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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!
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…
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!
- 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
Income to Date
- January 2017 – $0
- Month Beginning – $6,000
- Remaining Budget – $5862.13
Matthew Allen is a full-time trucker, part-time blogger, and imaginary entrepreneur. He is the only known trucker who is blogging about creating passive income online. He is also the co-founder and co-creator of the most popular WordPress plugin for Amazon affiliates – AmaLinks Pro.