My ridiculously simple process for selecting the perfect ecommerce niche on your first try, and why it doesn’t involve keyword research, spreadsheets, or a calculator.
An Introduction to Ecommerce Niche Selection and Product Validation
This guide will be difficult to swallow for a lot of store owners. In it I plan to challenge the widely accepted, yet faulty, method for selecting a product niche for your ecommerce business. And I will present an alternative method for niche selection that is both simpler — it will eliminate at least 50% of the guesswork found in other methods — and a lot more likely to bring you success in the world of ecommerce.
I fully expect it to be the most controversial piece I have ever published. Many of you will impulsively, reflexively disagree with it. Some of you will be so offended that you’ll exit the page in disgust, or write me hate mail. One or the other.
That’s okay. I heartily invite disagreement. There are many gurus and so-called experts who profit exorbitantly from the status quo, and I don’t expect them to like this guide.
They complicate what should be a relatively simple process into a multi-step system centered around an entanglement of apps, spreadsheets, and programs, and then sell their method as an “online course” — a guaranteed path to riches for all who purchase.
A few who purchase such courses probably go on to find some success. Of course, maybe they would have found success anyway? We’ll never know. But most end up frustrated, selling a product they know very little about, serving a (now) highly competitive niche, and flushing money down the Facebook advertising toilet. I know because I receive emails from them wondering why their sales are so low.
Here’s just one example. I will share my response to this email later in this guide. My answer probably wasn’t what he wanted to hear, but it was advice he wouldn’t get anywhere else.
His situation probably sounds familiar to you. Maybe you’re in the same situation. You spent weeks creating your store, tweaking your template, writing your product descriptions. Finally, when everything was just right, you cranked up your paid advertising and waited expectantly for sales. But your results weren’t what you imagined.
Many experts would advise you to continue optimizing your ads until you turn a profit. And that might work. I can’t say with total certainty that it won’t. But turning an unsuccessful product into a successful product sounds like the very definition of an uphill battle.
What if you could go back to the beginning and, using the right niche-selection process, create a store that rolls downhill? Allow gravity to work for you rather than against you. It would be almost effortless.
Maybe you chose your product niche based on an ebook you read, a webinar you attended, or a course you paid money for. Or maybe it just randomly popped into your head one day.
My method will be different. For one, it’s free. But more importantly, it is simple — almost embarrassingly simple. I lay out the exact process I followed to choose my own product niche, and I’ll even tell the story of how I got my first online sale completely by accident before I was even ready to start accepting orders. That’s the power of allowing gravity to work for you.
The only tools you’ll need to implement it are (as always) a pen and a yellow notepad. But first let’s talk about why you need a new method in the first place.
The Status Quo
The status quo sucks.
I warned you that this guide would be controversial. I predict this is where many readers will exit; we would all prefer to avoid having our most basic assumptions challenged. But I stand by my statement. The status quo is not only not the most likely path to success; it is actually a great blueprint for failure.
The universally accepted method for selecting a profitable ecommerce niche runs something like this. Of course there are endless variations on this method, but they all follow a similar pattern. See if this sounds familiar.
First you research the top 10 most profitable ecommerce niches. Whether it’s a “cheat sheet” or a “swipe file” you saw advertised on Facebook or an online course you took, you’ll see the same niches crop up again and again. Beard grooming products. Paleo Bars. Coconut oil. Pet accessories. Etc.
The next step is to perform keyword analysis (or ad targeting analysis) on each niche to determine which presents the best opportunity to eek out a competitive advantage in and steal market share from the existing players.
It’s a series of cold, robotic calculations. There is no human element. This step will often involve fancy-looking spreadsheets. (After all, if you used a spreadsheet to find your answer, then it must be correct.)
Once you settle on the product that your fool-proof algorithm deems to be the most profitable, you find a suitable dropshipper and launch your store.
Finally, profit! Well, we hope.
But my grim prediction is that you will not steal substantial market share from the existing players. In fact, any customers you do scratch together will be completely wiped out by all the other eager entrepreneurs who took the same online course as you.
Raise your hand if you’ve seen one of these dubious screen shots posted online.
The store owner typically claims to have followed the exact process I described above and then suddenly the sales just started rolling in! This should set off major alarm bells. Now, don’t get me wrong. I’m not saying that these screen shots are all Photoshopped. Let’s just say the skills required to pull off such a stunt would not be hard to come by.
