TAS 774: 3 Steps To Identify Profitable NICHES and AVOID BAD Ones

What does it take to build a solid foundation for an ecommerce business in 2020? Is there a way to investigate and validate a niche market before you get too invested? On this episode of The Amazing Seller, you’ll hear from Scott as he reveals his three steps to identify profitable niches. You’ll want to pay close attention as Scott goes through several examples of how he’s used these steps in his businesses and how sellers like you can do the same. Have pen and paper ready; you’ll need it for this informative episode! 

Does the market exist? 

It might sound like a basic question, but you need to investigate if the market you are interested in exists. Just because you can dream up a great product, it doesn’t mean that people are out there who will buy it! Once you’ve identified that the market exists, you need to niche down in that market. Too often, Scott talks with ecommerce business leaders who fail to niche down their market while trying to maintain broad appeal – it doesn’t work! To learn more from Scott about identifying and validating a market for your ecommerce business, make sure to listen to this episode! 

Making a profit 

Does the market you are investigating support more than one product? Are there other ways to make an income in your niche market, or is it solely focused on a specific product? As you build your ecommerce business, you need to look for multiple ways to bring in profit to keep your business running. As Scott is fond of saying, you shouldn’t place all of your eggs in one basket! To hear more about diversifying your revenue stream and putting your business in the best position to succeed, tune into this helpful episode of The Amazing Seller. 

Where is the traffic? 

Have you ever seen a ton of billboards along the side of low traffic roads? No! Advertizers are not stupid; they go where there is traffic – the same is true for ecommerce businesses. If you want to build an ecommerce business that will last, you need to build a business in a niche market with a ton of traffic. If you’ve been around the TAS community for very long, you know that Scott is passionate about helping sellers like you understand the value of harnessing the power of traffic. You don’t have to figure it all out on your own, Scott has put together a program to help sellers like you understand your niche market and use traffic to your advantage. Learn more by visiting the link to the Brand Creator’s website located in the resources section at the end of this post.

OUTLINE OF THIS EPISODE OF THE AMAZING SELLER

  • [0:03] Scott’s introduction to this episode of the podcast!
  • [1:45] Why it’s a bad idea to build your brand around a single product. 
  • [5:30] Does the market exist? 
  • [9:00] Does the market support multiple ways to generate income? 
  • [14:30] Is there traffic in your target market? 
  • [16:00] Scott recaps all three steps. 
  • [20:30] Closing thoughts from Scott. 

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TRANSCRIPT TAS 774

TAS 774: 3 Steps To Identify Profitable NICHES and AVOID BAD Ones

Speaker 1: 00:00 If you want to have a successful business, you have to, you must find a profitable niche period. In this episode, I'll show you how to find them.

Speaker 2: 00:12 Hey, Hey, what's up everyone? Welcome back to another episode of the amazing seller podcast. This is episode number seven 74 my name is Scott Voelker and I'm here to help you build a future proof business. You can create the ultimate freedom, fuck always a, but you have to take what you learned from this podcast and take action and you can become the amazing

Speaker 1: 00:33 seller of your life. So if you're ready, I'm ready. Let's do this. All right. So in this episode, like I said, and this is really, really important. So many people get stuck here or they find out later that's their market. Their niche isn't profitable or it doesn't have the opportunities that it should have, or they might need to pivot. So what I'm going to do is I'm going to give you three steps to identify profitable niches and also how to avoid bad ones. All right? And I just want to share with you like an example, okay? Of what this looks like. So myself, when we started, I say we, myself and my wife, we started our photography business. We had no idea about if our market was profitable or how to separate ourselves from the competition or any of that stuff. We didn't know what we were really doing.

Speaker 1: 01:27 But now looking back at it, I can see what we did and why it worked. All right. And I'm going to also give you an example of how something might not work. All right? So I'm going to give you these three steps, but first let me just kinda kind of give you a visual of what this looks like. Okay. Because a lot of people, they will go after the product. We do not want to do that. We do not want to just go after the product and build the business around the product. That's going to be bad, okay? Because then you might not have the opportunities of going out there and creating traffic or having other opportunities to sell different products. That's not necessarily a hundred percent that product. And it will make sense as I go through these three steps. But like for myself and my wife, we went through and kind of did this when we were going from our photography business to where we went in the online space.

