Online businesses of all kinds have been enjoying massive growth over the past few years. The advance in technology and the change in consumer buying habits have increased the demand for online products and services. If anyone is thinking about starting an online business, now is the best time. However, there are several things a person should know before starting an online business. One of those things is knowing which niche to pursue.
We often get questions from new entrepreneurs about finding the right niche for their online businesses. In this post, we will take you through the process of finding the right niche for you.
What are Niche markets?
The ability to fully concentrate on small and specific segments of your business will enable you to garner maximum profits. Niche markets are well-defined and specific segments that you chose to fully concentrate all your marketing efforts. It is important to note that a niche is not defined but created.
This is done by identifying needs, wants, and requirements that are not satisfied by other business ventures. Therefore, you must identify your niche markets before starting your business. Below are ways of finding the niche markets for your online business:
Start with your interests and areas of expertise
Starting a business and sticking to it is quite a challenge. This is especially true if you are tackling issues that are foreign to you. It is important that you make a list of all fields that interest you and also topics and areas you are passionate about. Take a deeper look at what you are good at and know a lot about.
A niche market is created from gaps in the market. You will be able to identify those gaps by doing some research on other competing firms. It is crucial in helping you gauge whether you have an opportunity to stand out among other firms. Similarly, you can also find ways of creating a unique product and therefore distinguish yourself from your competitors.
Finding Niches Within Major Markets
One of the keys to finding the right niche is to look at some of the major markets and identify underserved segments within that market. For example, the cosmetics and beauty industry generates about $62 billion annually with about 36.4% being for skin care. A possible underserved market could be women of color who are over 30 years old and experience dry skin.
Here are some of the major markets with areas of opportunity for your niche:
Fitness and Weight Loss– One of the giant markets that is clearly not going anywhere is the fitness and weight loss market. This market can be either fitness training, equipment, and gym memberships or nutritional supplements, diets, and programs. The weight loss industry alone commands roughly $60 billion annually with fitness (mostly gym memberships) making up another $27 billion. So if you have a business idea for anything involving fitness and weight loss it is best to act quickly.
Dating and Relationships- Roughly 45% of US residents 18 or older are single. Compare that to the 37.4% in 1974 and you can see why any help in the area of dating and relationships has been lucrative. Although a large percentage of relationship help is targeted at romantic relationships, niche markets that may be underserved are the other important human relationships like family, friends, and co-workers.
Pets- It is said that people will spend any amount of money on their children and their pets. That seems to be true given that Americans spent a record high of $66 billion last year on their pets according to some reports. That revenue marks a $6 billion increase from the previous year.
Self-Care Products and Cosmetics– Even though there are some big players in their field like L’Oréal and Procter & Gamble Co, there is still plenty of sales to go around. With many Instagram influencers, becoming the spokespeople for cosmetic lines, many have taken the opportunity to launch their stores for these products.
Clothing– If you have an idea for a clothing line, brand, or any type of apparel, it is a good idea to jump and start the process of selling your products immediately. The apparel market generates a whopping $356 billion annually in the US and an estimated $1.3 trillion worldwide. Finding a niche market in this area is somewhat easier to do and can be something as simple as selling a unique brand of t-shirt from your online store.
Subscription Boxes-With the rise of companies like Birchbox, the subscription box industry now generates $5 billion annually. Years ago many were labeling subscription boxes a fad. But the creating and delivering quality products never go out of style and the industry seems to continue to grow stronger.
Self-Improvement-Everyone wants to be a better version of themselves, right? That is one of the reasons the self-improvement industry is such a lucrative segment. This segment can include books, programs, or products that help people improve their lives.
Keep Your Eyes on Trends
Keeping up with what is trending is a key step in selecting your niche. Just a word of warning, however, it is very dangerous to chase trends. In 2017 fidget spinners were a hot commodity and everyone wanted one. But, by the latter half of the year, all the hype died down and the interest in those types of products cooled and so did the sale of the items.
To help research the trends and the overpopulation’s interest in them, we recommend you use these two tools:
Market research of all kinds is an important activity for any online business to practice. However, when looking for the right niche, paying attention to trends is even more important.
Identify Problems that You Can Solve
Make a list of all the problems that your target customers are experiencing and identify those which you can solve.
Conduct one on one chat sessions with a person from your target market. Try to create a clear framework of questions that you will ask during the session. Go through forums that are relatable to your specific niche and pay attention to the questions and issues raised in those threads.
Another way to identify problems is to listen to what people complain about. Visit Twitter and search terms to see what the complaints people have of brands and products in the niche you are leaning towards. Also, go to Amazon and read through reviews of products sold. Take a look at the 1 and 2-star reviews. What are some of the things people are unhappy with?
What is the profitability of your niche?
After identifying your passion, interest, and the problems you can solve, computing the profitability of your niche is crucial. Browse through the products available in your niche and identify any advertised or available offers. If you can find a few products then you should note their pricing range and determine your prize offer. However, if the niche you have chosen does not have any offered products, you will have to identify another niche market.
Testing your idea
With all the above procedures and knowledge on identifying your niche market, you should be able to create a niche and test the idea. Create a landing page where you can pre-sale the products you are developing. To increase visits to your page, identify an advertising agent and pay them to advertise your products. Social sites like Instagram are also a great playground to see if people are interested in what you have to offer.
Although those are good ways to gauge interest, the best way to test an idea is to launch it and limit the downside. We often preach this type of “action focus” on StartUp Mindset because it is one of the things that separate extremely successful entrepreneurs from mediocre ones.
In online business, identifying a niche market and fully dominating the segment is crucial. To reap maximum profit in your online business, you should regularly try to find a niche. Do not do it once! This will help you expand your business opportunities. Finally, note that a niche market will also help you acquire more customers since your aim is satisfying their special needs.
Once you have found your niche, you can focus on building your business by doing the things necessary to succeed online.