What to Sell Online: Niche Product Selection

What to Sell Online - Dog's choice

Sometime it’s not easy to choose.

You’ve ­­decided to start an eCommerce store.  Great!  You’re in the right place for that.  But first things first.  You must choose a product to sell!

Figuring out what to sell online isn’t just a part of the process.  This is the MOST important step!  I cannot stress that enough!

You need to identify a niche that has real value.  One with true potential.  One that solves a problem or fills a need.  You can’t just sell anything.  And you definitely don’t want to sell a random mix of everything.  Amazon already does that better than you’ll ever be able to.  Sorry, but it’s true.  Niche product selection should be your focus.

So let’s focus on choosing a specific niche!  Better yet, a micro niche.  More on that in a moment.  By focusing on a specific niche, you can actually do things better than Amazon will ever be able to do.  Yep, that’s true too!

So there it is.  Determining what to sell online is the same as niche product selection.  You’re trying to figure out a specific type of product to sell on your eCommerce website.

What’s a niche anyway?  Well, in terms of products and eCommerce, a niche is simply a sub-set of a larger group of products.  But I bet you already knew that.  If not, here’s a good example:

‘Doll houses’ would be a niche within the girls’ toys market.  Fisher Price Doll Houses would be a more focused niche within the Doll Houses niche.

Niches are like categories and sub-categories.

Why should I choose a focused niche over a broad category?

Great question.  There are a couple of very important reasons why I recommend focusing on a niche.

  1. Your path to becoming an authority, getting noticed, and building an audience is much easier if you’re focused on one specific niche.  It’s exceedingly more difficult to focus on a broad category in a large market, with lots of different categories and product types.  Start small, then grow bigger if/when it makes sense.  But honestly, don’t even worry about getting bigger right now.
  2. Better conversions!  That’s right.  If your site is specifically tailored to a particular niche, people will be more likely to purchase from you.  If you seem to specialize in just what they happen to be looking for, you instantly gain a level of authority and expertise in their eyes.  People would much prefer to order from an expert over a super-store, all other things being equal.  (And if you provide real value, they’ll even pay more to buy it from you!  …true story)

When you’re just starting out, you want to give yourself the best possible chance for success, with the least amount of personal and monetary investment.  Focusing on a niche allows you to do that.

Okay, so hopefully I’ve convinced you about the importance of choosing a niche.  I want to take it a step further now, and urge you to get really focused, and seek out a ‘micro niche’.  A micro niche is just as you suspect.  An niche of a niche.  A very specific product sub-category, in other words.  So in our example of the Doll House niche, ‘miniature doll house beds’ would be a micro niche.

I know, it seems awfully specific.  But remember, you want the least path of resistance when starting a business; the lowest barrier to entry; the best possibility for success  (that is, sales).  A micro niche, if chosen properly, will give you these things.

Some Proof, Please!

Okay, okay.  You don’t just have to take my word for it.  Building niche-based websites has long been a proven model for success in the online marketing world.  There are countless examples of people who have made a killing with affiliate product promotion or adsense, by focusing on very specific niches. This is no different for eCommerce sites that sell physical products.

One great example, from noted ecommerce expert Lisa Suttora, details how a man went from a “variety store” model (selling a little bit of everything) on eBay, to deciding to focus on specific niche ecommerce sites.  He now owns many niche ecommerce sites and has been listed as one of Australia’s 30 under 30 entrepreneurs.  Focusing on one niche at a time gave him greater SEO and online marketing leverage, intimate market knowledge, clearly focused brands, etc.

There are also lots of real-world examples that demonstrate how reduced choice can lead to improved conversions for online stores.  One awesome example, from eCommerceFuel (http://www.ecommercefuel.com/inside-relaunch-online-store/) details how a trolling motor (those small fishing boat motors) site increased conversions by over 48%, and average order value by over 32%, by reducing the number of products they sold and focusing on a specific type (a micro niche) of trolling motors.  And by the way, Andrew’s site is a killer resource for starting and running an eCommerce store.

Another example, from Visual Website Optimizer, shows how they were able to increase site engagement by 27% after removing a product filter from one of their product categories.  This is a good example of how fewer choices can mean better results.  Something like a product filter would seemingly be a benefit to the user.  But A/B split testing showed that it actually just distracted visitors.  Having fewer choices allows your customers to get right to what they’re looking for, without being confused or distracted with anything else.