Speaker 1: 02:21 Now photography is a really, really big space. It's a competitive space. There's a lot of people doing it, right? So when my wife and I decided to get involved in the online space with digital photography, we didn't want to just teach digital photography. I was more, I guess, interested also in the Photoshop side of things. Okay. And so what we were doing, because we were doing it in our own studio at the time, is we were creating these really high end, uh, newborn photography sets. Okay. And also for toddlers, but mainly for newborns. That's what we specialized. Again, talking about niching down. And we'll talk about that a little bit more here in a minute. But you know, niching down is so important, but sometimes you might niche down too much and then you find out that it's not profitable in that niching down area. So we've got to, got to make sure that we don't fall into that trap either.

Speaker 1: 03:16 So we want to do a little bit of validation and in these three steps you're going to see what I mean. So what we did, I'm just again giving you like a little bit of a, of a view of what this looks like. So what we did is instead of going out there and just trying to teach photography or help photographers, we said, what can we do that the market wants? But uh, no one else is really serving that or at least doing as good a job as we will do because I think we'll do a better job. And that is digital backgrounds. Okay. Digital backgrounds are huge in the photography space, but there's a lot of cheesy ones out there. They're not that great and they, there wasn't really a lot for newborn photography. So what we decided to do, because we are, we were already doing it in our own studio, is we started to offer those to, uh, the online space okay.

Speaker 1: 04:06 In the digital online space. And that's where we built our business in showing people how to, number one, take a photograph against a green screen or a white background, and then cut it out. Making it look realistic with like really wispy hair and all of that stuff. And then placing it in a digital background. One that looks real, and it also looks like you would pay thousands of dollars for this set. All right? And that's really what we did, because again, we knew that the market wanted it. It was a product that, you know, if you were to buy these backgrounds, these real backgrounds, these canvas ones, which we were having painted hand painted, um, they were costing us, you know, anywhere from 1500 to $2,000, and then the props that go into them, another $500 thousand dollars. So you're talking two to $4,000 and we can give this to someone and they can use it in their own studio and they might only pay 30 bucks.

Speaker 1: 05:00 Pretty good deal, right? So we knew that the market was there. We also validated that they were selling on eBay at the time. And, uh, so we just did our validation process that way and it worked out really, really well. Okay, so again, I'm just giving you a picture of what it looks like to number one, understand your market and then from there if you can niche down and then from there is their products already selling in? Is there a demand? Okay, so those are like the high level things, but let me give you a three-step little process here that you can take yourself through. So number one, number one, does the market exist? Okay? Does the market exist? Now you might be thinking, I don't know if it exists. Well then you've got to do a little bit of digging. Okay, we've got to do a little bit of digging because if we do this and we find out that the market doesn't exist, you might say, well that's great.

Speaker 1: 05:52 I want to create my own market. And the answer to that is I would probably say not to do that. And the reason is is because it's really hard to create a new category. Not saying he can't be done, it's just going to be a lot harder. So you just want to validate that the market does exist and you want to know the market that you're going into. Okay. The other thing that you might want to ask yourself is if you are in a market, okay, is it niched down enough? Okay. Now this is where it gets a little tricky because again, let's say that you are in the fishing market and then you want to go into the bass fishing market. Then you wanna go into the kayak, bass fishing market. The one thing I see people doing sometimes is they niche down into that kayak, bass fishing type level, and then they build the site out all around that.

Speaker 1: 06:38 The problem with that is then it's going to be hard to come out of that if you ever want to. All right, so again, just a little bit of warning there. Don't niche yourself down into a corner. Always allow yourself to open up and be a little bit more broad. Okay? But you do want to niche down if you can and you want to do that research first to make sure that you can niche down. All right? So again, I want to stress this though. I got this in my notes because I want to remind you as well, make sure that you are not building your business around a product. It is going to be very, very difficult to do anything outside of that if it's just around the product and you're gonna run out of things that you can do to generate traffic, if, if it's not, um, or if it's just focusing on that product.

Speaker 1: 07:26 All right. I'm going to give you an example again of what this looks like and some advice that I gave one of our past guests who sells cable railing systems. Okay? So got a great little business, okay. Doing really well. Selling cable real railing systems, okay? These are those wire, um, cable railing systems that the really cool, I actually got him on my Lake house to look awesome. But when you're trying to do these other things that we want to do to build out our brand, you know, and get some uh, you know, additional revenue streams, not just relying on those one products or those, you know, those railing system products, what can we do? So my recommendation was first off, start with creating the content around that. Okay. Around the products. But then from there, what else could you do? Well you could show people deck designs, you can show people, uh, you know how these certain decks were converted.

