Uncovering Profitable Niches & Digital Products
Although you can access all the lessons today, I’d highly recommend taking your time and actually go through the steps day by day to get the best results.
Before choosing a niche for your new Etsy shop, let's brainstorm some niches and product ideas.
A niche is a subset of a market. There can be many levels of niche. For example, “label template” is a niche in the template category. And if you want to make it even more specific, or “niche down”, then you can get a ‘sub-niche’ like “retro candle label template”.
The more you niche down, the fewer competitors there will be, and the less competition you will face. You'll learn more about that later in this lesson.
7 ways to Brainstorm Niche Ideas
This is the starting point of our market research journey. I’ll run through how to generate niche ideas and how to narrow them down to analyse them further in the next chapters. Here are some of the places you can find potential niches:
Your Own Passions & Interests
Think about your hobbies, skills and knowledge. A lot of passions and skills may not seem ‘sellable’ at first, but can be turned into unique products. For example, if you’re into hiking, it can be used to make journals made for hikers with information like hiking trail log book. Another example is that if you are into beauty, then some potential niche ideas could be printables like skincare labels and beauty routine cards.
Your Unique Advantages
These advantages can be internal (your own heritage, culture, etc) or external (your location, etc). For example, if you are part of an ethnic group, making products that are relating to that could be your advantage.
Using The Digital Product Idea Generator
Scroll down to the next part to use the idea generator to get some potentially great (or potentially funny) niche ideas.
Inspirations On Etsy
Home page, gift ideas and shopping guide in the Etsy blog are just few of the pages to find inspirations.
Etsy Search Bar
Sometimes it’s good to just searching for random products on Etsy. Click around, see the related products, browse shoppers’ collections, explore related search queries to get more product ideas. Some words that you can use to start with include "template", "printable", "Canva", etc.
Social Media
Similarly, you can browse social media for inspirations. I especially love browsing Pinterest and Instagram. Explore hashtags, browse the popular/trending pages, look for brands that your friends interact with, etc.
Other Shopping Websites
Marketplaces like Amazon Handmade and eBay can give you tons of inspirations of niches you haven't thought about.
Recording Your Niche Ideas
To record the potential niches, I’d recommend using your favourite note-taking methods to mark down the ideas. My go-to is using a note-taking app like Apple note or Google doc, but you can write them down with pen and paper if you prefer.
After this process, you may have ended up with too many potential niches, as you’d need to analyse them in the next few steps. I’d recommend bringing about 10 to the next steps.
If you have too many, here are some ways to narrow them down preliminarily:
- Your own skills and knowledge
- Your preferences - Keep an open mind, but you can eliminate some of the ideas that you have absolutely no interest in.
- Ease of learning how to make the products - A simple search on Youtube and watching some short tutorials will give you an idea of whether that niche is difficult to start
- Resources and investment - Some niches may be popular but require a large investment or a lot of resources to start. For example, it may not be feasible to start selling furniture if you live in a small apartment
Our Digital Product Idea Generator gives you over 346,000 unique product ideas with a mix of digital product type, design style, and target customers.
Some ideas will be crazy. Some ideas will be unrealistic. But some ideas will be brilliant.
The main purpose is to get you thinking about different product possibilities. Keep your own interests and skills in mind when choosing product ideas. If you come across a niche that sounds great, do market research and see whether it's viable.
How To Use This Generator
Click the button to generate a new digital product idea. Then click different words to refine your product idea.
Most Etsy market research tools are capable of doing market search on Etsy. The ones that I recommend the most for market research is Alura because of their Chrome Extension. They have a free plan for you to try out, and I've also included ways to pick your niche without tools after this.
Let’s learn how to do use Alura to do market research and choose the niche to enter:
Using Alura Chrome Extension
IMPORTANT: When you are doing market research on Etsy, keep in mind that Etsy shows personalised search results and suggestions that could skew your analysis. I’d recommend using an incognito browser when doing research, and open a new incognito browser after browsing 20-30 pages.
The Alura Chrome extension is especially useful in validating niche ideas. It’s my top choice mainly because I can use it directly on Etsy, and it can compare both the demand and competition level at the same time.
Using your niche ideas, you should search them on Etsy one-by-one. The most important thing you should look for is the Score of the keyword.
The score looks at both the estimated sale number of the listings under this keyword, and also the level of competition. A high score is a good sign as it means the demand is high with low to manageable competition level. A low score may indicate low demand and high competition.
When you hover over the score, Alura will give you the detail assessment of the demand and competition. What you want to look for is high demand with low/medium competition.
