How to Find Your Business Niche (+ Tips for Finding Products to Sell)

You’ve undoubtedly heard the mantra “Just follow your passion!” But I have to strongly disagree: I think it’s dangerous advice that can lead new entrepreneurs astray.

This is especially true when it comes to choosing in-demand or trending products to sell. Your life-long love of Star Wars figurines doesn’t mean it’s a great niche to build your new ecommerce store around—sorry, Skywalker. 

If a thriving business is your goal, you should follow a methodical approach and pick a niche with attributes conducive to online success.

In this short guide we’ll share strategies to help you find a niche and product to sell. We’ll also show you how to determine if there’s enough demand for your small business idea, and give you a few tools to measure the competitive pressures in those areas.

What is a niche?

Market niches are segments of broader markets defined by their own unique characteristics, such as needs, preferences, and identities, that set them apart from the wider market. It is in this specialized segment of the market that you want to position your business.

You can define a niche by:

• Price (e.g. luxury, moderate, discount)
• Level of quality (premium, handmade, economical)
• Geographics (residents of a certain country, city, or even neighborhood)
• Demographics (gender, age, income level, education level)
• Psychographics (values, interests, attitudes)

For example, selling trail running shoes is a niche. Trail running shoes are a segment of the larger industry of footwear and the audience is runners, hikers, and nature enthusiasts, which has a large community.

Why is it important to find your niche?

To succeed in your business, you need to carve out a niche. Choosing a niche helps you build credibility amongst one audience and dominate a particular corner of the market. When you niche, you become the go-to spot for a specific group of people.

Niching also:

• Helps you build customer loyalty. Customers will choose your brand over a mass market company offering more product types. They will also connect more with a niche brand and know you’ll meet their needs. 

• Lowers marketing costs. By knowing your niche, you can target specific groups of customers. These people are more likely to act on your promotions, which brings down marketing and advertising costs.

• Shows expertise. Choosing a niche establishes you as a thought leader in the space, versus providing a generic product. It positions you as an expert, establishing credibility and building trust amongst relevant customers.

• Increases profits. Narrowing down on a niche lets you learn about specific customer groups. If you can show you are the best brand to meet their needs, they’ll spend more with you more frequently. 

Suppose you own a shoe store. You sell many types of shoes in the store. One day, in order to attract more customers, you add shirts, hats, sunglasses, and jackets to your shelves.

If someone is looking for a specific work boot or running shoe, are they going to come to you? Chances are, no.

Say you position your shoe store to be the #1 place for nurses to buy shoes. You sell slip resistant, durable shoes that offer support all day long. You spend money on ads and influencer campaigns targeting nurses. Over time, you become the go-to spot for nurse shoes and establish your place in the market. 

How to find your niche in 6 steps 

1. Evaluate your passion and skills
2. Find a few different potential niches
3. See if there is a market
4. Narrow down your niche
5. Validate your niche
6. Test your niche

1. Evaluate your passion and skills

Finding your niche begins with looking at your passions and skills. Some questions to ask yourself:

• Are there any topics you’re passionate about? 
• What do you excel at? 
• Do you have a favorite hobby? 

All these factors are important to consider when trying to find a niche. 

Let’s say you have a passion for fashion and are good at styling outfits. You might enjoy creating or sourcing clothes and working with a stylist for photo shoots. You can find a niche in the fashion industry by combining these interests and skills. 

Or perhaps you enjoy cooking and creating healthy recipes. You might enjoy selling cookware and writing recipes for your company’s food blog. Finding a niche in the food industry would be easier with these interests and skills.

The key is finding an area you’re passionate about and have some skills in. This will make finding a niche you’ll enjoy working in much easier.

2. Find a few different potential niches

Once you have an idea of your passions and skills, start looking around for potential niches. In this phase, you want to build a big list of niches so you can determine demand. You’ll narrow down these niches later.

There is no single way to find a niche. But here are a few ways you look for some.

Start with Google searches

The best way to start brainstorming is to understand what other online retailers are doing. Let’s use “vegan shoes” as a starting point. Scroll down to the Refine section where you can search by type, style, material, and department. 

From there, you can find a goldmine of potential angles, like faux leather unisex running shoes and vegan pumps.

Dig until you find an underserved problem you feel you can provide a solution to. Keep in mind that even if you have competition, you can still compete by getting even more specific with your audience and building an effective marketing strategy. 

Pay attention to your surroundings

Start looking outward to catch any common pain points. Your own experiences as well as the experiences of others can spark ideas. 

If you’re selling shoes, you might notice both youth and elderly people have trouble tying laces. Maybe you yourself are after a certain style of shoe but no one ships to your country.

Take note of any problems like these and be that business to serve a niche population with your unique solution.