Speaker 1: 08:20 You can give back yard ideas to improve the backyard cause if you're looking to do your deck over, you're probably looking to do some of your backyard stuff. Maybe it's patio stuff so you could do a whole do it yourself type area about decks or backyard design in home improvements, that type of stuff. Then we're not just niche down so, so far that we can't come out of that. It would be weird if we started talking about that if, if our site was only talking about the, you know, the cable railing systems. So hopefully that makes sense. It will probably once I get into step two and three here. All right, so let's move on to step two. So in step two, we want to make sure once we know the market, once we identify the market, we've sub niche down if we can, and if we have to or if we want to, right?

Speaker 1: 09:11 Then what we want to do is we want to look, does this market have a variety of ways to generate income? Okay? Does the market have a variety of ways to generate income? How do you know this? Well, I would encourage you to do this, okay? Because a lot of you listening are probably thinking like, well, I want to launch five products of my own and it's going to take me, let's just make it easy. Let's say it's $5,000 to launch each product, so you're like, it's five products. That's $25,000 is going to cost you. Well, you don't have that right now. You're like, I got enough to do one product and then I'm going to wait and I'll launch the other ones later. But while you're waiting, you could be selling other products, just not your own products and you can be making revenue from that.

Speaker 1: 09:53 If you can have other people or some people coming over to your site that aren't just looking for that one specific product that you have, you see all that opens it up. And what we can do is we can become an Amazon affiliate or an associate as they call that. And then any product in that catalog, we can then promote. So we can do content around it. We can, uh, we can lead people over to our, our website and educate them. Again, if we were doing backyard design, maybe it's one of those standup heaters that goes on the deck. Well, we're not going to sell that, but if that was in one of our deck designs, right, then we could link to that. And maybe that's a $300 or $500 product. We can earn anywhere from four to 8% commission on that. Not too bad.

Speaker 1: 10:38 Right. I gave an example not that long ago. Like, if you are in the bass fishing market and you are in the kayak, bass fishing market, you might not sell kayaks, but you could sell kayaks just as a referral. And if you saw the kayak, I think the one I looked at was like $1,700 and you earned a 8% commission on that. I mean, heck, you're talking over $100 and you didn't have to deliver a product. All right? So it's really, really good to be able to see the opportunities inside of the market. But do you see why if you have the market, you understand the market, you're not necessarily, uh, pigeonholing yourself to where you only can talk about that one product. Right? Another example of this is in our photography, our online digital photography business, we could recommend real backdrops, but I'm not going to make real backdrops and sell them, but I could link over to those, those backdrops, those Muslim backdrops or canvas backdrops.

Speaker 1: 11:40 And they're heavy too, by the way. Or maybe a maybe a backdrop system. Right? And I've sold those through our website, but I didn't sell them. I basically just recommended them. Okay. It's basically just being an affiliate through Amazon or Etsy. Etsy has an affiliate program or eBay, they have one, right? If I recommended a lighting kit, well it doesn't mean that I'm going to create the lighting kit, but I can recommend it, right? And then I can earn a commission on that. So that's how we can really broaden this out. But I would encourage you to do this. Sit down for an hour, go on Amazon, go on eBay, go on Etsy and see what other products you could sell to your market. Do not limit yourself to thinking you have to be the one to have that product in hand. Okay? And I think you're going to be surprised.

Speaker 1: 12:27 And if you can't find a whole bunch of products, you're probably niched down too much or you might be looking to narrow within your own vision, right? Like you need to open that up. You need to go a little bit outside of the box a little bit. But that's why it's so important to understand the market. So again, going back to step one, does the market exist? And who is the market? Who is the market? Okay, we really, really need to know that. Okay, and step two here, does the market have a variety of ways to generate income? And again, we talked about the product side. Now let's, let's talk about digital products. A lot of people, they don't, they don't think of this as a way of them creating extra revenue through their business. Well, if you're in the bass fishing market, maybe you can show people how to catch more bass, but maybe you're not going to, well, you can go to ClickBank.

Speaker 1: 13:17 ClickBank is a digital product, a marketplace, and you can go there and see what products are selling there and you can see how well they're selling. And then from there you can re you can refer people to that product. I would always recommend you buy that product. Generally it's going to be under 100 bucks. Buy it, see how the flow goes, see how their funnel works, see how they are to their customers. Because you don't want to recommend products that you don't believe in as well. All right. So definitely I always recommend buying that product and seeing their flow. So definitely do that ad networks. Another great way to bring in extra revenue on eBay. Like I said, Etsy, there's a whole bunch of different ways that you can do this. All right? But you definitely want to make sure in this step you want to make sure that the market has ways to make money.

