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6 Ways to Identify Profitable Products and Make Money With Your Online Store

6 Ways to Identify Profitable Products and Make Money With Your Online Store

Here are some powerful tactics to build and grow a successful online shopping business.


5 min read

Opinions expressed by Entrepreneur contributors are their own.


Though running your own ecommerce business can be an exciting entrepreneurial adventure, there is no denying that many online stores fail to make any kind of profit. After only a short time, they are out of business, closed up for good.

While there are many factors that can cause an ecommerce store to fail, one of the biggest problems entrepreneurs face is the inability to recognize and leverage a profitable product niche. However, by conducting a thorough analysis of the current marketplace, you can find an area where you can make a lasting impression.

1. Solve a meaningful problem.

As with any other business idea, a successful ecommerce product can get its beginnings when you try to solve an actual, meaningful problem. You can get ideas from your own experiences, from talking with friends or neighbors or going online to see what challenges others are experiencing.

This is exactly what worked for dog toy brand Active Hound. As a Shopify blog post explains, the brand’s founders spoke with dog owners at a local park and learned that “the pricey dog toys they were buying lacked the durability needed to withstand the wear and tear of a playful pet. Hearing about this frustration inspired them to create a line of ultra-durable dog toys.”

Related: 7 Realistic Ways to Make Money Online

2. Find a gap among potential online store competitors.

Chances are if an ecommerce niche has marketing potential, there are already other stores selling a similar product. However, this doesn’t mean you need to abandon that idea entirely. By researching your competitors, you can find areas where their offerings don’t quite meet customer needs — and that’s where you can come in and establish your unique value proposition.

For an expert’s take, I reached out to Sultan AlBanyan, co-founder of FLTR, as his company serves as the perfect real-life example of this. FLTR is a manufacturing startup that produces face filtration masks. He explained, “There is a big demand for effective, yet stylish filtration masks in our home country of Saudi Arabia. But these masks don’t last forever — they need to be replaced periodically.”

Continued AlBanyan, “In our research, one of the things we found was that competitors in our niche didn’t use a direct-to-consumer model, which raised prices and made it hard for some to consistently afford to buy the masks they needed. By identifying what was missing from their offerings, we were able to define our place in the market.”

3. Check out what’s trending.

You won’t gain much traction if you create an exact copy of a pre-existing idea. But when you look at trending product niches and brainstorm alternative possibilities within that category, you may just find the unique angle needed to launch a successful ecommerce store.

The good news is that there are plenty of resources available to help you get an idea of trending categories in the ecommerce world. Google Trends is a great place to evaluate search volume for different keywords. Many ecommerce platforms like Oberlo also post lists of current trending products, which can help fuel ideas for your own store.

Related: 8 Ways to Make Money Online Without Quitting your Day Job

4. Know the margins.

It’s one thing to sell a product online; it’s quite another to sell it at a profit.

Research by MarketingSherpa found that ecommerce stores with annual revenue of under $100,000 have a 30 percent median gross margin. Successful stores know whether they can compete on price or value, and use it to maintain these types of margins.

When evaluating a product niche, you can’t just set an arbitrary price point. You need to research what your target audience is willing to pay for that product and then account for business expenses such as manufacturing, shipping and web hosting. Razor-thin profit margins will make it hard to scale or adapt to changing market circumstances.

5. Look for recurring sales.

Research from the Harvard Business School has found that a five percent increase in customer retention can increase profitability by 25 to 95 percent. It stands to reason, then, that the most profitable ecommerce niches would focus on areas where customers are more likely to come back for a repeat purchase.

This is part of the reason behind the success of subscription boxes and subscription services in general. Each customer becomes a recurring source of revenue. This also makes other items that need to be replaced regularly — such as planners, food and DIY materials, to name a few — a good choice. Deliver a quality experience the first time, and customers will likely come back to you time and time again.

Related: Why Search Engine Optimization Is the Key to Making Money Online

6. Know your interests.

A study of ecommerce entrepreneurs published in the Huffington Post found that 45 percent of entrepreneurs cited a love for what they do as the primary reason for starting their store — ranking far ahead of other attributes typically associated with side hustles, such as freedom to work where and when you choose.  

At the end of the day, it doesn’t matter how lucrative a potential ecommerce product may be. If you aren’t passionate about the idea, you won’t have the drive necessary to work through unexpected problems or innovate to come up with better products or services. Find something that you yourself are interested in, and you will be better equipped to stick with your store for the long haul.

Your chosen product niche will ultimately define everything about your ecommerce store, from its target audience to the way you market your brand. By doing your due diligence to find a niche that appeals to you and has real market potential, you will be able to lay the foundations for a successful ecommerce store.

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