Not Just Any Niche

Alright. You’re still reading so I hope we can agree that choosing a niche or micro-niche is a wise approach.  Awesome.  I knew you were a wise one!  But what’s next?  You can’t just throw a dart and pick the first niche it lands on.  If you select the wrong niche you’ll either be competing with Goliath (Amazon), not competing at all because nobody wants what you’re selling, or worse yet, competing on price because you’re selling a commoditized product that folks can get at the corner store.You need a practical, data-backed method for choosing just the right niche.

It’s simple really, in theory.  At the very minimum, you want to identify a niche that is searched-for frequently, and is at the same time undeserved by existing eCommerce merchants.  So a niche that a lot of people are interested in, but for which very few online stores are offering a viable choice.  Easy!  Only, it’s not all that easy.

It can actually be pretty darn difficult to find such a niche.  And that, my friends, is something a lot of eCommerce ‘experts’ won’t tell you.  They’ll make it seem like it’s as easy as brainstorming 20 ideas, narrowing down your list, and doing a few Google searches to find the perfect one.  No!  That’s not how this works.  It’s more complicated than that.  But thankfully, it’s not rocket science.

You just need a plan and the right tools, along with some basic guidelines.  Maybe a step-by-step plan of attack?  Okay, here you go.

Step 1 – Mindset
It’s not about what YOU are interested in.  It’s about what potential customers are interested in.  To be clear – I do not recommend that you “follow your passion” or “choose something you’re passionate about”.  If, after all of your research, you happen to have found a niche that meets your criteria and you’re passionate about it, then great.  That’s certainly not a bad thing.  But your passion alone should not be the driving force behind this selection process.  For example, let’s say you’re like me and you’re passionate about golf.  Despite not being very good at it, I do love golf.  And frankly, I’d love to own a golf equipment eCommerce store.  But that would be a horrible niche to enter.  It is saturated, completely.  There are so many online options for purchasing golf equipment.  It would be extremely difficult to ever get noticed in this crowded space.  Even in a micro-niche like a specific type of club, the competition is very strong. I’d be trying to compete with giant online and offline retailers, large content producers (Golf Digest), etc.  It would be difficult and expensive to get onto the first page of Google’s search results…not to mention it would take forever…if it ever even happened.

Make it easier on yourself.  Don’t focus on a passion.  Change your mindset and focus on a business approach.  Focus on an approach that seeks to validate demand and profit potential of your niche.

Here are a few other niches I wouldn’t touch, simply because the competition is already so strong:

  • Insurance
  • Debt Consolidation
  • Mortgages & Loans
  • Real Estate
  • Computers and related equipment
  • Stocks
  • Travel
  • Making Money Online
  • Weight Loss
  • Dating

Step 2 – Generating Ideas
Once you’ve established the proper mindset of commercial viability over passion, you can move into the idea generation process.  This is the phase in which you develop a list of potential niches for your eCommerce site.  You just want to come up with a group of potential niches that you can further refine based on the criteria we’re outlining elsewhere in this plan.

First off, avoid the highly competitive niches listed above.  Again, those are typically too competitive to waste your time on.  Think small, undeserved, focused, micro niche. Develop a list within those constraints.

If you’re in idea generation mode, try to always be aware of that fact and try to pay attention to things you read or hear, and how they may spark ideas for product niches.  Be aware of your surroundings as well, as you may come across a product in the store, or a situation in every day life, that sparks the idea creativity.  There are also some tools and resources you can use to help.

Popular lists like Twitter Trends, Google Trends, or Amazon best sellers.  Tons of ideas there.  Twitter and Google will give you ideas about things that are trending, topical and popular right now.  Many of these topics may not be product oriented, but they can spark ideas of related product niches.  And the Amazon best sellers will give you an idea of the best selling products on the web right now.  If you can find a niche variation of one of those, then you’re on your way!

Spend a couple of hours of the course of a 2 or 3 days just thinking about niche ideas, looking at these resources and jotting down what you come up with.  You’ll have a great starting point.