Speaker 1: 14:02 Okay? That is generating money because sometimes you'll go into step two and you'll be like, there's not really a lot of opportunities to generate revenue here. There's only a few, right? Well that's a red flag. We want to then either pivot into another direction in that market or we might just need to, you know what, we need to abandon that market. You know, it's better to do it now then you know, wait until you get to this point, right? So these three steps are really, really critical. And number three is their traffic. Big one here guys, is there traffic? Are people searching for topics? All right? Are they searching for help? Are they searching for how tos? Are they searching for random questions about the market? Are they looking for examples? Again, if you're in, you know, backyard design or home improvements, you know, is there, you know, 15 ways to improve your backyard, right?

Speaker 1: 14:59 Or your deck or how to create a, you know, a backyard Oasis, like whatever, right? Like there is there, is there, that type of stuff that's bringing in traffic. So we want to know that stuff. Okay, how much traffic can you expect? Right? So go and use tools like Google, Uber, suggest. Again, that's Uber suggest YouTube. Again, if you go to YouTube, you're going to see the views, you're going to see what people are looking for, what people are viewing, right? So that's traffic on Pinterest is another great place to look and see what is resonating with that market. And sometimes you'll find that they're not on Pinterest, maybe they're overrun on Instagram, right? Facebook groups, another wealth of information over in Facebook groups. Again, if you can't find Facebook groups, market might not exist or maybe you've niched down too much. So these are ways for you to see the traffic potential and you really, really do want to do this.

Speaker 1: 15:58 So again, let's go through these three. All right? Does the market exist? And let me add who is the market. Once you do establish that, yes, there is a market, so does the market exist? And if you say yes, then I want you to answer this question, who is the market? Start looking in really identifying who it is that you're marketing to or that you are reaching. Okay? It really important that you do that because then you can target those people. We're actually doing inside a brand creators Academy right now. We're doing a live case study inside of there and we're actually in the list building portion right now. The time of recording this episode. Now we are up over 4,100 emails and let's see in the Facebook ad in the post that we're running, uh, we are about 1,100 likes. Um, on the actual ad, which is a post, we've got over 300 comments and 475 shares.

Speaker 1: 17:00 But the cool thing about this is once we're running these contests and these giveaways, we're getting a lot of comments in the comments. We can actually start to learn who the market is. And it's funny because just before I got on here, uh, someone in one of the comments posted a picture and it showed them with one of these items in the market, I'm not going to give it away cause we're sharing it inside a brand creators Academy and I'm keeping it exclusively there. But just so you get an idea, I said to my wife, I said, this lady right here, this is our market. And it was like clear as clear as a bell. Like it was right there. You, you totally seen it. And when you're writing your emails, you're looking at that picture of this woman with the item and you're like, yep, that's the market.

Speaker 1: 17:46 And then you speak to that market and your messaging becomes, and you're able to then resonate more with the, with the market and you're selling becomes easier, your product selection becomes easier, everything becomes easier because you're starting to identify who the market is. And how to message them and really truly give them what they want and what they need. Okay, so again, one, does the market exist? Who is the market? Okay? And then from there at number two, does the market have a variety of ways to generate income? Not just one product and not just maybe three products, but a variety of different ways that we can bring in revenue. Number three, is there traffic? Are people searching for topics? Like I said, go to Google and type in how to catch more bass and then let it fill it in and it'll say in a pond, in a Lake.

Speaker 1: 18:36 Uh, you know, in a river, whatever. I don't think they're in a river, but you get what I'm saying? Right? So that's how you can really understand if your, if you're on the right track. Okay. And if your market can be profitable. All right, because in the end, like we are trying to build this thing so it can be profitable. But what if you build out your, your one product brand and find out that you're really limited to only selling that one product? Well, unless you sell hundreds of thousands of units, how are you going to scale this? How are you going to bring in additional revenue streams? And I will tell you this, okay? I will tell you this, that if you are able to diversify your revenue streams, diversify your traffic channels, and really identify who your market is, you will have a much greater chance of taking this business that you're building and eventually selling it if you want to for a lot more than if it was just a one off product.

