How many sellers in a niche is considered too competitive?

by | Sep 11, 2015

It’s up to you to achieve ‘the edge’. Here’s what to consider when dealing with online competition If you’ve been researching products to sell online, then I’m pretty certain that at one time or another you will have found a really great product which is being sold by a number of different sellers and each of those sellers is doing a steady trade with that product. I’m also pretty certain that you will also have found a really great product which is only being sold by a few sellers but who are making steady sales although not enough to set the world on fire! So, you have two dilemma’s here. Whether there is actually already too much competition from other sellers of that product or whether there is enough demand for the product for you to be able to succeed with it. Having some competition is a good thing, because if the market is busy, well it’s because there is a market! But what if the market seems to be particularly aggressive?
  • Should you then avoid that niche or product completely because of the amount of other sellers already there?
  • And how many sellers is too many sellers?
This is indeed a bit of a conundrum and one of the top concerns I hear about from would be online sellers – particularly those just starting up. But the problem starts because too many new sellers are desperate to sell the latest, most in demand products thinking they will make a quick buck. I’m afraid this is a recipe for disaster. Now before I go further, I should point out that there are of course some markets that are far too competitive to easily break into – particularly on eBay. I’m talking about some of the clothing niches and most certainly the electronics niche. There are simply too many big (and often international) sellers there who have huge buying power, all competing for the same market. They are able to buy in huge bulk quantities, price their products extremely low and sell in volume – and that’s how they profit. You wouldn’t be able to reach those prices, therefore it’s really not worth your while. This is why it’s super important that before jumping into any niche, with any product, you work out the supply and demand for the product you are looking at sourcing and selling. However, as I mentioned earlier, I often get asked ‘how many sellers mean there’s too much competition?’ But it’s not really about the number of sellers who are already selling within that market area that you should take notice of. More importantly you should analyse the number of sales being made and over what kind of timescales plus the potential profitability of the product. Here’s an example. Product A is being sold by just ten sellers, so you might think that this is a good small niche market to get into…but if each of those ten sellers is only shifting one product a day, then the demand simply isn’t there. Product B is being sold by one hundred sellers, which on the surface might make you think that it appears to be a more saturated market with more competition…but each of those one hundred sellers is selling five products per day – so demand is actually higher. So from this analysis you can deduce that the demand and potential profitability is significantly higher for Product B even though there are more sellers and so Product B would actually be the product for you to to source and sell. So, we’ve established that it’s not all about the number of sellers – more about the number of products being sold – and you can get this information by looking at a seller’s sales history directly from their listings on eBay. Look at big sellers and smaller sellers too to ensure you get a good comparison. I can honestly say that if I were to start all over again from scratch right now, I would be more concerned about the quality of my competition rather than the quantity. I research products more or less every day for my Source Report members and from my experience I know that you can definitely sneak into a market with a product even if lots of other sellers are selling it and you initially perceive it as too competitive! And there’s a reason for this! It’s up to every seller to gain their edge If there are a lot of sellers in your niche, in order to get a piece of the pie, you will have to do something a little bit different to attract customers and get your share!
  • Is there a unique spin you can put on a product to make it stand out?
  • For example, list it in a different category aimed at a slightly different market.
  • Can you offer a ‘similar but better’ product than your competitors?
  • For example, a higher spec model, a specific colour, a different size, a ‘bundle’.
  • Is your customer service better?
  • For example, faster dispatch, express delivery, quick email response times, a free gift, gift wrapping.
TIP: I suggest you purchase the same product from one or two competitors to see what their dispatch times are like, how they pack the item, what their customer service is like and then work out how you can be better!
  • Does your listing description go above and beyond your competitors?
  • For example, a FAQ section, lots of images, features and benefits.
It’s important that you stand out and if you can do this then you will succeed. If the original product you decide to sell is getting lost in amongst thousands of other listings, then narrow it down and really specialize. For example, if you sell bog standard dog leads and you are consistently being blown out of the water by bigger sellers who are selling cheaper, research and focus instead on a narrower market with a product to suit – in this case perhaps super strong retractable leads for dogs over 20kg. The result will be that whilst you are of course decreasing your market you will also be targeting a market and so the end result will be that you will achieve a higher search ranking for a very specific topic that will be searched for by people specifically wanting that product, rather than a generic dog lead. Focusing on specifics is an advantage when it comes to dealing with competition!