By reading this article, you're very likely to be on the hunt for the next big idea for your online business.
You have the itch, the motivation, and the gut. You want to get started with your own company.
But you don't know where to start.
I can relate to it. I know this feeling and I've been there before.
One thing most, if not all, successful businesses have in common? They started by focusing on one very specific segment of a bigger market, aka. a niche.
At the end of this article, you'll be able to:
- Start your online business by honing in the right things
- Craft better messages towards a specific audience
- Speed up your go-to-market strategy
I'm going to give you the ins and out of niche markets, what they're for, and why you should get down to them. I'll also walk you through some of the best examples and give you 3 extremely valuable tips on how to find a profitable niche.
Without further ado, let's get into it!
What is a Niche?
Explaining what is a niche market is like comparing a housing renovation work business with an in-house house painter.
The former is an all-in-one solution you can hire if you don't want to deal with plenty of stakeholders and take it easy. The second one is focused on doing one thing very well: painting the wall within the house.
Which one would you pick? It depends you'd say. Fair enough.
The thing is, the painter will get a much easier job of pitching his services. For the all-in-one business, the pitch would be along the lines of
I can do anything you want in terms of renovation.
Okay, but what are you good at?
Anything and everything!
MMMM… ok. Let me get back to you.
Joke aside - let me give you a simple definition of a niche market.
A niche market is a subset of a bigger pie, a bigger market in which the individuals can be defined by their own unique requirements, their own needs, and characteristics that separate them from the rest.
In marketing, this niche market is embodied by a persona which is a "composite sketch of a key segment of your audience".
B2B Content Marketing Strategist
For example, within the keyboards market, we'd have different segments or niches. Keyboards for geeks would be one, keyboards for children would be another one, and so would be keyboards for disabled people.
As an avid game player, which one would you pick? The generic keyboard or the niche keyboard for geeks? I'd assume the latter.
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The persona is well-defined, which makes the messaging music to the audience's ears. It's much easier to understand the value prop and feel the benefits of adopting such a solution over the generic one.
There is one and only one persona the company is focusing on - which makes everyone's job easier and much more straightforward. The narrower the target audience, the easier it becomes to identify the potential customers and to relate to the pain points.
That's definitely the way to get started with your business. Once you dominate the niche, and only then, you can expand out to a broader audience.
Now that you understand what a niche market is, let's get to some real-life examples.
What are some examples of Online Niche Markets?
I'm going to split the different ideas into buckets, based on the overall category.
First thing first, profitable niche products could be actual physical products. The goal here is to identify a product you can sell online through an e-commerce website (online store).
From a logistic standpoint, you can either store the products in your own warehouses or get the products from the provider to the client directly. The latter is referred to as drop-shipping. I'll cover this topic more in-depth in a later article.
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This product must be as specific and narrow in terms of audience as possible. Surfing on the remote wave, how about you come up with a product for remote workers using their laptops on a daily basis? It could be anything from stickers to webcam protection.
As Shopify nicely states on its blog:
Carving out a niche market and positioning yourself as the go-to brand for a specific audience not only establishes your credibility over competing generalists but also results in a more focused business, from your unique value proposition to your content marketing, that makes it easier for the right customers to say, "This is for me.
More niche product ideas for physical items:
- your own craft
- your book
- collectibles from your childhood
Let's move onto the digital products.
Let's start with the most basics digital niche markets.
Affiliate marketing is the process of making money by recommending products or services you love.
In order to make money and get those links out, you can do different things:
- creating a Youtube channel promoting/talking about different products
- creating a niche blog
- guest blogging on other websites
For instance, Adam Enfroy is a nerd and like playing around with online software. This led him to create his blog https://www.adamenfroy.com where he does software review and makes revenues off of the links he's sharing.
Niche Online Courses
Next up on our list of digital products are online courses.
We all have something to share, something to teach, something we can relate to. Whether is a hard-skill, a soft-kill, a concept, a craft, whatever. The point is, anyone is legitimate enough to create his own course and spread the word.
You can use platforms such as Udemy, which handle most of the job for you. You only have to get down to marketing in order to promote your course!
Fun fact: there is even a course on Udemy which teaches you how to create a business around a profitable niche!
Instead of going the online course way, you can also go for an e-book. The purpose is the same: share your expertise and knowledge, and spread the word about it! The format is different, and so is the audience.
As long as the topic remains a niche one, selling it is going to be a no-brainer!
