Welcome to my latest update for the 2017 Mortgage Crushing Challenge! In this update, I’ll be sharing details about my thought processes when it comes to choosing a niche. If you don’t know what this challenge is all about – please refer to the Financial Freedom post that I wrote at the very beginning. It explains exactly how this whole thing came about and why I decided to join. Scroll to the very bottom of this post to see my Budget Update for this challenge. As a reminder, here is my stated goal – and then we’ll get right into the content!
I am going to create one (brand new) passive income producing website that will cover my mortgage by December 2017!
Progress Update
During the month of January, I accomplished THE 2 MOST important steps when it comes to building out a niche site – niche selection and keyword research. I also chose a domain name and registered the domain.
Niche selection is not something to take lightly. I definitely want to dive deeper and explain my niche selection process to you and show you why I chose the niche that I did.
Keyword research and niche selection kind of go hand-in-hand for me. I did a LOT of keyword research during the month of January – and ultimately that led me to the niche I ended up choosing. I’ll explain in detail below…
Choosing a Niche Based on My $9,300 Mistake
First of all – a brief explanation on my mistake. I made a major mistake in niche selection for my last big niche site and I spent a lot of time and money to build out an awesome website that now earns far less than I was hoping for. I used a mostly content only strategy (very little link building) and organic traffic to the site remains at around 500 visitors per day. My Amazon conversion rates are off the charts – usually at about 20% each month. But, due to my huge mistake – I’m only earning a few hundred per month from the site.
Because I made my new niche selection, for this challenge, in January – I’ll share with you the December numbers that I was looking at, from my last site, as a comparison. The site I am talking about earned $335.91 from Amazon in December 2016. The following two screenshots show the income from both Amazon tracking ID’s that I use on the site (one is for the normal links and the other is for Amazon native shopping ads).
Here is My Massive Mistake
If it isn’t obvious enough from the screenshots – I’ll just say it (write it) out loud. The cost of the items I am promoting and selling is WAY too low!!
Adding the two tracking ID’s together, my total ‘Shipped Items Revenue’ is $5094.01. Divide that by my total number of ‘Shipped Items’ (252) to come up with an average price of only $20.21 per item.
$20.21 per item!!
Who, in their right mind, would create a massive website with well over 200 pieces of published content that promotes products with an average price that low?!
Me! That’s who!! What an idiot!!!
In my defense… I knew the price per item was low when I started. I was hoping for strength in numbers and I was basing that hope on previous success I had with an Amazon site in a similar niche. In other words – I thought I would sell a LOT more items with similar traffic numbers. What I didn’t know when I started was that this particular niche is dominated by a couple of multi-level marketing (MLM) companies. They brainwash much of the industry (their customers and potential customers) to believe that only their brands are the the best and that much of what is sold on Amazon is a scam.
How Is My Mistake Worth $9,300?
My average sale of $20.21 per item multiplied by 252 sales is $5,094.01. My (approx) 7% commissions yielded me $335.91 in December 2016.
If I look up the main product on Amazon for my new site that I am building, the average cost for all products on the first page (of Amazon) is $546.41. Let’s see what happens when I plug that number in – in place of the $20.21. In other words, I am estimating that my average sale from my new site will be $546.41.
Estimated average sale of $546.41 multiplied by 252 sales equals $137,695.32. Assuming my commission rate will still be 7%, my commissions would be $9,638.67!
My ‘mistake’ site could be a nearly 5-figure per month niche site if I hadn’t made such a huge mistake in niche selection! All I had to do was choose a niche that promotes higher priced products.
If I take my estimated commissions from my new site ($9,638.67) and subtract my actual commissions from my ‘mistake’ site ($335.91) – I come up with a mistake value of $9,302.67!
I know you’re probably thinking… “Well, your higher priced product might not sell 252 items per month like your lower priced product.” More on that below…
Niche Validation and Niche Selection
When choosing a niche to build an Amazon site around – it is VERY important to verify that the products you plan to promote are actually selling on Amazon. One very basic way to do this is to just look up the product on Amazon and take a look at the actual listings for a few of the top products. Amazon doesn’t tell you how many items are selling per month – but if the product has hundreds, or even thousands, of reviews – you can guess that a decent number of items are actually selling per month.