Step 3 – Profitability
Just because people are looking for something, doesn’t mean it has profit potential.  You’ve got to choose a niche in which people are actively looking to buy a product, and a product already exists.  For example, I know lots of people are afraid of spiders.  And if you do a Google search for ‘afraid of spiders’, you’ll find over 7 million results.  It’s definitely something people are interested in and searching on.  But what you’ll also find is a glaring lack of products being sold.  None.  There are zero Adsense ads, and no eCommerce stores come up.  That doesn’t mean this is a great, un-tapped opportunity.  That means that people searching in this niche aren’t looking to purchase products.  They’re just looking for information.  Now, you could instead focus on the spider killing niche if you’re the murderous type.  A search for ‘spider killing’ does reveal one eCommerce result for a spider killing spray on sale at walmart.com.  But this violates our guidelines in that it’s a commoditized product, is for sale at the corner store, and is being sold at an online giant like Wal-Mart.  No thanks.  I’ll pass.

So what identifies a niche as potentially profitable?

  • There are some (but not too many) commercial listings in your search results.  That is, when you search for, say ‘heated dog house’ you’ll notice several ecommerce sites show up in the organic search results.  Additionally, there are Google promotional ads (Adsense) along the top and right side of the organic results.  For heated dog house, the competition is pretty stiff, so I’d probably stay away from it.  But, perhaps there’s a more obscure micro niche within the heated dog house category that has some, but less, commercial competition.  That’s the kind of thing we’re looking for here.
  • Do your target customers have the money and ability to buy what you’re selling?  For example, you might not want to market luxury dining tables to recent college grads.  It’s out of their affordable price range…not to mention extremely difficult and expensive to ship.
  • Is it something people want year round?  Seasonal niches can work, but again, why make it harder than it has to be.  Give yourself the best chance at success by selecting something that people want any time of the year.

Ensure that your niche has profit potential before moving into the next step.

Step 4 – Prove Demand
So far we’ve developed a mindset that favors a business approach, we’ve generated a list of ideas, and we’ve filtered down that list to leave only the potentially profitable niches.  Now here’s where it gets interesting…dare I say, exciting!  We can actually ensure that there is sufficient demand for our niche.

There are no certainties in this game, but being able to tell approximately how many people are searching for your niche every month certainly stacks the deck in your favor.  And you can very easily determine this key metric.

First, you need a keyword tool.  You can go premium, with and excellent tool like Long Tail Pro that really does a deep dive into keyword research.  It provides you with extensive keyword analysis and suggestions, competitor analysis, Google rankings, etc.  I’ve used it and highly recommend it for niching down to a profitable, and in-demand micro niche.  However, if FREE is your thing, then Google’s Keyword Planner tool will do the job just fine.  Either way, these tools provide you with data on how many people, per month, are searching for a specific term, as well as many many related terms.

Regardless of the tool you choose to do keyword research, here’s what you want to look for to prove demand for a niche:

Take each remaining niche from your list and do the following:

  1. Enter it into your keyword tool of choice, and be sure to select ‘exact’ match search results, and make sure you’re only looking locally (as in the United States only).
  2. Run your query
  3. Here’s what to look for, for each keyword phrase:
    1. At least 3000 local monthly searches – this ensures that a significant number of people are searching for your niche…demand!
    2. Make sure there are lots of variations of your keyword.  10 or more is a good target.  These would be ‘long tail’ variations.  Ex – if your niche keyword is “ant farms”, some long tail keyword variations might be “glass enclosed ant farm” and “ant farm with queen”

So, not only do you want to ensure that a significant number of people are looking for what you’re selling, but you also want to make sure that there are lots of long tail variations of your niche being searched for.  This is because, in reality, most ecommerce sites only get about 20% of their traffic from their primary keyword.  All the rest of the traffic is coming in from those long tail variations.  So you want your niche to have lots of these variations that you can target with great products and / or content.

There must be demand for your niche, before moving on to the final step!

Step 5 – Assess the competition
Even if you’ve done everything right up to this point, you still may not have a viable product niche to pursue.  That’s because there may be too much competition.

But Ryan, didn’t we already think about competition in the first step?

Indeed we did.  But that was in a much more broad sense than is required now.  At that point we were just thinking logically, and being prudent so as to not waist our time researching saturated niches.  But now, you have a much narrower list that’s been fine-tuned and filtered down to the best possible opportunities.  It’s now time to complete your final due diligence for each of the remaining niches.