Pro-tip: Use Gumroad to sell your online books and PDF - it's the easiest and cheapest solution I've found, with a best-in-class user-experience!
I've discussed collectibles that must be delivered physically, but they can also be sent electronically.
I recently came across Rarible.com, a blockchain-based platform allowing you to sell any kind of digital collectibles. They basically give you the platform and the tools to create and sell your own niche product!
Last up on our list of niches examples are online services.
Traditional consulting or services require proposals, back-and-forth client discussions, and a custom solution for every client. On the other hand, productized services, are packaged so that the offer and the process stay the same for every client.
Whichever type of service you go for, always stick with a niche.
Instead of providing lead generation for any business, do lead gen for plumbers. Instead of offering account services, offer accounting services for small and medium-sized businesses.
All-in-all, you should have a pretty good understanding of what niches are about and what kind of niches you can get started with!
But why, really, should you niche down?
Why should you niche down?
The answer is fairly simple.
By narrowing down the addressable audience and the market, you are setting yourself up for success.
- You focus on one pain-point and solve it well
- You have an easily identifiable target audience
- The pain points are clearly stated and addressable
Now that I got you covered with the basics, I'd like to get into the nitty-gritty.
Tip 1: Start by answering those questions before doing your market research
Before starting doing any research and thinking too much about niche ideas, there are things you can do to prep up the ground. Of course, you can sit and pray, wait for the idea to come, but that's definitely not likely to be a hit!
Lucky you! I came up with some questions you can answer to kick things off.
1- What do you enjoy spending time on?
You don't want to work on something that annoys you, do you? Say for instance you hate doing sport, why would you try to sell a gym product online? Of course, no way you'd succeed doing that.
Therefore, the first thing you can do is trying to list all the domains of interest to you.
2- What do you want to sell?
(your time - service, productized service — a product, book)
3- What are your top skills?
It's also very important for you to know your strengths and weaknesses, where do you perform, and what you'll need help on. Based on the list you'll come up with, you will quickly realize what you have to learn or outsource.
The goal here is not only to identify the gaps but also to try to find a workaround.
For example, assuming you dream of creating an online app, but you have no idea of how websites and apps are made. Well, it could be a problem. But it's also an opportunity.
There is a growing movement of no-code applications that allow you to build an app without doing any code, just dragging and dropping things around. Bubble.io is such an example.
This topic was recently discussed by Noah Kagan on his podcast about how to come up with business ideas. He went through additional tips that'd help you kick off your research.
First, he advised to look at where you’re spending most of your money and most of your time. For instance, he realized a few years back that he was spending tons of money on software licenses, and he, obviously, liked getting deals and discounts before buying them up.
This led him to create one of his most successful business: AppSumo.com, which is basically a platform running lifetime deals on software.
The actionable thing you can do: look at your bank statements, look at your Chrome history, look at your phone activity, look at your calendar. In a nutshell, scrutinize your activities!
He's also stressing the importance of getting feedback and surveying your friends! Ask them what their top pain points are, ask them what's been on their todo-list of things to build for ages.
You can watch the full video here:
Tip 2: Leverage Resources to Identify Trending Profitable Niche Markets
You've got a better idea of the areas you can go to. If you completed step 1, you should have a list of 5 to 10 domains you can dive into. Time to explore them!
There are tons of resources you can leverage in order to create your own benchmark and get inspired.
Find and follow influencers
Any given industry out there has specialists, influencers, and experts that speak out about their observations, their expectations for the future, the new cool projects, and trends they spotted. Which is why it's very important to follow them and feed yourself with their content! Here are a few places that'll help you find them!
Twitter, TikTok, Instagram, Linkedin native searches
Using any social media search function, you can go after thought leaders around specific hashtags, queries, and content.
Buzzsumo.com is a great alternative to the native search. It's a tool that helps you identify content that performs best across social media, as well as to identify influencers around a specific topic.
Great to monitor things in the long run!
Leverage Curated Newsletters
Next up on our list are the different newsletters that curate the trends and things to know in a given industry. They already to the heavy homework and data analysis. Great!
Trends by the Hustle
Trends.co is a monthly premium newsletter that goes through the "next big business idea before it explodes". Must read!
It's released by the same team as The Hustle - a free daily newsletter that I recommend by the way to keep you up to date with fresh news!
Another great newsletter covering business trends once in a while. Anything from productized services, to coliving and personal branding. This kind of newsletter goes through trends they found worth sharing, giving an intro to what they are about and why they are interesting.