Niche Validation with Amazon Sales Estimates
In order to be more precise and to estimate with accuracy – I use a tool called Jungle Scout – specifically, the Jungle Scout Google Chrome extension – which has a feature that estimates the actual monthly sales volume for each product listed on a page on Amazon. From any page on Amazon, you simply hit the Jungle Scout Chrome extension button and a window opens up on top of Amazon and populates data for ALL of the products that are showing up on that Amazon page. Here is an example screenshot using the search term ‘pressure washer’…
As you can see – it provides estimated sales figures for each product listed, as well as an average sales volume for all products listed. This is also the tool that I use to easily calculate the average price for all products listed on the first page of Amazon for particular search terms.
If Amazon doesn’t provide monthly sales data, how does Jungle Scout calculate it?
Great question! And I’m not qualified to answer it. But Greg Mercer, the creator of Jungle Scout is qualified and he addressed that very question in this post on his blog – The (Data) Science Behind Jungle Scout’s Sales Estimates
Niche Validation with Keyword Research
Everybody who uses SEO to get traffic knows how important keyword research is. But did you ever consider that keyword research might be important even if you don’t plan to use SEO as a main traffic source?
Keyword research enables you to know exactly what people are searching the internet for and to what extent. If done correctly (by using the right tools), keyword research can also clue you in as to how easy or difficult it might be to compete in a particular niche.
Keyword research also shows you exactly what type of content you should be creating for your website. It is not wise to just make stuff up and create content around what you think visitors will want to see/read. Instead, you should appease to their wishes and desires and create content that answers questions or solves problems that YOU KNOW they are looking for answer for. You might be surprised at some of the obscure things people are actually searching for that you could create content around!
My Unique Keyword Research Process
As I mentioned at the beginning of this post – I’ve been doing a LOT of keyword research lately. I have a new and unique process that I use for keyword research which involves morphing two of the very best keyword research tools together. This post is already long enough – so I want to send you step-by-step instructions in a separate downloadable and printable PDF file. Click the button below to access my unique keyword research process…
Step-by-Step Instructions for My Unique Keyword Research Process
I’m telling you – this new process yields results like I’ve never seen before and I’m able to come up with massive lists of keywords that are perfect for building out niche websites.
Choosing My New Niche Based on Product Price
I mentioned above that the average cost for items listed on the first page of Amazon for my new niche is $546.41. But that’s just an average for those products that happen to be on that page. Not all of those are necessarily the products that I plan to promote.
My new site is going to promote some really high-ticket items! That’s right. I learned from my past mistakes… I used the Search Analyzer tool within AmaSuite to find the top rated and best selling products for my niche. I came up with a list of 10 specific items.
The average price for these top 10 products is $3,331!
Do these specific items actually sell on Amazon?
Yes! How do I know? I looked at the statistics that Jungle Scout provides for each item individually. The total monthly sales, on Amazon, for these 10 specific items is 534 units!
What if I could get just 10% of those sales (meaning that 1 out of 10 buyers on Amazon for this product got to Amazon via my site)? 53 sales per month multiplied by an average price of $3,331 is $176,543 in revenue. A 7% commission payout on that would be $12,358 per month!
Okay. What if I’m half wrong. What if I only get 5% of those sales. Then my commissions would be around $6,000 per month. A LOT of people would be VERY happy with a niche site that earns $6,000 per month!
What about 2%? What if I can only rake in 2% of the total sales for just these 10 items? That would be 11 sales per month (about one sale every 3 days) and my commission would be approximately $2,500 per month. That’s more than enough to cover my mortgage payment!!
Note: Amazon commission rates are currently based on a tiered structure. More sales per month equals higher commission rates. I use 7% for all of my estimates because I achieve at least 7% each month for sales from all of my sites combined.
Another Great Way to Estimate Profits
Instead of just fumbling numbers together like I did above – there is actually a really great tool available that is designed specifically to calculate website earnings for Amazon Affiliate sites. Check out the results I get after plugging my data into AmaProfits.com.
$12,000 is a high-end estimate, assuming that my keyword ranking positions will be at #3 on average. What if I put in 10 for that variable (meaning my average keyword rankings are barely in the top 10 in Google)? Even if my average rankings are only 10 – this tool estimates that my site will still earn $2,779 per month!
As you can see from the different sets of numbers above – this niche is clearly validated based on product price. Even if I achieve the most conservative and lowest estimates – I should earn more than enough to cover my mortgage payment.
