When choosing a micro-niche for your e-commerce store, there are several practical factors to consider. Three of these factors (which we'll call the 'Big 3') are do-or-die factors that are absolutely critical to your success. Then there are a handful of other factors you should also consider before deciding on a product line.

Big 3 Factors

If the micro-niche you're considering fails any one of these Big 3, we'd strongly recommend passing on it. There are literally hundreds and hundreds of attractive niches out there, so don't settle on one that doesn't pass all 3 of these Big 3 factors.

1. Seasonality - Don't choose a highly seasonal product that only sells well for 1-2 months of the year (especially for your first store). Almost all products are seasonal to a certain extent, but don't choose a highly seasonal product line like Halloween costumes.

2. Availability in local retail stores - Don't choose a product that is widely available (with a broad selection) at local stores. It's fine if a specialty store here and there offer a limited selection, but you'll have a hard time competing if the local Wal-Mart has a wide selection of the product line.

3. Profit per sale - Choose a product line where you'll make $25+ of profit per order. We're talking about profit here, not revenue. Since your profit margin will usually (not always) be about 20% of the retail price, this means you want to sell a product where the average order is upwards of $125.

Other Factors & Considerations

These aren't necessarily do-or-die factors like the Big 3 are, but you should strongly consider the following factors when choosing a micro-niche  for your store.

a) Catalog size - Steer clear of product lines with hundreds or thousands of products. Building your store is a pain, and then maintaining a store that big is an even bigger nightmare. The optimal store size is around 10 to 100 products.

b) Intent to buy - Consider whether the average online "shopper" is really intending to make a purchase. Avoid product lines that appeal to kids and teenagers, since they don't have the means to buy. Avoid micro-niches where you expect that a large percentage of shoppers are just browsing, researching, or window shopping.

c) Technical difficulties - Try to avoid highly technical product lines where customers are prone to have problems. Avoid products with a wide variety of models, options, or styles. Avoid products where there are compatibility issues or where the customer has to go through a complex installation process. These types of product lines will give you headaches before, during, and after the sale.

d) Shipping issues - Generally, you won't be shipping products yourself (your dropship supplier will), you still need to consider shipping issues. Are the products extremely heavy and costly to ship? Are they fragile and prone to being damaged?

e) Custom made - It's best to steer clear of highly customizable products that have to be custom made to order. The more customized a product, the higher the chances for mess-ups, delays, stock issues, and customer dissatisfaction.

f) See & touch - Avoid products that you would expect shoppers would want to see and touch before buying. Put yourself in the shoes of the customer. Would you be comfortable buying this without seeing it in person first? Society is becoming more and more comfortable with buying online, but there are still some products that people just won't buy without seeing it beforehand.

g) Potential legal issues - Stay away from high-risk products and potentially dangerous products that could present legal liability problems. Don't sell a product line that could violate any laws or regulations.

h) Customer service required - Consider whether the people interested in buying the product will have a lot of questions and need a lot of hand-holding. What is the anticipated level of customer service you'll have to do before, during, and after the sale? How difficult will it be to learn the product line and be ready to assist customers?