Speaker 1: 19:36 I promise you that. I've talked to Joe Valley over a quiet light brokerage and he'll tell you like flat out if you have these additional things, you are going to get a higher multiple, all right? Because again, an investor is looking at it like less risk, more opportunities, more opportunities to scale to build this thing out. All of those things. All right, so just really understand that what we're doing here is we're trying to identify when we're looking at a market at a niche and a niche. All right? If we're looking at that, we're really then identifying the ways that it can make income or generate income and the ways it can generate traffic. All right, so if you're at this point right now and you have not gone through that process, those three steps do it. Okay. The other thing I would like you to do is download the brand growth validation checklist.

Speaker 1: 20:25 If you haven't done so already, this is going to be even deeper and you're going to start uncovering even more about your market and really doing a full evaluation of your market or the one that you're considering. Again, a lot of people get stuck right here in the niche selection. All right, well this will help you. All right, so if you haven't done so, go over to brand creators.com make sure that you grab that checklist. I also have a video showing you and walking you through exactly how to do this. Now, the other thing I want to do here is I want to remind you, depending on when you're listening to this, because this is airing on January 8th at least it should be, is brand creators Academy is officially accepting new members right now. Enrollment is open. It will be open for just one week at this time.

Speaker 1: 21:16 Okay. And we open generally a few times per year and we do this. So this way here we can really focus on helping our members inside of the Academy. And just to let you know what's happening in there, if you haven't heard me talk about this in the past, which I've been talking about quite a bit, is what we're doing is we're doing a live brand case study where we're building it from scratch. So no matter when you join, you can go back to the beginning of when we started, when we brainstorm the idea to where we got everything set up to where we started to generate traffic, we started to build the list. Currently, right now we're in the the list building portion. I sent my first broadcast email this morning to the list of just over 4,000 people. And uh, it was just great because I was sharing that inside of the Academy of the email that I wrote.

Speaker 1: 22:07 And then instantly within, I think it was like five minutes, we already had over 50 people clicking on the links inside. And I think I looked about two and a half, three hours ago and it was about three hours after I had published that and we were over a 14% open rate in just three hours, which is just insane. And over a 3% click through rate, which anyone that knows anything about email list building and email marketing, the average, the standard in, in this market or in, you know, in our industry is really generally around 10% like people are happy with 10%. Um, I know right now we're at 14% just in three hours. We will get that to over 20% we definitely will. So that's really exciting stuff. And the crazy thing is, is we're still building, this list will probably be over 7,000 by the time we end our list build, give away a little process here that we're documenting.

Speaker 1: 23:05 But what we're doing here is we're showing exactly how we went out there and found the lead magnet as we call it. And then from there we're showing how we set up the Facebook ad, how we found the right audience. And then from there how we brought the cost from, I think it was around maybe 40 45 cents now down to about 23 cents per email, which is just crazy. And yesterday we had over 330 emails in one day, which is just craziness. Um, but that's what we're doing inside a brand creators Academy. So if you're at all interested, if you're listening to this on the 8th of January, 2020 go-to brand creators.com and you see a way for you to be able to join us in this enrollment period, or if you just want the free resources, you want to go through the free training that I have there for you, depending on when you're listening to this, again, that is usually there, um, throughout the year because I want to make sure that you have this so you can validate your market and really understand those three steps, but really go deeper than that and really map out how you can grow and scale your brand.

Speaker 1: 24:14 All right, so definitely make sure you go to brand creators.com. So let's just wrap this up and, uh, well let's just, uh, let's give you guys these three steps. Again. Number one, does the market exist? And if it does, great, then from there, figure out who, okay, who is in your market? Who is your market? All right. And then number two, does the market have products and ways to make money in a variety of ways? Okay. And then number three, does the market have traffic already? Again, if you just go through those three alone, it's going to give you a good idea if this is a good market or if it's a bad market. All right, and again, go to, I'm telling you right now, it will make this so much easier if you just go to brand creators.com and make sure you go through that checklist, make sure you watch me take you through the validation process, which I think it's around 20 minutes long and it will really allow you to see the exact full process.Speaker 2: 25:13 And again, if you want to join us and brand Frieders Academy, I'd love to have you inside there as well. All right guys, so that's it. That's going to wrap it up. As always, remember I'm here for you, I believe in you and I am rooting for you, but you have to new after you come up, say it with me. Say it loud. Say it proud. Take action. Have an awesome, amazing day and I'll see you right back here on the next episode.

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