When it comes to building up a business everything is about finding a
profitable niche which is big enough to generate revenue for you and
small enough that it’s too small for bigger players. The key is a low
market entry barrier, little competition and high revenue potential. You
can apply this to Amazon, eBay, Etsy, Airbnb and in our case to Fiverr.
The key features which describe the niche potential:
- Revenue Potential
- Market Entry Barrier
However, how do you get these features?
It’s easier than you think. First of all, Fiverr provides all the
numbers you need on the search page for a keyword(=niche)
You can find the number of gigs in the top right corner. For each gig,
you get the number of reviews and the start price and the seller level.
You need to extract that information for all Gigs on page one and type
it into Excel spreadsheet to get an overall picture and do the math.
This case study demonstrates a market analysis with three niches, which
seem very profitable:
- logo design
Let’s dive into the analysis. I put the visualisations into one plot, as I am only allowed to have one plot in this post:
First, we check the demand in the markets. To get an idea of the need,
we can use the total number of reviews on the first page, as the buyers
can leave a review when they order a gig.
The demand for logo design is by far the highest of these three niches.
The need for copywriting is the lowest, WordPress is somewhere in
However, demand is not everything, as the goal is to get a share of the
market. We need to check the supply in the market. We can use the total
number of gigs for this.
It’s interesting how many Gigs we have for ‘Wordpress’ and ‘Logo
Design’. These niches seem very crowded. On the other hand, it surprises
me that there are much fewer Gigs for ‘Copywriting’. It’s interesting as
the demand was lower for copywriting, but not in the same way as the
number of gigs.
To get an idea for the competition we can aggregate a new metric. We
have the total number of gigs for a keyword (=niche), which defines the
supply in the niche market. On the other hand, we have the total number
of reviews for the keyword, which is a metric for the demand in the
market. Dividing the total number of Reviews by the total number of gigs
is a hint for the competition in the market.
We see that ‘WordPress’ is the most competitive niche followed by ‘logo
design’. It seems that in the ‘copywriting’ niche there is a room for
new gigs, as the competition is lower than for the other two niches.
Market Entry Barrier
Another feature you have to keep in mind is the market entry barrier. It
goes hand in hand with the competition, but it’s also something
controlled by the platform. Fiverr pushes gigs with positive reviews and
which are selling well on top, to protect these sellers and make them
happy to avoid them leaving the platform. On the other hand, they try to
mix in new sellers from time to time to offer them the chance to also
sell. They want them to get a share of the pie.
You can see that there are much more sellers with no seller level on the
first page for ‘copywriting’ than for the other two niches. I am sure
that there is potential for new sellers. On the other and it’s difficult
to get into the logo design niche.
Competition is one side of the coin, but it does not help, if there is
either a small demand or the price is too low to generate enough
revenue. We want to get an idea of what revenue potential each of the
niches has. We multiply the starting price of the gigs with the number
of reviews for this. It is not an accurate number of what earnings you
can expect, but it’s good to compare the niches with each other.
With this case study, we could find out that ‘logo design’ has the
highest revenue potential out of the three niches, but it’s the most
competitive market with the highest market entry barrier. On the other
hand, ‘Copywriting’ seems to have much less competition and have a low
market entry barrier. On the other hand, it has the lowest revenue