How To Find A Niche Market For Your Store In 4 Steps
When you start a business, it’s not always easy to make up your mind on your future niche. How to find a niche? What to focus on? What if the chosen field won’t turn out to be as profitable and popular as planned?…
If you want to create a profitable dropshipping store, it’s a good idea to carry out a niche research first. Today, we will talk about the best way to do it – and share the algorithm we use ourselves. So, let’s take a look at some measurable niche criteria!
What is a niche market?
To begin with, let’s discuss a highly important question: what a niche means, exactly?
A niche is a narrow market segment with some specific products that are interesting and desirable to a certain category of potential buyers.
For example, let’s take a broad market: clothes. Within this huge market, there are lots of smaller product categories: outerwear, underwear, homewear, sportswear, and many more. And each of these categories, in turn, can be divided into numerous, even smaller niche segments, for example:
- Classy jackets and coats for young men
- Comfortable workout clothes for women
- Affordable home clothes for toddlers
Now, you see it: there can be countless variations! Defining a niche, you:
- Take a broad market as your starting point (for example, clothes)
- Pick a more narrow category within it (for example, office wear)
- Make it even more narrow to understand who you will be targeting (for example, smart suits and accessories for middle-aged men)
When your niche is defined in such a specific way, it lets you run and grow your business much more efficiently as you understand:
- Who exactly is your average target audience representative
- Which product features and online shopping aspects are most appealing and desirable to this audience
- What should your advertising messages be and where you should place them to reach your potential customers effortlessly
And now, when you see how important it is for your store to be built around a certain narrow niche, let’s discuss how to find a niche that gives you the best business opportunities!
1. How to find a niche market using AliExpress?
First of all, we visit the website of the dropshipping supplier we’ve previously chosen. Most typically, that would be a seller’s store on AliExpress. Here we can check the relevant statistics that helps us understand if this niche and these specific products are popular with potential customers.
While choosing a promising niche on AliExpress, we use a five-stars scale to estimate:
AliExpress products quantity
We look at the number of items that can be found on this platform upon the use of a particular keyword (we include only the items that have the free shipping option and the 4*+ rating).
Depending on the number of products available, we assign the following ratings to the analyzed niche:
- 5* if there are more than 2,000 items
- 4.5* for 500 – 1,999 items
- 4* for 100 – 499 items
- 3* for 1 – 99 items
The niche popularity on AliExpress
We set the same parameters and sort the items by the number of orders. Then we take the first 10 items and calculate the arithmetic mean of the number of orders.
We use the arithmetic mean to assign a specific rating to the analyzed niche:
- 5* for an arithmetic mean that’s more than 2,000 orders
- 4.5* for 500 – 1,999 orders
- 4* for 100 – 499 orders
- 3* for 1 – 99 orders
We set the same parameters, take the first 10 stores, and evaluate them by the same parameters as AliExpress itself does:
- How long the store has been in operation
- What’s its feedback score
- What is the percentage of its positive feedback
- How much the items match the description
- What buyers say about the quality of seller communication
- How satisfactory is the shipping speed
We take all these parameters into careful consideration, but, in our opinion, the most crucial of them is the percentage of positive feedback. Therefore, for these first 10 stores we calculate the arithmetic mean of the feedback score:
- 5* for an arithmetic mean that’s more than 96%
- 4.5* for 95% – 95,9%
- 4* for 94% – 94,9%
- 3* for 93 – 93,9%
Price setting aspects
To estimate the margin potential, we take the price of the most popular item in the niche and look this item up in 10 other online stores. We calculate the arithmetic mean of these 10 different prices (i.e. the average market price) – and compare it to the price set by AliExpress seller. Then, we calculate the pricing difference and assign our rating:
- 5* for the difference that’s more than 250%
- 4.5* for 100% – 249%
- 4* for 50% – 99%
- 3* for 1% – 49%
Seasonal fluctuations of demand
There are types of goods (for example, Halloween decorations, Christmas gifts, etc.) that are in demand only within a limited period of time. There’s nothing wrong about having these products in your store if they are combined with some other kinds of offers (birthday cards, wedding decorations, etc.) that are not season-dependent, but it’s not recommended to rely on them solely.
If you are not sure whether the niche you’ve chosen is seasonal, check it with the help of ‘Google Trends’ tool. That’s what we do, too – and here’s the algorithm.