However, we’ll suppose for the sake of argument that the method I described above actually worked. Imagine you’re selling hoverboards for $399 and your cost dropshipped from China is $199. You’re making money hand over fist, just like guy who posted that screen shot.
Sounds great, but the best case scenario here is that you’ll temporarily profit from a clever trick. Consumers are not yet aware that the same product with the same features is available cheaper elsewhere. But free enterprise always leans toward more perfect information, and it’s only a matter of time before your profit margins gradually decline, and then disappear altogether. It’s not a sustainable business model.
Just a Thought: If people knew that you could order a hoverboard for $215 with free shipping from aliexpress.com, how many Shopify stores would go out of business overnight? Hoverboards are an easy target, because it’s a fad product, but how many readers are using basically the same model?
Of course, the much more likely scenario is that you make a few lousy sales, if any at all, and wake up one morning among the hoards of confused ecommerce entrepreneurs who now own stores filled with weird products in a niche they know nothing about and never imagined themselves working in — and wonder how the heck you ended up here.
Now you’re finally primed to learn the simplest niche-selection method ever.
Choosing the Perfect Niche (On Your First Try)
My process for choosing the perfect niche for your ecommerce business on the first try is something I call the Birthday Cake Method. The name probably requires a little backstory.
My best friends James and Sarah have four kids, and one of their family traditions is making a custom birthday cake out of the guest of honor’s favorite stuff.
It started as a simple tradition with the birthday boy or girl choosing their favorite color frosting, but as the kids’ interests became more fanciful, so did the cakes. On Gemma’s 3rd birthday, she was really into The Little Mermaid. (Like watch-it-three-times-a-day into it.) So Dad commissioned this masterpiece by a local baker:
Maren was turning seven around the time that the Maleficent movie with Angelina Jolie came out. She knew the words to the entire movie by heart, she had the dolls and figurines, she even had the Halloween costume. And of course on her birthday, Dad knew what her cake would be:
A few weeks ago, on the way to school, the kids were discussing their plans for next year’s birthday cakes. They intuitively knew what would be on each kid’s cake. Benny, 10, would have a baseball cake. He loves all sports, but he currently plays catcher for his travel team and eats, sleeps, and breaths baseball. Ellis, 6, would be a dinosaur cake. And so on.
Each member of the family was assigned a cake according to his or her top interest, until they came to mom. They puzzled over the question for a few minutes, and then gave up. They couldn’t figure out what her thing was.
What does this have to do with selecting a product niche for your business? I’m getting there. Do you remember the email from the frustrated entrepreneur who is now on his third business that I shared at the beginning of this guide?
Here’s the answer I wrote him. It probably wasn’t the answer he was looking for. Most gurus would have encouraged him to keep trying with his adult novelty store or to try another niche following the same method. But he didn’t email a guru.
My advice to you is this: sell something you like.
There’s no shortage of popular blogs, online courses, and information products out there teaching people how to find the most profitable niches. I’m not saying that’s how you chose your niche, but it might be. Their methods include a bunch of fancy keyword, traffic, and financial analysis but virtually no human analysis.
And that’s where they go wrong. Now when I say “sell something you like” that’s not some hippy–dippy “follow your passion” motivational nonsense. I’m merely noting that, empirically, people have better success selling something they like.
Best of luck,
If somebody were to design a custom birthday cake for you, what would be on it? In other words, what is your thing? It could be a hobby you love: skateboarding, painting, fishing, knitting. Or it could be something you’re passionate about: movies, art, beer, cheese, whatever.
If you’re like me, you probably just rolled your eyes so hard they slammed into the back of your head. I’m allergic to motivational garbage. My body bursts into hives at the mere thought of sitting through a speech on following your passion.
This isn’t that. This is a very precise test to find out what you’re best qualified to make, or sell, or both.
If you’re not sure what your Thing is, then your friends or your kids probably do. Send them a text right now:
If you were going to make me a birthday cake that had “me” written all over it, what would it be?
If you get the same puzzled responses that good ole mom got, then you need to invest some time into getting a Thing. Interests can be cultivated, and it’s good advice for anyone — not just entrepreneurs — to cultivate an interest that they love, or want to study, or want to be the best at.
Your Thing can change over time too. When I started becsport.com, I went through the exact process I advocate in this guide. My Thing was the gym. I wanted to squat 2x my body weight and deadlift 2.5x my body weight.
