Many people make the basic mistake of not understanding their market before they begin a business, it can be exciting purchasing products and building a web store, however before you’ve started any of this you need to think about what market you’re going to operate within.
With the popularity of the internet many markets are hugely competitive, meaning you’ll either need a superb marketing campaign to attract customers or revolutionary products which your competitors can’t compete with.
It goes without saying that the most profitable markets tend to be around niche items and services, however some niches have such a small audience, the profits are relative to their size.
Before thinking about which market you want to operate within, you need to think about the following points:
- Is the market big enough for a new product or service?
- Are their other companies already selling a similar product?
- What’s the general estimation of people who are purchasing?
- Are people purchasing “one off items” or repeatedly coming back for more?
- Are the potential customers easy to reach?
- Are the customers passion about the niche?
- How long has the niche been established for? Is it a new market or old?
As you can see, there’s a lot of different things to consider before deciding the right market for you. Remember the large markets will all be competing on price, thus the lowest company who can produce the products or services will ultimately win in the long-run.
It’s not uncommon for competitive markets to see companies only making 1 or 2% profit on each item they sell. In these markets its all about the volume of products rather than the profit on each item.
There’s plenty of places where you can find ideas for niches, including social media platforms, keyword planning tools, advertising agencies who give competition data, message boards, forums and even your own market research such as focus groups, interviews, surveys, questionnaires and so on.
For some niches you may find they have a fantastic market offline, which hasn’t transferred yet to online. This can be a great opportunity for you to get in there before a competitor.
However, this obviously means you’ll need to do a lot of ground-work away from the internet to see if the niche is viable and big enough for you to make a profit.
The general top performing markets in ecommerce include:
- Beauty – In 2018, the organic and natural
beauty category is predicted to become a 2 billion-dollar industry.
- Vitamins and Supplements – Heathy lifestyles are extremely
popular, the market for vitamins, powders, and supplements will continue to
grow. Sales for these types of products are expected to reach $13 billion by
- Pet Supplies – This is a large market in the
United States and other western countries. The pet industry is expected to
reach $96 billion in the US by 2020.
- Baby Equipment – According to Inc.com – It’s
estimated that by 2018 there will be more than 6,000 companies looking to sell
products via e-tail in this “niche” market.
- Subscription Boxes – The subscription box model is
useful for the seller due to its high customer lifetime value. Visits to
popular subscription box sites have grown 3,000% since 2013.
A good tip I can share with you, to help you on your way, is to think about hobby’s and how passionate people are to them. For example, mountain bikes can cost hundreds of dollars, if not thousands in some cases, while you may not start a bike store, there’s hundreds of relatable accessories which hobbyists will quite happily purchase to supplement their main interest.