Written by Lyndon Scott

July 20

How to Find a Profitable Ecommerce Niche in 2021

So you want to start an online store and sell stuff to the masses?

Maybe you're just starting in e-commerce or, perhaps you've been at it for a while. Either way, one of the most significant decisions that'll affect your success (or failure) is choosing a profitable niche.

How do you go about finding an ecommerce niche that will make your online store profitable?

It's pretty challenging, especially if you're a beginner. You want something with high demand and low competition, but it needs to be profitable as well. 

This is a guide for anyone looking to find actionable steps on finding a potentially profitable ecommerce niche.

I'll break down how you go about finding a profitable niche for your online store and how you can increase your chances of success in this game.

I'm sure the first question on your mind is, "Why do I need to pick a profitable niche for my online store?" After all, what you sell doesn't matter as long as it sells, right? Wrong!

It matters because you only have so much time and resources to spend on your online store.

If you choose a niche that doesn't convert well, it will be hard for you to make your online store profitable.

On the other hand, if you've picked a profitable niche, your chances of success increase significantly.

You'll have more time and energy to focus on things that will help your online store grow and make you more money.

Why Is it Important to Pick a Profitable Niche? 

Think about this. You're spending money on building your online store, paying hosting fees, designing the website, and all other monthly expenses that come with running an online business.

If you don't get enough buyers or sellers, your store is bound to fail. 

You don't want to spend a lot of time and money on something you're unsure about.

Even if you have the best ecommerce platform on the planet, there won't be a difference if your online store isn't profitable.

So why take risks? Find a niche with high demand and low competition instead.

What is an Ecommerce Niche?

An ecommerce niche is a market segment that you're going to target. It's an area of interest where buyers and sellers exist. A niche targets a specific group of people in the population.

Ideally, a profitable niche should have low competition but high demand. It's where the money is, and that's what you need to establish your online store in.

While a non-niche store can have more customers, there are also tons of competitors to deal with. Niche stores have fewer competitors and allow you to be focused and gain some loyal shoppers.

These are the four main categories that you should consider when looking for a niche:

Pricing

For this category, the niche depends a lot on the products you are selling.

The can be a huge difference when selling cost-effective, premium, or luxury products as different consumer groups have different needs.

Demographics

For this category, the niche requires a specific and well-defined audience. Sporting and fitness products are naturally sold to young adults, while luxury items sell more to the older demography.

Psychographics

For this category, the niches revolve around the reason why people shop. Psychographics are different from demographics as demographics revolve around identifying who the shoppers are.

Psychographics go into understanding your audience's hobbies, spending, and shopping habits.

Geographic

Niches in this category are determined by where you want to sell your products. Are you selling locally or targeting global sales?

Why Do You Need an Ecommerce Niche?

As said earlier, there're many benefits to selling everything, including generating massive revenue for your e-commerce store.

However, finding an e-commerce niche also has its benefits.

First, as a small business operating in a niche, there's little competition to deal with. General stores often have a lower ROI than niche stores as you get a better quality of leads and loyal followers than a broad audience.

Secondly, you're likely to find/create communities within a niche, which helps you establish a fanbase of customers who are willing to pay for the products you sell.

Niche e-commerce stores are easier to rank and perform better with SEO. People often search for specific terms rather than general categories.

If you have a niche store, it's easier for you to pop up in Google and show up in social searches.

Should You Follow Your Passion or The Money In a Niche?

For some people, passion matters a lot in what they do. Without a passion for what they do, they lose commitment and dedication. They have to love what they do.

Others find satisfaction when their efforts translate into monetary value. They don't mind jumping into any niche as long as the money flows in.

Whichever the way, it's essential that both passion and money be a massive reason to finding a niche that will keep you motivated to serve your audience better.

So how do you balance between passion and money?

When you find your passion, you also have to know that there are consumers alike who share the same passion.

You will also have to ensure that the pricing is right to turn a profit and some fun while creating content for it.

If passion is your roadmap to choosing a niche for your ecom store, here are some questions that you will need to answer;

  • Which blogs, websites, and social communities do you frequent the most?
  • Which pages on social personalities do you follow on social media?
  • If your friends described you, what would they say is your biggest obsession? (Ask them)
  • If you had a thousand dollars to spend, what would you spend on?

If money is the light to your path and you are looking for a niche based on how much you can make, here are some questions for you.

  • Which are the fastest-growing online retailers today? What products are they selling? (Focus on niche retailers)
  • What are the average sale prices of various categories like jewelry, apparel, toys, and many more?
  • Which are the most popular products right now?
  • What are the average profit margins for these products?
  • How much profit do some niches make if you do decide to invest in them?

How To Know If a Niche Is Profitable

You want to find a niche for your ecommerce store to avoid fierce competition and make money, but that doesn't mean competition is bad.

You still need competition in order to guarantee that there is actually a market for your niche!

Not all niches will make you money. Some niches are more profitable than others, but that's not all.

