique than an automated business (the kind that will give you freedom).

The real way to excel at drop shipping is to pick a niche market that is just outside the box.

A niche product example:

My best selling product ever was a portable ice maker.

If you think about it, this is just barely outside the box.

Not as common as a refrigerator, but not as UNCOMMON as a walk-in deep freezer for a restaurant. Finding that nice balance early on makes picking the niche market a much easier process.

Find your Niche #3: Use Amazon’s Help to Get Very Specific

Amazon is the world’s biggest retailer and they sell pretty much everything under the sun. That’s what makes it one of the best places to find your niches and the products that are “red hot”.

Here’s the step-by-step process to finding highly specific niches using Amazon:

  1. Click on the ‘All’ tab at the left of the main search bar it will show a list of categories or ‘niches’.
  2. Click on a specific category, that interests you (or at random).
  3. Then leave the search box blank and hit ‘Go’.
  4. A new page will display and on the left-hand side a whole list of subcategories or ‘sub-niches’ will pop up.
  5. Click a subcategory and it’ll take you further down into the niche into a more specific sub-niche.
  6. You now have drilled down into specific niches and can even go further still.

niche example

Amazon is especially great to help you find a niche market that is super specific.

Even better is you can choose “Best Sellers” from the navigation bar at the top of the page just under the search box and see what’s currently selling best.

There’s no way you can’t find a niche on Amazon, or at least have a good brainstorming session browsing the site.

Amazon’s “Best Sellers” page is updated hourly making it a solid resource for profitable niche selection!

Takeaways

  • Tons of niche markets are profitable, but that doesn’t mean you should rush into them.
  • When brainstorming for niches, get out and open your mind. It’s amazing how many potential winning niches you can find.
  • When first brainstorming profitable niches, make a list of at least 50 niches that fit the pricing point, target market, and brand loyalty criteria.
  • Think just outside the box: don’t pick a niche market that is over-saturated, and make sure a niche isn’t highly specialized.
  • Stay away from niches that require a lot of individual attention from customers.
  • The same amount of time will go into processing an order for $20 as it would for processing an order for $200 or $2,000. If you’re going to be doing the work you might as well have a chance of making some real money on each sale.

Still unsure how to find a niche?

Be patient and go through the process again and again.

Finding a niche market is the most important factor that goes into building a successful online store.

The good news for you is it is only getting easier to research and test the profitability of a niche product before you start building your store.

So get creative, do your research, and get started building a successful online store!

What’s a niche idea that you’ve had?

Struggling to find a profitable niche? Let me know your ideas in the comments!

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Anton Kraly

Anton Kraly

Anton Kraly has been a serial entrepreneur for more than a decade, finding success building and selling multiple seven-figure businesses. In 2013, he started Drop Ship Lifestyle to teach people how to create profitable eCommerce businesses by leveraging high-ticket drop shipping. Now, his online eCommerce learning program has grown to an international community of more than 8,000 eCommerce entrepreneurs.