Validating My New Niche Based on Competition
It’s always a good idea to analyze the current top 10 search results in Google for at least one of the main search terms you plan to target. For example – if I were using ‘pressure washers’ as my niche – I would want to look at Google search results for the term ‘best pressure washers’ and/or ‘pressure washer reviews’. Search terms (keywords) like these are buyer terms – meaning people who search for that information are simply looking for more information about the product before they buy.
Note: ‘pressure washers’ is NOT my niche, by the way! I just keep using that as an example.
So, when I analyzed the competition for the niche that I chose – I found that 6 of the top 10 websites currently ranking in Google are Amazon affiliate niche websites!! This is great news!
As I scrolled further down the search results (past the top 10), I noticed several more niche websites. Clearly, this niche is NOT a secret. Plenty of other people have had the same idea as me and wanted to create a site around very high-priced products.
Isn’t it Bad to Have So Much Competition Already Ranking?
If you are new to this niche site thing – you’re probably thinking exactly how I thought when I started out several years ago. Somebody already beat me to it! I’ll never be able to outrank all those sites. They have a huge head start on me!
Well – I’ve got news for you! Other niche sites (competition) already ranking in the top 10 in Google is a great sign! This means that Google is willing to rank this type of site in that particular niche or for that particular keyword.
If you find what you think is a good niche and you don’t see other niche sites already ranking in the top 10, it means one of three things…
- you actually found a great niche that is undiscovered and untapped – you’ll be the only niche site in that space with NO competition
- this is HIGHLY unlikely – there are literally thousands of people just like me around the world who are building out niche sites like these
- Google simply won’t rank niche affiliate sites for that niche and instead give preference to actual brands or other major ecommerce retailers
- the niche you found actually isn’t great at all and has poor monetization potential – so, literally NO other niche site builders targeted this niche
- if you know of or can find an unconventional way to monetize a particular niche – something like this could be a great find
My New Niche- Validated and Chosen
After carefully scanning through many of the current niche sites that I found already ranking in my niche – I made the final decision to go after it! A few of the sites were pretty good as far as layout, content and backlink profiles. These might be tough to beat right away. Several of the sites were terrible overall and should be easy to beat somewhat quickly.
The product prices are killer and I’ve verified that people actually buy these products from Amazon – so I’m jumping in! I’ve already purchased the domain and I’m well on my way to creating content for the site. More on that in my next update. This update is long enough!
See you in the next update!
Stated Goal and Budget Update
I am going to create one (brand new) passive income producing website that will cover my mortgage by December 2017!
Goal Parameters
- Create brand new website (starting January 2017) that earns at least $2,100/month by the end of December 2017
- Spend no more than $500/month to create this site and get it earning – total budget of $6,000
Expenditures to Date
- January Expenses
- Domain registration from namecheap.com (1-year with privacy protection) – $10.87
- Hosting – using one of my existing hosting accounts at WPEngine – $0
- Keyword Research – purchased a keyword research package from Niche Wolf – $127
Income to Date
- January 2017 – $0
Total Budget
- Month Beginning – $6,000
- Remaining Budget – $5862.13
Image by Miran Rijavec via Flickr
Matthew Allen
Thank you for the great info!
Did you register EMD, PMD or brandable domain name?
Are you planning to outsource content?
Hey Matthew,
Thanks for reminding me to take into account prices as I finalize the niche selection for my authority site. I try to make sure that the majority of items have a price point that is greater than $100.
You might already know this, but just a heads up…….Amazon might be changing their fee schedule for their affiliate program soon. There have been talks about it being category based vs the current volume based. Thankfully, the niche I’ve been researching for the past couple of weeks doesn’t look like it’ll be too affected!
I’ll definitely post updates (monthly?) on my journey to building my authority site. Not so much mortgage crushing (since I don’t own a house yet), but will aim to reach the 4 figure mark by the end of the year!
This will be interesting!
Hi YeSo. I registered a PMD (partial match domain – for those who don’t know) for my new niche site. All but one of the niche sites that are currently ranking in Google in this niche are also PMD’s.
Definitely outsourcing ALL of the content. I don’t write any of the content for my niche sites anymore. I’ve been working with the same writer for nearly 4 years now and she does a GREAT job for me.
Yeah Paul – I’ve been seeing talk about those possible Amazon changes in some FB Groups. I saw a breakdown somewhere too (can’t remember where) that showed possible rates for each category. The category for my new niche was unaffected.