It's also important that you think of evergreen niches that are not affected by trends or seasons. An evergreen niche is sustainable and will make you money all year round.

How to Search For Profitable Niches

Here are a few steps to take if you want to find a profitable and sustainable niche over a long period.

Step 1: Check Google Trends

Google Trends is a good platform to start. This tool will tell you what is popular and trending right now. Google Trends will show you how particular search terms regarding a niche have been doing overtime.

A great trend for your niche should show a standard curve that extends over time. Here is a screenshot of a niche (circular saws) that has a sustained traffic flow for over a year.

You can even niche further down if you wanted to. Here is a Google Trends screenshot of a sub-niche in the circular saw niche that would potentially target a fanbase of customers who prefer using Makita circular saws. 

Some trends might be seasonal but also worthwhile. A good example is the lawn-mowing niche. Searches seem to pick up between February and July, after which the curve takes a sharp decline. However, all year round, there seems to be traffic (albeit low) for the term “lawnmower.”

There also seems that in the lawn-mowing category, there exists a brand fanbase of people who expressly prefer the “Bosch” brand, and more specifically the “Rotak Lawnmower.”

Step 2: Do Some Keyword Research

Finding out the search volume of your niche idea is essential as you get to know if there are enough people interested in a product that you plan on selling. 

Of course, there’s more to analyzing keywords and knowing what works from what doesn’t.

Tools like Keywords Everywhere, Ahrefs, and Ubersuggest help identify how much traffic a search term receives.

Here is a screenshot of an Ubersuggest Keyword research report for the search term “Makita Circular Saw.”

Step 3: Check The SERP Competition

Competition is inevitable. Several factors determine how competitive a niche is, and you need to know what they are before settling for one.

Checking the SERP competition level will give you an idea of how hard or easy it would be to rank on top spots for your targeted keywords.

Tools such as SEMrush and Ubersuggest will help you identify how competitive a niche is.

Step 4: Check Amazon For Trends

Amazon is a great place to mine for ideas. You'll need enough time to look up your niche on Amazon and see the number of search results you find. These results will give you a rough idea about how popular the niche is.

The Amazon Movers & Shakers listings are always great for inspiration.

Amazon Movers Shakers

Pick a Niche Where You Can Add Value

Aside from figuring out a way to make money from your e-commerce store, you also want to find your niche where you can add value. 

It would help if you focused on niches where the information is scarce or limited. It could be that there are no other blogs about your chosen topic, and this makes it easier for you to rank quicker without much competition.

Create Content That Answers Questions

Creating content is an effective way to build trust and authority, especially if your e-commerce store niche has a dedicated audience of hobbyists.

Many people do this by creating blogs on various topics, writing about their own experiences, helping others solve problems, or just share knowledge. 

If you want to save time, check on Quora or Yahoo Answers for questions that people are asking about your niche. These answers will then form the content of your article.

By covering people's needs through creating content that enriches their decision-making process and solves their problems, you create goodwill.

People don't mind buying from people who helped them solve a problem.

Targeting the Right Customers

Knowing the ideal customers for your e-commerce store niche is important.

While all customers are welcome, being deliberate with the type of audience you want to sell to is important and can make a huge difference.

Let's take a look at some examples.

Passionate Hobbyists

It's incredible how much money people can spend on things they are passionate about.

For example, campers are willing to go all out in buying the right gear- to make sure that their camping experience is perfect.

Off-roaders can spend upwards of $50,000 customizing their cars for the experiences they love.

All you need to do is look on Facebook to see how many groups revolve around off-roading.

Facebook Off-Roading Groups

If you can find a niche with a customer base that is passionate about their hobby and products, then you have a chance at providing value and succeeding in your e-commerce store niche.

Pain and Problem

If you've had a serious problem that badly needed a solution, then you might understand how willing you were to solve the problem.

Targeting an audience with a pressing problem and offer a solution will also help you make money.

The knee and back brace dropshippers made an absolute fortune a couple of years ago, but that's also not to say it's a good idea to sell medical products.

That's a discussion for another day, however!

The Final Word On Niche Selection

Choosing a niche for your e-commerce store is an important decision. It can be difficult to find the perfect fit, which is why it’s so helpful to take into account all of these factors when making your choice.

While you may not always have control over what type of customers are visiting your site, there are many other things that you do have some say in. You should first think about whether or not it will be sustainable and profitable as well as if they would make a good target customer who has enough money to buy from you. 

However, there are other things you can do to ensure the success of your site. By offering quality content and solving problems that people have, you can build trust and a loyal customer base.

By following these tips, you’ll be able to create a thriving e-commerce store in no time!

About the author 

Lyndon Scott

After leaving behind a career in the corporate property development world, Lyndon founded Carts+Conversions in addition to running his own eCommerce brands. Lyndon enjoys writing about different ways to run a successful Shopify eCommerce business so if you have any requests, please feel free to make contact! Thank you for reading.


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