Use Google’s suggestions

Ever notice how when you start typing something into a Google search, it shows you suggestions before you finish? These are Google’s most-searched-for related queries. Use them to your advantage to find a niche for your product category. You can plug in “best shoes for” to get some ideas.

If you want to see the search volume for specific results, download a tool called Keywords Everywhere. For $10, you get 100,000 credits (1 credit = 1 keyword), which expire after one year. Knowing the search volume for target keywords can help you gauge the popularity of a niche. 

Look for passionate communities online

The web is pretty good at organizing itself into communities based on shared interests, passions, and hobbies—in other words, into niches. Dig through the most active subreddit and listen in on their discussions.

Subscribe to hashtags on Instagram and TikTok, like #sneakerhead, and you’ll find opportunities to niche down.

3. See if there is a market

When you’re looking for a niche, it’s important to ensure a big enough market to support your business. It’s no use trying to sell to a group of people that’s too small to sustain your business. 

Here are a few ways to determine if there is a big enough market for your niche: 

• Total addressable market (TAM). This is the total potential revenue that your business could generate if it captured 100% of its target market. For example, if you’re selling a product that is aimed at women aged 18 to 35, your TAM would be the total revenue generated by all businesses that sell products to this demographic. 
• Size of the niche market. This is the portion of the TAM that is made up of your target market. For example, if you’re selling a product aimed at women aged 18 to 35, your niche market would be the TAM’s portion of this demographic. 
• Growth rate of the niche market. This is the rate at which the niche market is growing. For example, if you’re selling a product that is aimed at women aged 18 to 35, your niche market might be growing at a rate of 5% per year. 

Do market research on your chosen niches to see if it’s a good specialization or not. You can also plug each niche into Google Trends to see the current trend.

For example, you can see below that the topic “vegan shoes” has consistent demand over the past five years. This would be a decent niche to get into as a new business owner. 

4. Narrow down your niche

Now that you’ve brainstormed a list of potential niches, it’s time to start narrowing them down. Here are a few factors to consider as you narrow your list:

• Do you have any personal or professional experience in this niche?
• Is this niche something you’re passionate about?
• Do you have any existing connections in this niche? 
• Is this niche too broad? 
• Is this niche too competitive?
• Can you realistically see yourself building a successful online business in this niche? 

You don’t have to check all the boxes, but the more “yes” answers you have, the better. If you’re struggling to narrow down your list, try these exercises: 

• Take a closer look at the niches you’re most passionate about. What are the unique selling points (USPs) of each?
• Are there any niches on your list that you could combine? For example, if you’re passionate about fashion and sustainable living, you could focus on selling sustainable fashion. 
• Are there any niches on your list that you could segment further? For example, if you want to sell fitness products, you could segment by type of fitness (e.g., CrossFit, yoga, running) or by product type (e.g., fitness apparel, fitness equipment, fitness supplements). 

5. Validate your niche

There are a few key ways you can validate your niche before you invest too much time or money. 

Take a look at your competition

If there are already a ton of businesses selling what you want to sell, that’s not necessarily a bad thing. It could mean that there is a market demand for what you’re selling.

But, it could also mean that you’ll have a hard time standing out in the crowd. If you do decide to enter a competitive market, you’ll need to have a unique selling proposition that will make you stand out from the rest. 

Talk to potential customers

See if they would be interested in what you’re selling and if they would be willing to pay for it. You can also look for online communities related to your niche and see what kinds of conversations are happening.

Are people talking about the problem you’re trying to solve? Are they looking for solutions? If so, that’s a good sign that you’ve found a potential niche. 

Build your audience first

Kickstarter campaigns generate awareness about products before they’re even developed. You can introduce your idea and gain followers before the idea has come to fruition.This way, you’ll have an engaged group of target customers ready and waiting for you when you launch.

Research consumer trends in your market

It’s important to be up-to-date with what’s happening in your chosen niche. Resources like Think with Google and Nielsen consumer research will help you understand consumer pain points, desires, and breakout trends.

Set up Google Alerts for related keywords and regularly monitor social media conversations to stay on top of what’s trending.

The goal is to get feedback from real people about your niche idea. This will help you validate (or invalidate) your assumptions and give you a better idea of whether or not there is indeed a market for what you’re selling. 

6. Test your niche 

Finally, you can validate a product or niche by testing it out. This can be done by starting a blog or a YouTube channel related to your niche or creating a landing page to sell a product or service related to your niche. If you can get people to sign up or buy what you’re selling, that’s a good sign that you’ve found a viable niche.

Niche market examples 

1. Conscious consumers

The topic of sustainability has become increasingly important, and for good reason. 

Almost any mass-produced product has a niche market of conscious consumers looking for greener alternatives. More than 59% of shoppers are making it a priority to shop environmentally friendly.

