Competition is everything on the internet. The products you will sell is one of the biggest decisions to face. Competing on stuff like computer hardware, DVDs or books would be very difficult because there are massive companies doing tonnes of transactions every minute. For this reason most people writing small ecommerce sites find a niche market which has less competition.
Some people choose an area they already have an interest in. By doing this you may already have some knowledge of the products, and you will be more likely to keep motivated to keep stuff updated. Finding a good niche involves doing some research into how many people are likely to be interested vs. the amount of competition.
Free Niche Software
To find out how many people will search for your keyphrase you could use a keyword tool, such as google’s own keyword tool. By typing in your chosen keywords it will tell you the approximate number of searches done for those words every month.
This keyword tool also suggests some alternatives to the keywords you enter.
Targetting the most popular keywords is not always the best option. Other more well established sites may already hog the top spots in search engine results. An initial judgment of competition for a keyword or keypharse can be made by viewing it's results in a search engine. If you see the phrase appear time and again in all the titles and descriptions it will be a hard market to crack.
The Pagerank of competitors sites is likely to be much higher if they are a well established site. To find out how competitive the niche is, software can be used to list the pagerank, and other useful information about your competition
Some free Software to do this is a plug-in for Firefox and Internet Explorer called SEO Quake. It is supported for both the Mac And Pc too. By searching for your term with this tool on it's easier to find gaps in the market. If the top page of results has many zero or n/a Pagerank pages, it would be an easy term to rank highly for.
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