It’s time to analyze the competition to make sure you have some kind of chance to get your site noticed, ranked, and into the fold.  We want to identify a couple of targets in your niche.  By targets, I mean sites that are vulnerable, not up to the standards of the others, low quality, forgotten, abandoned, etc.  We can feel pretty confident that we can eventually out rank these targets!

To do this you really just need to look at three metrics, for each of the top ten sites that come up in Google for your niche keyword search.

The three things you need to look at are Inbound Links, Domain Authority, and Website Quality.

Inbound Links – These are links pointing to a website from other websites.  Also known as incoming links, they represent one of, if not THE most important SEO factors.  Google places a large importance on the number of inbound links a site has, when determining search position.

So you want to evaluate the number of inbound links that each of the top 10 sites have in Google’s results.  You can fairly easily achieve this with a tool like Open Site Explorer.  Simply enter up to 5 URLs at a time and run the search.  What you really want to pay attention to is the “Linking Root Domains” number.  This is the number of unique websites that are linking to it.  Depending on the niche the numbers could be in the 10s, 100s, or 1000s.  You want to look for opportunities here.  So if every site has 1000s of uniques, you want to avoid this niche.  But, if every site has numbers in the low 100s, I wouldn’t be too worried.  The gold here is when you find one or two (or more) sites in the top 10 results that have much less than all of the others.  Those are your targets, and that tells you there is room to work your way in to the search results in this niche!

Domain Authority – This is a metric developed by Moz.com one of the leading SEO communities, and is widely used as an indicator of Authority in the SEO industry.  It’s essentially an algorithm that predicts a website’s ranking potential based on a bunch of factors.  Luckily, Open Site Explorer can also be used for gathering this metric.  So you’ll be killing two birds with one stone here.  You quickly notice the Domain Authority metric for each site you evaluate.  It’ll be in the top left of the results.

Domain Authority - OpenSiteExplorer

Domain Authority Metric in Open Site Explorer

Again, we’re looking for opportunities here.  70 and up is considered very strong Domain Authority.  So if all 10 results were above 70, I’d avoid that niche.  If a few are really low…like under 30, that’s a big opportunity and I’d pursue that niche.  Basically, just look for a couple that are much lower than the rest and target these.

Website Quality – This is a less precise evaluation and won’t rely on some tool or number.  This is your reality check, your hands-on diagnosis of the competition.  You want to visit each of the top ten sites and determine their level of quality.  This isn’t anything specific.  We know quality when we see it, don’t we?  Look for things like professional design, great navigation and usability, great added-value for the customer (things like product guides, helpful tutorials, videos, etc…great content).  If every site knocks it out of the park in the quality department, I’d avoid the niche.  But what we’re looking for here is…say it with me…an opportunity!  Are any of the sites poorly designed, hard to navigate, offering no additional value to the customer?  If so, here again, these are your targets.

What to Sell Online – The Selection

Have you’ve been following along?  Have you performed each of the steps outline here in succession?  If so, you should have arrived at this point with probably one or two excellent niches!  They’ve passed all of the tests and cleared the hurdles.  We can be fairly confident that these niches would be profitable.  You’ve given yourself the best chance of success!

If you have one or two niches, all you have to do now is pick one.  You can feel confident that it is a smart way to go.

Next, you’ve got to put a plan in place to source products, develop a website, and promote it.  All of which can be done rather painlessly.  Especially if you have a little help. And that’s why I’m here.

We’ll get to product sourcing next!

Next Steps

If you liked this article, or hated it for that matter, I’d love to get your feedback.  Leave a comment below and let’s begin the conversation!

I highly encourage you to follow this step by step process if you’re interested in choosing a niche a new ecommerce site.

Take action, and let me know how it goes!

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6 thoughts on “What to Sell Online: Niche Product Selection

  1. Pingback: Starting an Online Business | Everything You Need to Know

  2. Ola

    hi ryan, thanks for the follow this morning. This is a great post. Good work – the logic is excellent. Will share it with appropriate clients too :)

    thanks
    Ola

  3. Pingback: Introducing #AmazonDomination - Sellbrite Blog

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