In the past, companies might have donated proceeds to a cause, but now consumers care how products are made. In other words, there’s a subculture within green living that cares about ethical supply chains. If you’re in this niche, keep that in mind. 

Some product examples are: 

• Bee’s Wrap that replaces Saran wrap
• Cruelty-free cosmetics
• Vegan clothing
• Menstrual cups

2. Pet owners

There was an estimated $123.6 billion in sales for the pet industry alone in the US in 2021. The market offers a lot of product opportunities across different types of pets, lifestyles, and more.

For example, Pup Socks sells personalized socks, you can plaster your beloved pet’s picture on, and it has hundreds of thousands of website visitors monthly. 

Many people own fish, dogs, or cats, but there are also unique pets, such as horses, lizards, turtles, and even chickens. You can tap into any of these niche markets. 

3. Locals

Even the world’s biggest brands are adopting local marketing approaches through targeted campaigns. This is because they’re competing with a consumer-driven movement to support local businesses.

But if you’re only selling online, it can be difficult to establish a local presence. Luckily, there are ways for ecommerce sellers to appeal to locals.

Peace Collective, for example, was founded around Toronto pride with the slogan “Toronto Vs Everybody.” 

If you want to sell locally you could make t-shirts with subculture slogans, images of the city, local sports teams, or even sell souvenirs and city guides. The possibilities are endless.

Tips for finding niche products to sell

While you’re brainstorming various niches and products to sell, there are a lot of important things to consider. Here are some types of niche products you’ll want to sell. 

1. Accessory-heavy niches

Merchants rarely make much on big-ticket items and will only earn maybe 5% to 10% on products like laptops and TVs. Where they really make their money is on the accessories.

Accessories enjoy significant markups, and customers are much less price-sensitive about them. A buyer might shop for weeks to get the best deal on a TV, but wouldn’t think twice about dropping $30 on an HDMI cable from the same place. Yet there’s a good chance the business made nearly as much profit on the cable as it did on the flatscreen.

When you choose a niche with lots of accessories, you’ll enjoy significantly higher profit margins and fewer price-sensitive shoppers.

2. Customers with a passion or problem

It’s amazing how much money passionate hobbyists will spend. Mountain bikers will drop hundreds on lightweight accessories to shave a few pounds, and avid fishermen will invest tens of thousands of dollars in boats and related accessories.

Also, if you can offer a product-based solution to a painful problem, you’ll find a captive audience eager to buy.

3. The $100 to $200 range

I’ve found that this price range is an ecommerce “sweet spot.” It’s large enough to create decent average order value and per-order profit, but small enough that—with a quality, informative website—most customers won’t need to speak with someone before the sale personally.

As you grow, generating most of your orders online offers massive efficiency savings versus a phone-heavy approach. But if you’re selling products that cost $500 or more, many customers will want personal customer service before pulling out their credit cards.

4. Hard to find locally

If you needed garden equipment, you’d likely head down to your local Home Depot or Lowe’s. But where would you go to buy surveillance equipment or magicians’ accessories? Probably online. Pick niche products that are hard to find locally and you’ll be able to get in front of the vast majority of your customers as they search online.

While you ideally want something difficult to source locally, you also need to ensure there’s ample demand for the product! This can be a fine line to walk, and we’ll return to the issue in the competition section below.

5. Low product turnover

If your product line is constantly changing year to year, you’ll end up spending valuable time on resources that will soon be outdated. Selling a product line with limited turnover ensures you can invest in an information-rich website that will be viable for years.

6. Consumable or disposable products

Repeat customers are essential to any business, and it’s significantly easier to sell to existing customers who trust you than to new prospects. If your product needs to be re-ordered regularly—and you’re able to keep your customers happy—you’ll be on your way to building a profitable business with recurring revenue.

Finding a great product is only part of the equation. Even a niche fitting all the above criteria would be a poor choice in the face of inadequate demand or crushing competition. Understanding a product’s demand, competition, and suppliers will be important to making an informed decision.

What should I do if I can’t find a specific niche?

Having a niche business makes it easier to find potential customers and convince them to buy from you, but you need to be sure there are enough buyers in that niche to make it viable. 

Let’s say your target audience is dog-loving nurses in Toronto and you determine your niche is too small. Consider pivoting. You could expand to dog loving professionals in North America. You won’t really know what will resonate until you try. 

Niche down, make more money

Even if you do achieve success early on, niches change, so expect to evolve with your audience over time. You might even introduce new products to your line as new opportunities present themselves. 

Understanding the specific needs of each niche makes it possible to speak directly to them in your marketing—you’ll have a greater chance of attracting a buyer’s attention and winning their business by making it clear that your product is specifically for them.

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