Congratulations! Deciding to venture into the world of eCommerce can make for a rather profitable decision. However, a major hurdle you have to clear now is finding the right niche for your business.
Granted, this process should not be overly complicated but you need to be smart when finding your niche. After all, striking a balance between what you can offer and what the market needs is the key to making your venture as profitable as possible.
When finding the right business niche, here are a few tips to keep in mind.
Gauge Customer Interest
Your business is not going to be sustainable or profitable if you don’t take into account what is called “buyer intent”. You might have set up a virtual stall in any of the online marketplaces, load it up with a lot of stocks of your products, and still find that no one is visiting your store. Why? Because nobody is interested in your offerings in the first place.
Before you set up your eCommerce business, you need to educate yourself with what the market currently wants and needs. To do this, you need an online tool like Google’s Keyword Planner. The app is designed to give you an idea as to the volume of searches made into a topic which your business can offer products or services at.
If the search volume is low on that topic based on the number of keywords used to search it and their frequency, that niche might not be as profitable as you might think. On the flip side, if the search volume for that topic is too high, then chances are that that niche is crowded.
Either way, you have to make sure that your products can be seen as solutions to whatever problems that niche regularly faces. The more problems your products solve, the more attractive your offers are going to be in the market.
Study the Competition
To really determine if your eCommerce business is going to be sustainable, you have to identify the size and severity of the competition it is going to face. First, check on sites like Amazon for any potential product that can compete with your products. Chances are that competition will be fierce for you if Amazon already has the products that you are planning to sell already listed.
Next, check on your page’s visibility on the Search Engine Results Pages (SERP) on sites like Google, Yahoo, and Bing. If your pages are nowhere near in the very first SERP, then investing on a good Search Engine Optimization (SEO) specialist might help boost your visibility online.
The point here is that you should never be intimidated by competition no matter how small or large it can get. Its existence means that your niche is profitable and it’s up to you to find ways to outmaneuver your competitors.
Mind the Pricing
The trickiest part with running an eCommerce business is making sure that your pricing margins are sensible. After all, you want to earn from your business venture as much as you want potential customers to like your business.
If you set your pricing margins too low, scaling your business (that means increasing prices for your offerings to meet the demands of your expanding business) later on would prove to be hard; even impractical.
To make sure that your business scales well, make sure that the product margin is exactly at 20%. This way, your business won’t have to deal with a lot of blowback if you decide to scale your prices later on.
This is an average margin for physical products, but the good thing is that selling digital products, such as courses, ebooks, consultations, etc. is so much more profitable. There are even platforms that have been specifically designed for that, According to SupplyGem, Kajabi is the best platform to sell online courses. While Shopify is the best for physical products.
In practice, this should be easy. If the acquisition price of a certain product is at $50.00, then add $10.00 to that product’s price tag to make a profit. The key here is to find that sweet spot between making a profit and ensuring that your inventory constantly gets cleared out.
All in all, everything boils down to making doubly sure that your eCommerce business idea has a role to play in the market and that role can be monetized on your part. If this is not your first foray into the market, then you can make educated guesses for your decisions. If this is your first venture, then there is no harm from building on the experiences of others.