What Is a Niche and Why It Is Important to Choose It Correctly?
A niche refers to a smaller part of a huge market focusing on specific demographics, location, problem, or common interests of consumers. With niche products, landing sales become easier and more convenient. So, it is essential for you to learn how to find Amazon niches.
Meanwhile, it is important to find not just a single niche that seems attractive to you at first. You need to research it and evaluate the potential benefits that you can get as an Amazon seller. This is where you need to know what criteria your ideal niche must meet. Other than finding profitable niches on Amazon, you also need to look for products that can offer potential benefits. And, you need to do this comprehensively.
Ideal Niche Criteria
Before settling to a particular niche idea, it’s a nice idea to have a set of criteria for evaluating each option. The criteria might include next ones.
Seasonality. You need to know whether a product from a specific niche has low or high seasonality. It is best for you to look for a product that you can sell all-year-round. This does not apply to the period of holidays and sales, when demand for certain goods increases significantly. However, in general, throughout the year, the demand for the goods of the selected niche should be relatively constant and stable. You do not want to be among the winners for only a few months of the year, do you? Then avoid seasonal items.
Opportunities for sub-niches. This is what you need to know whether you can easily expand both your product line and audience. Any business involves growth, and each seller sooner or later thinks about its expansion. It is important that the selected niche allows you to create a line of products that are interconnected. So you can not only expand your business, but also win customer loyalty and expand the audience of your brand.
Competition. It is necessary for you to know how entrenched the competition in the market is. Besides, you have to discover if there are established big brands. Perhaps this is one of the most important criteria both when choosing a niche as a whole, and when searching for a specific product. If there are well-known brands in the category and widely popular products with numerous good reviews, it will be extremely difficult to compete with them. Therefore, you should strive to find a niche in which competition is minimal. Or, if in the category there are many products from various sellers, but there are opportunities to improve the product and the quality of service, you can try to enter it. But be prepared for the fact that you will need much more effort.
Opportunity to do better. A niche should leave you opportunities to do a better job of presentation or marketing. Ideally, if at the same time you can improve the product and eliminate the shortcomings that other customers complain about. You can also apply community knowledge in order to understand what exactly needs to be changed in a products so that it becomes ideal for customers.
Demand. When checking the demand for a particular niche, you need to know how many units were sold. Demand is one of the key factors that determine the success of your business. Suppose you've already had a few ideas on what products you want to sell on Amazon. But if there is no demand for them, or the demand will be too low, you will not be able to grow your business, get enough profit and, ultimately, you will lose.
You also need to determine your minimum goal for the units sold every day. Usually, most sellers when starting a new product are guided by the figure of 10 units per day. That is, if you can sell at least 10 units a day, this is enough to start with.
Niches with goods that are poorly represented in retail stores. We are not talking about exclusive products, the demand for which is quite low. But your chances of a successful start will be higher if you manage to find those products that customers will find it difficult to buy in retail stores. Yes, this approach requires a lot of time that you will spend searching. However, if you find and offer buyers a quality product that they cannot purchase in each store, you will quickly attract customers to your business.
Let's give some more tips on how to choose a niche.
Always focus on finding niches with low competition. The Amazon marketplace is oversaturated with goods and sellers, but there are niches in which you still can gain top positions. However, it will be more difficult to do this if the competition there is high enough. If large players are present, i.e. brands that have long established themselves, you should not try to beat them.
For you to find an ideal niche to start with, pay attention to top products with large sales volumes and a low number of reviews. If your products have more positive reviews, you can win the competition. After all, customers trust the opinions of other people who have already purchased the product and had the opportunity to evaluate it. So, if you have good reviews, you can win.
Instead, a large number of reviews with large sales of products can make it more challenging for you to rate your product higher. As a result, the niche becomes undesirable. So, you need to repeat the whole process and pick various niches to find which one is beneficial for you.
What Niches Should Be Avoided
If you are a novice seller, do not plan to invest a huge amount of money in a business with a long-term prospect just to pay back investments. Be aware that there are some niches that you need to avoid, including:
Niches with famous branded products. You may find it difficult to sell licensed products or clothing brands.