In order not to miss the hottest trending topics, we monitor general public interest towards various areas of life. Google Trends shows us the graph illustrating how public interest towards some particular topic is changing. We track this trend in the target region within the period of the last 5 years and assign our rating:
- 5* for an ascending trend
- 4* for a flat trend
- 3* for a flat trend
We do our best to make sure that we can promote our offers on various social networks. It is also a nice strategy to choose a niche that can easily be promoted through paid advertising and SEO tools. Therefore, we also check if:
- Some valuable content can be generated for this niche
- We can optimize images and videos
- There are enough relevant and competitive keywords that we can select in relation to this category
SEO potential of a niche should be evaluated carefully in advance, this is why it is necessary to rely on some quantitative indicators. This article describes this process in detail – since it’s quite a complicated issue, we decided to devote a separate post to it.
2. How to find a niche market with the help of Google Trends
Google Trends is a wonderful instrument that gives you the necessary insight into general public interest towards this or that product. This service is designed to analyze search trends, so it can be perfect for your business because it shows:
- How does the search volume change over time
- What are the most popular search terms
- Where do the people searching for this term live
- Whether the interest towards this search query is seasonal and changes through the year
What you need to do to use it?
- Pick a product category. The easiest way to do this is to rely on AliExpress in order to gather all the possible categories (e.g. electronics, home and décor, jewellery, etc.).
- Go to Google Trends and type in this category in the ‘Explore Topics’ field. Let’s take ‘knitting’, for example.
- Look at the result and try to analyze it with the use of additional settings.
For example, this graph shows how the search volume changes over time, and, as you can see, it decreases gradually. To learn more about this dynamics, you can change some settings:
- Your region of interest
- Time frame
- Type of content
What’s quite curious, this example shows the seasonal interest towards this search query. Like we previously mentioned – if you mouse over this particular graph, you will see that peak seasons for this search query are winter months.
Surely, you will also find it essential to learn more about the regions where this search query is the most popular.
Additionally, you will get the chance to take a look at the most popular related search terms and estimate the speed of their popularity growth. This will be a very important piece of knowledge at the moment of planning your marketing and SEO strategies necessary to promote your dropshipping store.
3. Finding a niche market using Instagram
Let’s estimate whether we can use Instagram for this or that particular category. All you need to do is type the chosen category in the ‘Search’ field.
As you can see, there are numerous results in the dropdown menu. The names of these accounts contain your focus keyword, which is why they are shown to you. Your task here is to open every one of these accounts and see how many subscribers it has.
To evaluate how promising is this dropshipping niche, we use the following criteria:
- 5* if there are more than 10 accounts with 30,000+ followers
- 4.5* for 5-9 accounts
- 4* for 1-4 accounts
- 3* for 0 accounts
We usually try to collaborate with the accounts that have at least 50,000 followers as this provides us with quite a significant audience. The most common way of such collaboration is promotion via shoutouts – we ask the account owner to publish our advertisement posts from time to time on a paid basis.
4. How to find a niche market with the help of Facebook
To check whether the niche you’ve chosen has the necessary potential, type its name in the Search’ field on Facebook and choose the ‘Groups’ section. You will see a list of the existing groups that have this keyword in their name, and the number of their members.
We usually consider a niche to be promising and prospective if it has more than 15 groups with more than 30,000 members per each.
Additionally, it can be useful to also check out the ‘Pages’ section – it gives you even more insight into this niche popularity and its opportunities for your business.
So, the evaluation criteria here are the following:
- 5* if there are more than 10 groups with 30,000+ members
- 4.5* for 5-9 groups
- 4* for 1-4 groups
- 3* for 0 groups
To learn more about our strategies that are most typically used to promote an online store on Facebook, visit our blog – this case study shows a detailed example of a successful promotion.
Do we avoid any niches?
Yes, we do.
There are some specific niches that should be approached with great caution. We recommend you to think really carefully if you want to include them in your online store.
- Items that are usually carefully checked before purchase
- Large and heavy items
- Items that can get damaged during transportation
- Items that can possibly experience some legal issues while being taken by a postal service and transferred through customs
Now, you have a much clearer idea of how to find a niche for your dropshipping store! You can check out our list of the most promising dropshipping niche ideas – we made it in full compliance with all the aspects described above. If you want to easily calculate the potential of dropshipping niches you’re considering for your store, use our free research tool.