This is a special guest contributor post by Helen Tarkhanova, the marketing manager at X-Cart.

Starting your eCommerce business is always exciting and a frightening journey. You have an endless amount of obstacles to overcome before you see any noticeable results.

Finding a profitable niche is usually the biggest hurdle most people face when starting an eCommerce business. You’ll probably spend days (or even months!) wandering around the web, desperately trying to find the products to sell and calculating the right strategy. This experience may stress you out or crush your motivation. But if you see your future self as a successful business owner, you should be prepared.

You may ask, “What if I just shoot in the dark and pick a random niche I like?”. Business does not work that way. You need to plan ahead as there are many unexpected situations ahead of you, so put your spontaneity in your back pocket and instead, arm yourself with patience and draw up a plan.

At X-Cart as an example, they spend a lot of time discussing the process behind launching an eCommerce business.

Picking a niche that fits your world views

Choosing a niche means that you will have to write, read and talk about your topic every single day for the next several years. Are you ready for that? If not, drop this idea.

The following five steps will help you to find the niche that fits your personality and views:

  1. Start with creating the list of things that inspire you. Go crazy here. Just grab a pen and jot down everything that comes to your mind. I also recommend carrying a small notebook — you never know when inspiration will hit. Then, narrow down the list to just 3-4 points. Keep it in mind, that if you do not enjoy the topic… your working process will turn into torture.
  2. Determine if there’s a profit potential. The first and the easiest way to determine whether your niche idea is profitable is to check Google search volume. If no one is looking for your product, there would be a lot fewer providers and less demand. Iff there’s no competition, the chances are that there’s no business either.
  3. Think of the value you can add. To create a profitable business, you need to address problems your customers are experiencing. Jumping inside your potential customers’ brains is a piece of cake — look through forums like Quora, research keywords, and have one-on-one conversations with your target market. That would be quite enough to uncover pain points. Does your product solve the problems of your potential buyers? If yes, go for it!
  4. Gauge your shoppers’ interest. If your product is somewhat new, you’ll probably have to educate your customers. By removing the mystery and explaining the way your product works exactly for their needs, you’ll make a huge step forward.
  5. Evaluate and test your idea. Before plunging headlong into the working process, take a moment to run a quick a/b test just to be 100% sure that your plan works the way you expect.    

Finding the right vendors

Now that you’ve chosen the product to sell and know a thing or two about your customers’ sore spots, it’s time to get down to practice and find a supplier. There are at least two options —  you can try to deal with vendors in your home country, where everything is oh-so familiar to you, or source your products from Asia, which is more complicated but way cheaper.

Both options have their pros and cons. Let’s drill down domestic manufacturing first. Keep it in mind, America has quite an expensive cost of living and labor compared to countries in Asia. If you live in the US, be prepared to pay an arm and a leg. On the other hand, by manufacturing your products in your home country, you will definitely have no problems with language barriers and import complications. According to statistics, more than 80% of people use English for communication here in the US, so there’s no need to hire a Chinese interpreter or use Google Translate to carry your thoughts to the manufacturer. Importing products to America can be one of the biggest challenges and you will escape it if you choose a vendor from your home country. It’s also easy to do quality control — you jump in a car, and you are there to touch your products.    

Now a couple of words about international vendors. If you want the absolute lowest cost for manufacturing, then you ought to consider sourcing your products from Asia. They offer the best prices  all over the world, that’s true. However, there is more than meets the eye. There may be lots of hustle about importing these items into your home country, but you’ll have nearly unsurpassable and a very impressive profit margin. Also, you may need to hire an expert from Asia, who will inspect the quality of your items during the production run, tackle all shipping-related issues, and communicate. Finally, who can put things into words better than the native speaker?

Actually, there’s one more option, the best one probably. You can use Sourcify to find trustworthy manufacturers. They will walk you through a production run and help you handle communications. This way you kill save three birds with one stone: time, energy and money.   

Targeting the right type of customers

We are all different; the same is true about your clients. For example, if you are going to sell fishing equipment — rods, reels, lures, lines, tackle and the stuff like that — you should be prepared that you target customer are most likely a passionate hobbyist. Of course, fishing is a popular hobby, and lots of people are wild about it, but only fishing maniacs can bring you 90% of profit.

Demographics (sex, age, and location) can also have a dramatic impact on your business. Nowadays more and more people prefer to shop online. However, if you are thinking about starting an eCommerce business, your attention should be primarily focused on the 24-55 age group. They feel a bit more upbeat about online purchases and have enough money if compared to generation Z (18-24). Women are making the majority of transactions online, but men are more comfortable making bigger purchases. Speaking about location, shipping abroad is much more expensive than domestic shipping.

The Bottom Line

Picking a niche is only the first step in a long journey. It’s like taking a bus — if you jump on a wrong one, your trip will be ruined, and you’ll get nowhere. Think carefully before choosing the item to sell and plan out your steps to grow.