(When you open the Chrome extension, click the ‘Settings’ button on the bottom right of the extension window. Then choose ‘All listings’ for ‘Listing to load initially’. This allows the Alura to analyse all the listings on the first page, which gives you more accurate results.)
Niche Down To Identify Less Competitive Keywords
Now that you have found products with great potential, it’s time to dig deeper and see whether we can find a small niche/keyword that has lower competition but still good demand.
For this, we need to use long-tail keywords.
Long-tail keywords are keywords that is made up of 3-5 words. They are more specific and targeted. And they have less competition compared to short keywords, making it easier to rank on the first page.
For example, the keyword "digital planner" is highly saturated with many listings competing. Here are some words to include with the main keyword in order to get a long-tail keywords with less competition:
- Product feature keywords like “digital downloads”, “instant download”, "all-in-one", "undated"
- Usage keywords like “fitness”, “student”, “business owner”, “weight loss”
- Style words like “minimalist”, “boho”, “green”, “botanical”
For example, from "digital planner", I can make the longer, more niche keyword like "green digital planner undated" which has good demand and less competition. Alura gave it a score of 8 out of 10:
How To Do market Research Manually
In case you don’t want to use Alura. You can still do this market research manually. Here's what I recommend:
Look For Indicators On Etsy For High Demand Niches
One of the main prerequisites of a profitable niche on Etsy is that it should have a good level of demand. Luckily, there are some indicators on Etsy that you can use to find popular niches:
- The niche keyword appears in the Etsy search bar autocomplete function
- Many ‘bestseller’ and ‘popular now’ badges in the search results (you may have to click into the listings to see it)
- Red text ‘In xx carts’ appears in multiple listings (you may have to click into the listings to see it)
- Many sellers with high number of sales and reviews
- Trending product ideas outside of Etsy, for example, trending on Instagram
Check Competition Levels On Niche Ideas
Estimating the competition level is also important in choosing a profitable Etsy niche. You want to avoid niches that are overly competitive as it could be difficult to stand out and get customers. Here are some indicators to estimate the demand of a niche:
- Number of listings - The higher the number of listings competing in the same keyword, the more likely that the niche is competitive. However, with Etsy’s updated search algorithm, some of the listings ranking under a keyword may not actually fit the search keyword, which means that there may be fewer listings that compete directly with you than the number of listings indicate. So keep that in mind when estimating the level of competition.
- Number of successful sellers competing - If there are a large number of big sellers competing for sales in a niche, it may be hard for a new Etsy shop to break in the market. Look for niches that only have a small number of big sellers competing.
- Quality of the best selling listings - If the best selling products are high quality with well-optimised listings, then it could indicate that the competition is strong in that niche. But if the best selling products are pretty average in quality and you are confident that you can create something better, then you can consider entering that niche.
Now that you know what you’re going to sell, the next step is to identify your target customers. To know them better, we can build a customer persona to understand your target customers better.
Knowing who your target customers is is crucial in every aspect in your Etsy business: from product creation and branding, to marketing and SEO. Knowing them better than your competitors mean that you can serve them better and have an easier time convincing them to buy from you instead of your competitors.
Here are some common aspects you can use to understand your target customers more:
Demographic Information
- Age
- Gender
- Location
- Income level
- Education
- Marital status
- Family size
Psychographic Information
- Purchase motivation
- Pain points
- Interests
- Preferences
- Values
- Lifestyles
(Although it’s important to have a clear understanding of your target customers, it’s not necessary to know all of these in details. Having a general idea is still helpful in pointing your Etsy business in the right direction.)
So how do find these information on Etsy so that we can create the perfect digital products for them?
Gather Target Customer Information
Go to your main competitors’ shops. Their customers should closely resemble your target customers. You should only focus on products that are similar to what you want to sell.
Understand Your Customers Through 5-star Reviews
Reviews are a gold mine for valuable information, especially from customers who bought products similar to what you want to sell.
They contain insights into the pain points, purchase motivations, preferences, etc of your target customers; You’ll learn a lot about what motivates your target customers to buy. You’ll usually find more about the psychographic information in reviews, rather than demographic information.
Here are some example of how you can extract customer insights from reviews:
Reading 2-4 Star Reviews To identify potential market gaps
Other than 5-star reviews, I’d also recommend analysing the reviews that are 2-4 stars from your close competitors, as these often contain complaints and suggestions for improvement.
These gaps between customer expectations and what the seller provides can help you identify areas where you can create a better product that meets the needs of the customer.
