When it comes to starting a new online business, it is very tempting to get into a broad market. The reason is simple: the broader the market you are in, the more people your website and products will appeal to. That works on paper, but it is far to be true in the real world. The main reason is simple: the broader the topic, the more people you could reach in theory, but also the more competition you will get. In this article, I will show why you should absolutely pick a niche for any online business, especially if it is your first one.
When I was about to start my first information website back in 2013, I wanted to get into a broad market. I wanted to start an information website where I would share high quality tutorials using open-source hardware (and especially my favorite platform, Arduino). I started publishing some tutorials on a website, making tutorials in fields like robotics, home automation, general programming and hardware design … but the website never took off.
So I quickly changed my strategy, and started to specialise in one of the domains I mentioned above: home automation. This when I created my most successful website at the time this article was written: Open Home Automation. And this website took off much better than when I was writing about open-source hardware in general. I didn’t change my field of expertise: I just niched down. And we are now going to see the 4 reasons why you should do the same in your own business.
The first reason is that when you are in a niche, it is much easier to be seen as an expert. For example, I would have been lost in the masses if I started to post content about open-source hardware or Arduino in general. But now, I am seen as an expert on the topic of home automation using Arduino.
And that’s so important to do business on the web nowadays. There are lots of people with websites and online businesses out there, and it is really easy to be lost in the masses. Being seen as an expert means that people will refer to you when it comes to your niche, and it will help you stand against the competition in your field. It will also put you in a very good position when you want to launch new products or services in your niche.
If you are into eCommerce and selling medium to high-priced products, you might be turning towards paid advertising, for example using Google AdWords. If you are in a niche, the price per click on your banner will be much lower than if you were in a broad market. For example, in the niche I am in, home automation using the Arduino platform, the cost of paid advertising will be really high if I wanted to promote my products using the sole Arduino keyword. One reasons is that I would be in direct competition with the manufacturer itself, Arduino.
Let’s take an example. If you are selling products for cats, for example, the estimated CPC (Cost-Per-Click) that you would have to pay for somebody clicking on your advertisement banner is estimated at 1.03 € by the Google Keyword Planner tool. This is for the ‘cat products’ keyword. Using the same tool, we can see that if you specialise your business in luxury cat products, the CPC falls to 0.53 €. This is nearly is 50 % reduction in advertising cost, just by being in a niche.
The other advantage about being in a niche is that you actually have a chance against the big players in your fields. In my own field, I had no chance to compete with any of the big players, whatever the angle I would approach it. Remember, my first business was all about creating high-quality tutorials using Open-Source Hardware platforms like Arduino. For the tutorials themselves, I had no chance against huge tutorials websites like Instructables. For the eCommerce part, I had no chance to compete against Arduino itself or against big stores like Adafruit.
But by being in a niche, I had a chance to get noticed. I started building a solid reputation for my tutorials in the home automation field, and this even got the attention of big players that started to ask me to write articles for them in my niche. By developing products in my niche and for my audience specifically, I can also run a profitable eCommerce activity while not being in a direct competition with the bigger names in the field.
Finally, the cool thing about being strong in a given niche is that it is quite easy to expand to broader topics. Indeed, people have a natural tendency to believe that because you are an expert in given topic, probably you are good in other related topics as well. This will allow you to go out of your initial niche and go to broader topics. For example, still about my open-source hardware website, I am now expanding to several new websites in other niches, like robotics or healthcare. I know that because of the reputation I built with my first website, I can now expand to other topics and at least part of my audience will follow.
Is your business already in a niche, or are you thinking about starting a new business? Do you think all new online businesses should be in a niche? Let me know in the comments!