Choosing a Good Niche for Your Ecommerce Store

Since this is probably the most common "newbie" question in the ecommerce space, I thought I'd share some information on this...

There are some key factors to consider when choosing a good niche. First off, you need to look at supply and demand for your chosen keyword phrase (or product line).

Demand is easy: how many times is it searched for daily (or monthly) in Google? - You can use your keyword tool of choice to determine this. I recommend going after a product line where there are at least 80 daily EXACT MATCH searches in Google (US only).

Supply is where it gets a bit trickier. Since MOST free traffic to your site will come from Google organic search, I recommend looking at the top ranking sites in Google for the keyword phrase. How well are they optimized? Are they big brands or specialty shops (like you will have)? How many unique backlinks do each of them have? Being on page 1 is KEY to your success, so this is important! (Again, there are tools that can help you analyze this.)

Once you find a keyword phrase (aka niche product line) that passes the supply & demand test, you need to consider how logical the niche idea is. I call these the "big factors to consider before entering a niche!"

There are many, but my top 3 are:

1) Searchers "intent to buy" - The keyword phrase absolutely MUST have intent, otherwise there's no real point in driving traffic for it (at least for ecommerce purposes). This is a judgement call on your part. You need to put yourself in the searchers shoes and think about whether the phrase has "buying intent" or not. To give you an example, the phrase "blue cars" has FAR LESS intent to buy than "blue 2010 Acura TL." Spend some time thinking about this concept and it will "click" for you if it hasn't already!

2) Availability in national retail chains - Does Walmart or Amazon have a wide selection of this product type that spans several brands and price points? If so, this niche idea probably isn't "nichey" enough. You don't want to take on a BILLION DOLLAR company!

3) Anticipated profit per order - You want to be able to make at least $15-$20 per order, and that requires an average order of $50+ (assuming a 20-30% profit margin). This is important because a specialty store can easily make 5-10 sales a day once maximized, but is unlikely to make 20+. NOTE: keep in mind that this is profit per order, NOT profit per item.

There are many other factors to consider, but those are the "make or break" factors in my opinion. You may also want to think about seasonality, how "touchy feely" the products are & how technical the product type is.

That about sums up all of the basics! I hope this is helpful to everyone that's at the point of trying to select a good niche to build a store around. Happy ecommercing!