Niches with electronic goods, electronic gadgets, and other electronics. Avoid products that may break easily, like anything that is electronics. This is due to both the difficulties and the defects during manufacturing, and the issues of warranty that you must provide to each buyer.
Niches with household appliances. Appliances like water filters may deliver quality control issues. Selling any household appliances is always a risk that you should not take if you are just starting your business. It is better to focus on niches with simpler products, where you will have less problems with returns, equipment breakdowns and warranty replacement.
Niches with beauty or health products for which you need to obtain permits, certificates, and other documents. You need to avoid products with any potential liabilities. This can lead to the fact that dissatisfied sellers can not only leave a negative review, but also complain about you as an unscrupulous seller. In addition, you can not always guarantee that your supplier (especially if he is from China) will comply with all requirements for the quality of raw materials and the formulation of cosmetics. You don’t need trouble, do you?
Niches with a large number of competitors and products with more than 100 to 200 reviews. Being part of a niche with a tough competition can be it more difficult to be easily recognized by your target audience.
Where to Look for Ideas for Niches
In the case that you are completely starting from scratch, you can consider the following places to find profitable niches on Amazon.
1. Large Marketplaces
You can find great niche ideas from largest marketplaces. These marketplaces must offer tens of thousands of products that are sold in various categories, such as Amazon, eBay, and Alibaba. We talked about searching for product ideas on Amazon in one of our articles, so you can start the search of your ideal niche product today.
2. Niche Communities, Blogs, and Forums
These include Reddit, Alltop.com, Pinterest, etc. Join niche communities and forums with a lot of subscribers and where you can explore conversations and questions that most people look for a product solution. Popular blogs usually feature products that consumers look for to solve their problems. This is a great opportunity not only to consider several options for profitable niches at once, but also to get ideas in order to make better products that are sold today, or to come up with your own unique product.
3. Special Tools
Take a look at the special tools for evaluating the niche and goods that are likely to fall into it. These Amazon niche finder tools include Jungle Scout, AMZScout, Viral Launch and more.
Jungle Scout allows Amazon sellers to filter products by ratings, salability, dimensions, estimated sales, and price. With AMZScout, you can perform product research and use tracking tools. As for the Viral Launch, it allows you to find items to sell based on trending products.
Each of these tools has its own characteristics and benefits. But you must understand that the ideal assistant in this matter does not exist. You can and should use special services that will help you to find the most profitable niches and optimal products. But you still need to conduct additional research, based on the results, and independently weigh all the factors. Only in this way you can be sure that you have found your optimal niche.
What to Do After a Niche Is Found?
You need to find products that will be profitable to sell in this niche. There are particular types of products within a niche that sell incredibly well. So, your next job is to find these profitable products. We’ll give some more tips so that you better understand which products you’d better choose.
- Product type. This is the part where you need to evaluate the products that are good and bad products to sell. Of course, thousands of goods are sold on Amazon, and you cannot say that any of them is good or bad. Nevertheless, when you are just planning to start your own business, it is important to choose a product with which you may have fewer problems at any stage. Therefore, it is better if it is a small and relatively light product with a minimum number of parts for assembly. Do not focus on products for which you need to get a lot of permits and certificates.
- Profit. Aim to get a profit margin of 10 to 30%. Then, it is better for you to stick with a niche that is consistent. The question of the level of profitability is determined by each entrepreneur individually for himself. Of course, the more you get in the end after the sale of goods (taking into account the payment of all commissions, production costs and Advertising), the better for you. However, when determining a niche, it is also important to consider the level of potential profit that you can get. Focus on a net profit of at least 20% so that your costs of starting a business are not wasted.
When finding profitable niches on Amazon, you need to perform a solid evaluation. You need to set a criteria to ensure you will end up with the best niche idea. Then, you can consider using special tools that can provide you essential data that can improve your search. Keep in mind that learning how to find Amazon niches requires time and effort. But, once put all your time and effort into research, you can hit a product within a niche that actually makes sales.