I have little muscle mass on my body naturally, so this not a small undertaking. I worked on it every day for two years. I read, I planned, and I trained every day. It was my Thing, and largely still is.
But if I had started my ecommerce business five years ago, my Thing would have been running marathons. It doesn’t matter what your Thing is; what matters is that you have something that wakes you up in the morning, gets you excited, and that you find yourself thinking about all the time.
Whatever your friends and family would put on your birthday cake, that’s your niche. Grab your pen and yellow notepad and write it down. Maybe you even have more than one. You’ll discover in the next section that you are already intuitively equipped to sell something in that niche.
Now it’s time to choose your product.
One-Step Product Validation
It’s a good idea to validate your product idea before investing a lot of money in it. That means you want to be sure that people will buy it before you spend your life savings on a huge purchase order.
But of course that’s easier said than done. Others have written lengthy guides on exactly how to execute a sophisticated product-validation experiment. And you could try them. However, while running such an experiment may be cheaper than buying your product upfront and then hoping it sells, it’s not free.
It’s impossible to guarantee that your product will be profitable. However, it is possible to heavily stack the odds in your favor. When I started becsport.com I was able to effectively stack the deck in my favor by using this one-step product validation test. Again, there is only a single step to my entire process, so pay close attention or you’ll miss it.
How to Validate Your Product Idea
Scratch your own itch.
Scratching your own itch means selling a product that you want for yourself. If it scratches your itch, then it has already been validated for a market of at least one customer. And the odds are good, if the product fulfills a need in your life, it will do the same for others like you.
And because you are a member of the same niche, you are intuitively equipped to sell the product. You have empathy, and it’s completely organic, not manufactured or learned. You know on a gut level exactly why people need your product. Because you needed it too.
Some of you are wondering if you have to be a designer, creator, or inventor to use this method. The answer is no. You could also repackage or rebrand an existing product that is being marketed poorly or to the wrong customers.
Here’s a simple exercise you can use to generate a huge list of validated product ideas that you can choose from.
Go back to your yellow notepad. At the top of the page you have already written down your niche. Now write down your answers to the following questions. You don’t have to limit yourself to one answer per question.
- What is something you wish existed in your niche but doesn’t?
- What is something you wish was easier to get in this niche? That could mean easier to buy online or it could just mean less expensive.
- What is a product in this market you wish was made better? This could refer to packaging, quality, or the actual features of the product.
After completing this exercise, you will now have a list full of pre-validated product ideas. They are already validated because you want them. A few of the ideas are probably already popping out at you, just waiting to be turned into a business.
This is the same process I went through when creating my first ecommerce business (becsport.com). The first time I used it was a complete accident. I just didn’t know any other methods for choosing a niche. But in hindsight it was absolutely critical to the success of my store. And I used the exact same method for my second store when the time came.
The niche I selected was the simple result of how I spent all my free time: in the gym. And the product I created was the answer to this question: “What is a product in this market I wish was made better?”
That simple process led me to create a high end pair of athletic joggers made with stretch fabric. And because I had pre-validated the product idea by only choosing from among product ideas that I wanted myself, I never fought the uphill battle of convincing people to buy it.
In fact I still remember my first sale. It was a complete accident. I had set up my store and an Instagram account while the pants were still in production. (I was following the Instagram strategy that I shared in my article An Entrepreneur’s Guide to Generating Ecommerce Sales from Instagram.)
I didn’t really consider myself “open for business”yet. Then one night while sitting on the couch watching TV, I heard that now-familiar tri-tone *ding* on my iPhone. You just received a new order.
I was shocked. And I was excited too. Gravity was working for me. Now all I had to worry about was reaching more people.
I have just a few more words of unpopular advice before I finish. If you have tried the traditional approach to niche-selection, and it’s not working for you, I want you to seriously consider closing that store and trying something you like.
If that pisses you off, I won’t hold it against you. I would probably have the same reaction. You’ve invested weeks, months, or possibly even years into your current store. The theme, the advertising, the dropshipping relationships. But if it’s not working, don’t fall prey to the sunk-cost fallacy.
Be bold enough to cut your losses and try the method in this guide. It’s a lot simpler and has the added benefit of self-selecting a business for you that will be a lot more fun to work on too.
Is my method overly simplified? Maybe. Or maybe the alternatives are just overly complicated.
I would love to hear about the next business you create. My direct email address is available on the contact page. Send me a note. I do my best (although sometimes fail) to personally answer each email.