It’s all just rumor though until Amazon makes it official. It won’t surprise me if they make the change. We internet marketers who have been around for awhile know and understand that this sort of thing happens and we just have to roll with it and adjust accordingly. Also why it’s not smart to keep all eggs in one basket.
Good luck with your goal! I have a stretch goal to hit the 5-figure mark in 3 consecutive months sometime this year.
If your mind can perceive it, you can achieve it! All the best for your goal!
Is there like a Facebook group for individuals who are participating in this challenge to convene and interact?
Yup! Here is the link for the FB group… https://www.facebook.com/groups/1228515200560409/
Really cool challenge, Matt! That sucks about that other niche and the MLM competition. I remember when your update last year on all the content and I was surprised about the lower ROI. It was around the time that I was adding content, the same amount, and I was seeing a very good ROI. Like 10x.
I know you endorse RankXL by Chris Lee & AMZ Affiliate Bootcamp by Tung Tran… I expect you’re following the AMZ version. Is that right? Or sort of a blend of the two and what you already know. I know Chris has some great methods even though it’s on the Adsense side.
Of course, I have my own brand of Amazon Affiliate techniques so I’m interested to see how well the AMZ version does.
Yep Doug… my niche selection sucked for my last site. This is why I call myself ‘Dumb’!! I feel like I’ve made every dumb move there is to make when it comes to internet marketing! Yet I still remain persistent…
I actually don’t follow Tung’s AMZ Bootcamp or Chris’s RankXL course step-by-step or word-for-word. I have access to both and I’ve taken a look at the content that each has to offer. They’re both great. But I pretty much use my own methods (which are very similar to theirs) and I also have implemented some of the techniques that I’ve learned from each of them.
I promote both of those guys just because I don’t have my own course to promote. If anybody from my audience wants to learn, step-by-step, how to build a niche site – I am comfortable promoting both of those. I would be comfortable promoting your course too Doug – except that yours is only open for enrollment on a very limited basis. And, I don’t think you have an affiliate program…?
Cool, I totally understand and the testimonials look to be solid for both Chris and Tung. Tung took my old course back in 2013, not that he needed it!
I have my course locked down & no affiliate program. I may look at adding affiliates on a limited basis in the future.
I’m working on my Amazon niche sites. I have this question: I will have 5 sites – I need 5 domains – it’s obvious but do I need for each site separated hosting or one hosting for 5 domains – one will be prime domain the other subdomains. One person told me I should have 5 different hosting account because it’s better for seo (choosing the cheapest hosting plan for 1 domain whatever hosting provider I choose). What’s better for Amazon niche site seo. Does it really matter at all ?
Best wishes,
Teresa
Teresa – why in the world would you create separate niche sites on a subdomain? Do you know exactly what a subdomain is? It would look like this… subdomain.maindomain.com – Are all of these sites you have planned on the same topic? If so, why not just create one niche site on one broad topic and use Categories to separate the subtopics…
You only need one hosting account. All hosts and plans within hosting accounts are different. But if you are looking for cheap – you can find shared hosting that will allow unlimited domains for around $3 to $5 per month. I believe Bluehost is currently offering $3.95/month and you get one domain name registered for free. dumbpassiveincome.com/start
Thanks Matthew very much. Now I understand the topic.
T.
Hi Matt, I found your site through a post on Nick Loper’s Side Hustle Nation. I’m looking to start a side hustle as well and would’ve joined this challenge had I known about it sooner. Although mine would be for crushing student loan debt. Lol I look forward to your updates on this challenge. Two questions for you:
1) You mentioned the ONE Focus process in a previous post. Are you doing that with this challenge? At what point will you reveal the URL of your site?
2) I like the Niche Wolf site and wanted to know how up to date those packages are?
Thanks
Hi Celise,
Never too late to join the challenge!! Jump on in.
1) Regretfully – I can’t say that I am utilizing The ONE Thing Focus like I should. Truth is, I’m at a point in my niche site creating journey where I don’t have to do most of the work to create my niche sites. I pretty much do just the keyword research and provide instructions as to the general idea I have in mind for a site – then my VA’s and writer do the rest. I stay involved only as a manager over the whole process. I probably will not reveal the URL. There is too much risk when running a public blog like this.
2) All of the packages on Niche Wolf are less than 3 months old and we are in the process of putting into place a process that will keep all packages up to date – meaning we will re-run all of the keywords through Long Tail Pro and get updated metrics every few months. Thanks for this question! This has opened my eyes as to how we should be publishing the date the research was completed on each listing.