What is the best niche for me to sell in and what is the most profitable product to sell in that niche?
This is a question that pops up in my inbox all too often and I have to admit I do find it frustrating. Why?
Well because it’s just like the ‘million-dollar question’. It’s like me asking you, ‘What should I eat for my supper this evening and what portion size should I serve?’
Or ‘What colour scarf should I wear today and will it look good with my new coat?’
Firstly, where are the details? I am unlikely to glean from your brief question about niches what your interests might be or what you have some knowledge about or skill within.
I won’t know whether you are a newbie or have some experience. I won’t know what your buying power is or how big or small you want your business to be…
Just as you are unlikely to know what foods I prefer or how much I like to eat, what colour scarves I own or what colour my coat is!
So, the best you could do in an attempt to answer my question about supper for example, is to take a very lucky guess. You might actually hit the nail on the head and I might end up eating a hugely satisfying meal of just the right proportions, or you might suggest something that I intensely dislike. Either way, there’s no real harm done in this scenario. However, lucky guesses are definitely not an option when choosing the ‘perfect niche and product’.
And that’s why there is no definitive answer to the question.
There are lots of factors involved, including as I’ve said, your experience, your interests, capital available, goals and aims. But what I want to give you an insight into today is something that can help you at least in part, determine the niche and product that may be the best for YOU based on your own interests, knowledge and ideas and more specifically how the actual size of a niche can affect the potential for you.
Niches can be too big…or too small
I must make it clear that only you can decide which niche you want to sell into. Choosing a niche is only as difficult as you make it and so many would be sellers end up procrastinating for way too long over this. My advice is always to start with something that interests you, something you know about or is connected in some way to your lifestyle or a hobby or a passion. This makes it much easier.
Once you’ve done that you’ll need to find out what the total sales are in that whole niche over a 30 day period. So, for example, if you have chosen the ‘Dog Supplies’ niche you should research the total combined number of sales for all doggie products over the past 30 days. This could include dog leads, dog collars, dog coats and so on – you’ll need to make a list of products ready for your research. The niche will likely contain a variety of products like this which you’ll investigate and then eventually add all of your data together to get a total sales sum.
Now, I’m not expecting you to start counting products sold from individual sales listings. You’d be doing that for ever, which isn’t the best use of your time! There’s a far easier way and that’s by using Terapeak – specifically their ‘Product Research Tool’.
You can get a free 7 day trial at http://www.terapeak.co.uk and find the exact data you need by searching for each product individually (e.g. dog lead, dog collar etc) and then simply adding up all the sales.
You’ll end up with a total number of sales for the niche as a whole that you’re interested in selling within and this will give you a general insight into whether that particular niche is too big for you to consider, or indeed too small.
Now, I’m aware that I haven’t stated what exactly makes a niche too big or too small yet but I’m coming on to that now, because there’s something else you need to consider in order to decide whether a niche is viable or not and that is your buying power. Just like a niche – your buying power can be too big – or too small.
Big niche. Buying power too small
Let’s assume for this example that you are a newbie and have start up capital of around £500 to £1000. If you’ve done your research and discovered that the niche you are interested in has 30 day sales of £300,000 then it’s very likely that the niche is just too big for you to get into with such a small amount of capital. You would need to spend your entire budget on stock and then there is the chance you would run into cash flow issues.
But all is not lost – if this is the case then simply narrow things down to a smaller sub-niche – for example ‘dog leads’ – again calculating the monthly sales figures, and base your start up around just one or two products in that sub-niche instead. This way you’ll become more specific and your initial capital will go further.
Small niche. Buying power too big
Yes, it’s possible to have too much buying power that would be wasted on a tiny, tiny niche. At the opposite end of the scale, if the niche you’ve researched only has 30 day sales of £5,000 for example then it’s going to be far too limited for you to make any real money. The exception to this rule is if it’s for example a £5,000 per month niche with only a couple of sellers in it. This would be extremely rare, but it can happen. The issue here is that a new seller in such an unsaturated niche will definitely cause waves, simply because those original few sellers will immediately see a drop in sales as soon as you enter the market. The knee jerk reaction to this will probably be price cuts from the original sellers and ultimately this causes a price war – and this is not good for anyone. This doesn’t happen when you enter a larger niche because any impact from a new seller is offset across lots of other sellers rather than just one or two.
Don’t forget too that when a niche is too small to consider, the potential is there for your buying power to take you much further and much more quickly. The key is to make the best use of your budget and get a good return on investment.
So, consider the 30 day sales figure in the niche, consider your available capital and also make sure you look at your competition – particularly sell through rates. You can see all this information very easily using Terapeak.
This way you can make a far better informed decision as to which is the ‘perfect niche’ and the ‘best product’ for you to sell, bearing in mind the actual size of the market and your own individual future business goals.
