Finding A Niche Market

If you were going to open a business with your own money, which of these two would you attempt? A mega superstore or the corner deli?

Would you try to battle some of the world's largest companies, with the most established names and huge budgets? Or would you try to find a community with relatively few eateries and a sizeable population, then try to appeal to that group of people? If you wanted the best chance of success, you would open the corner deli. Guess what many people would do when given the equivalent online choice?

That's right. Many people who create web sites try to build the "superstore" web site instead of the "corner deli" site. They join dozens, even hundreds, of affiliate programs, create as many categories as Yahoo and then link to all these programs.

They're unlikely to succeed. They will not be knowledgeable about most of those programs. How can they be? There are only 24 hours in a day. Why would people visit their site? People visit web sites for information. Don't ever let anyone tell you differently. If a site doesn't have some sort of unique, specialized information then it has nothing.

Internet marketing. It's not a niche. It's a mass market, like Wal-Mart rather than the local deli. Yet it's amazing how many neophytes try and promote Internet marketing affiliate programs. Most likely they do this because that's the first thing they are exposed to when contemplating starting an online business. But that's not the right approach.

The right approach is to use the information about Internet marketing to carve a niche for yourself in a place where there is not as much competition as in the "gorilla" areas - areas where you have to compete with proverbial giants.

You have to focus on a niche you know and love. Why? Because that's the only way you're going to be able to devote the kind of time and effort to create a meaningful site, build up the right traffic, generate worthwhile income, and enjoy what you're doing.

Here's an example. I sell display-ready ship models. It's a niche that upon first inspection has a lot of competitors. But most are just small shops that have a web site. Is there demand? Yes, a search on Overture's Keyword tool reveals nearly 30,000 searches last month for the phrase "ship model" and thousands more specific searches for a number of related items.

What's the top bid? About $0.70 (per click), so there's money in it too. Advertisers don't continuously pay that kind of money without generating results. So there's your answer. Yes, there is demand and there is money in it.

Is there too much competition?

No, you don't see any "gorillas" the size of a Sears or General Motors or Amazon in it. When you think of model ships, there's no company that you instantly associate with it, like Amazon when you think of books. That's a promising start.

If you were to open a deli you would find what the locals like to eat, when they eat and how much they spend. From there you can offer a menu that suits their tastes. Do they like cold cuts? Roast beef or chicken or vegetarian? What kinds of toppings? Side orders? Dessert? What do they drink with it? What portions? How would you get the word out? What do you want your deli to be known for (bean burritos, etc.)?

The same is true with an online site. In this example, who buys ship models? What for? How much do they spend? For a start, ship models are upscale, luxury goods. I've seen prices of $20,000 and more (imagine a commission on that)! We sell in the more affordable $40 to $1,300 range. Clients buy them as decoration in homes and offices. Or as gifts, especially retirement gifts.

What does that tell us? Our target market is older affluent folks who use the Internet (we currently sell exclusively online) who live in the US or Canada. The recipient is usually a man, though the buyer is frequently female.

Of course, you don't want to pay $0.70 a click for traffic if you can help it. So how would you go about promoting something like this? By thinking of related areas or sub-niches. Using a little bit of lateral thinking, what else are older, affluent men interested in? Traveling? Golf? Cigars? Wine? Vacation homes? Investing?

You could create a mini-site that's strictly about model ships. It'd be like the hot dog stand instead of a deli. The bare essentials to service customer needs in a tightly defined area. Or you could focus on related things like maritime history, birthday or retirement parties, interior decorating, gifts, travel to coastal areas, a particular aspect of boating or sailing, and link to a few related affiliate programs. There are many possibilities.

For example, suppose you decide to focus on 40th birthdays for men. Your site might include 40th birthday party ideas, humor, cartoons, birthday cards, and gift suggestions (maybe 40 of them). Among those suggestions could include golfing accessories, wine, vacation packages, and of course ship models.

There are many, many ways to approach this. The goal is to find some combination of supply (targeted traffic) and demand (goods or services) that is favorable and related to the topic of your site. Choose the affiliate programs that fit well with your niche. Then focus on that niche by developing related content that visitors want, and consistently promoting it.

The reality is that putting up a web site alone just about guarantees that no one will visit your site. And creating a web site takes work. As with bricks and mortar, it's better to build a thriving deli with a line out the door than a mega store with an empty parking lot.

Keep that in mind as you look to uncover profitable niches.

About the Author
David Nguyen is co-founder and affiliate manager of AuthenticNautical.com, Internet retailer of display-ready model ships & sailboats.