With the recent rise of content creators on Substack, it's a no-brainer to find interesting newsletters using their discovery tab. You can find content around, literally any topic. From vegan cooking to personal finance and daily news.
I also tend to look for newsletters on Google using advanced searches.
All-in-all, content doesn't lack. I anything but recommend you to deep dive into topics of interest by leveraging others' expertise. It's going to be a huge idea generator for you!
Deep dive into trends
Aside from newsletters, there are also great websites that'd help you in your idea generation process!
Trendsmap.com is a curation of trending Hashtags on Twitter. Great for local ideas!
Reddit is another great place to spot trending niches. You can either use websites such as subredditstats.com that give you the growing subreddit.
I also like going through the r/DIY subreddit which contains plenty of idea gems!
Last but not least, Google Trends! It's an excellent source of inspiration and niche ideas, but also one of the most reliable sources out there! They crunch their own data, based on the volume of research and identify topics that stand out.
The good point is that, even though we're talking about Google's data, it's related to most other platforms out there (Amazon, Reddit, etc.). Why? Because most traffic is coming through Google today.
Another great source of inspirations to come up with profitable business and brain thoughts are community-powered websites. Quora is a great example of all types of questions.
IndieHackers is another example.
By the way, I advise you to explore their products section to get some ideas of what people are doing and how much $$ they are making!
By the way, keep the "pay it forward" mantra in mind. The more you give, the more likely you're to get back from the community. And you might even be able to find potential customers in the different communities.
Of course, Reddit is a must! I'm mentioning it again but it is the go-to community! Talking about big platforms such as Reddit, we hear a lot about the concept of "unbundling" them. I find it quite interesting. It basically represents the idea of verticalizing a marketplace out of a bigger one initially.
Airbnb is nothing new - it was happening on Craigslist long before. The Airbnb founding team "just" took the P2P rental section off of Craigslist, added a bunch of features to make the renting experience smoother, and took it from there!
It resulted in a bigger market than Craigslist's initial market…
Tip 3: Focus on what is profitable
Last up: refinement! How do you focus on the right niche business idea?
Hopefully, by now, you have a good bunch of ideas springing up, and it's time to prioritize.
I'd advise you to use an Excel sheet to rank them based on different criteria. You can rank them from 1 to 3, and add them all up to get the final score at the end.
- Target Addressable Market: how big is the market and how fast is it growing?
- The Hair on Fire factor. Is this a nice-to-have or a must-have, for its target market?
- Day 1 Revenue. Will this thing potentially make money from day 1 or will it be a slow burn towards commercialization?
- Unfair advantage. Do I have an “unfair advantage”, ie. something others don't have, in the area?
- Defensibility. Will it be easy or hard for other players to enter this space?
- Lack of Competitors. Is this blue ocean or red ocean territory? How expansive is the keyword on Adwords? How much search volume there is on Google?
- Access to Market. Do I have connections or entry points to this market that will make finding my first customers easy?
- Personal Passion. Is this idea aligned to something I feel strongly about personally, which will potentially fuel the drive to succeed in this space?
- IP Creation. Am I genuinely creating some interesting IP here or is technology not a factor with this idea? Could be important for the final criteria...
- Acquisition Potential. Not that this is the goal but it makes sense to have some sort of exit strategy. Does success in this space align strongly with the strategy of a big, well-known company that might want to buy my product?
- Integrations. Can this product's value & stickiness be increased by integrating it with existing platforms? Integrations provide 1) Distribution 2) higher acquisition chances.
Using this system, you'll be able to focus on what matters and what is most likely to be profitable shortly!
Wrap Up: Buckle up for an exciting journey!
By niching down you can double down on speed by speaking directly to your customers, crafting a unique marketing strategy that speaks to them, and by becoming more efficient at delivering your products or services.
In a nutshell, niching down is important for the following reasons:
- You will know exactly what the pain points that your prospective customer's experience
- Your time and marketing resources will be more effective in acquiring and serving that type of customer by knowing exactly what they need and how to serve them.
- You will position yourself as a source of authority and build your brand as the leader in that niche, and a defensive moat that can be an asset for your business.
Keep in mind that the goal here is to start small, and expand the customer base over time once you dominate the niche. From a small business started in your garage to a well-established brand!
You're on the right path to hitting your financial and business goals.
Last Updated on January 16, 2021 by Hanson Cheng