Can Your Niche be to Small?

Ecommerce on the web is developing incredibly fast, but most people do not realize it. Keep in mind that Google is only nine or 10 years old depending on what you consider the launch date. The same goes for most big sites on the web. While the commercial side of the web is relatively young, large, dominant sites already cover most major commercial areas. If you desire to start a general online bookstore, you are going to have a real challenge catching up to Amazon.

So, is there still room for the little guy? Of course. The key is to find your niche. A niche is merely a very defined area of interest. If we consider the fact that Amazon is probably going to dominate anything we do for a general online bookstore, we might want to consider starting a site on a niche. We could do a review site on science fiction, romance, biographies or whatever. Since we can beat the Amazon brand or size, we beat it by focusing on some smaller part of the book market. With appropriate marketing, our site can then become a resource for people interested in that niche and we then have a winner.

The question for many people is how small can a niche be, but still support a profitable site? Unfortunately, there is no clear answer on this subject. There are, however, a few guidelines to take into account.

Obviously, the biggest issue is the number of people looking for things in the niche. The best way to ascertain this is to do keyword research. Using your preferred research tool, just search for the root word of your niche. Using our example above, I would search for "science fiction books" and also "sci fi", which I happen to know is use for this niche. Don't ask!

Now, take a look at the number of searches each month. If you discover there is less than 400 total searches across all search strings, the niche may be to small. Why? Well, even if you completely dominated the niche, you would only have 400 or so people visiting you a month. It is hard to make money off of that type of volume.

As always, there is an exception to the keyword research count. The exception has to do with the profit margin on what you are offering. Most people refer to profit margins as a percentage, but we want to focus on the pure dollars per transaction. If I start a sci-fi book site with my 400 potential visitors, my chance of making a profit is very slim. Assuming I make $3 a book, I would make only $1,200 a month if I sold a book to every single potential visitor. Chances of that happening are non-existent. Ah, but what if my product or service had a larger profit?

Let's assume I love to talk and know something about internet marketing. In the business world, this makes me a consultant! I do some hypothetical keyword research and find out there are 400 searches a month for internet marketing consultant. This is the same number as I had for sci-fi books. I should drop the idea, right? No! Consulting pays a lot better than book sales. Any consultant would give their left arm to have 400 potential clients a month. If I bill my consulting clients an average of $5,000, I only need a couple to make my sight a success. Simply put, the profit on each transaction is high, which means my niche is not too small.

Ultimately, determining if a niche has sufficient size is a subjective task. The key is to focus on the number of searches versus the profit per transaction you can expect.

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