How Do You Know if an Industry Is Oversaturated?

When I was first getting into business, I was worried about if other people were already doing my business idea. And if it would be too difficult to compete in that market. So, I researched how to tell which industries are oversaturated and put together this article to explain what I found.

So, how do you know if an industry is oversaturated? The key determining factor is the margin you can make for the product. When an industry has become too oversaturated, the amount of money you can make on each individual sale is a lot less. This means over competition has driven the prices down.

There are additional hints to show you whether an industry is oversaturated. So, read on to discover more in-depth details about how margin drives the prices down. And other factors that will let you know if an industry is oversaturated.

How to check if your industry is oversaturated quickly today: step-by-step

1. Looking at banner ads in your niche/industry

You firstly want to have a look at the ads that are being displayed on websites in that specific industry. For example, if you are selling portable car vacuums, then look to see what websites there are about car grooming.

More importantly, see what banner ads are displaying. This will give you a big hint about what products are doing well in this niche.

Advertisers will generally buy a place on a website for a fixed monthly rate or per 1000 views of the ad. When visitors go to the website, they see the ad, and a certain percentage of them will click on it, and a smaller percentage will buy the product.

Doing a bit of creative thinking about what types of websites are likely to sell your product will help a lot. Asking a question such as: what niche will have websites that are likely to sell my product?

For example, if you are selling Yoga mats, you could look at websites for single mothers, fitness, and women’s fitness. Although men do Yoga, more women do it than men. So, using your observation skills, some research, and your intuition will lead you in the right direction.

If every single fitness website you come across is selling yoga mats, then it is likely oversaturated. It doesn’t mean that you won’t be successful selling them. However, it will be a lot harder.

Once you see what sort of products they are selling with their ads, that will give you an idea of products that are doing well. So, you can model them or choose your own, depending on further research you do.

2. Doing a Google search for the product and counting how many websites come up.

Just going on to Google and typing the product name. Then seeing what websites people are selling them on and all the different results will give you a clear picture of how many people out there are selling the product. 

Look as far back as 3 to 4 pages. You will likely find blog type websites with lots of articles, online marketplaces like Amazon, and Alibaba.com, as well as links to Facebook. 

Although looking on Facebook is a good place to find how much competition is out there. I generally find the way they present the information is very difficult to use. If you find a good way to find this information, please send me an email. Or, let me know with the contact form.

3. Look on Youtube for the amount and type of videos there are

Going onto Youtube.com and searching for your product name and looking at the results that come up will let you know how many people are also trying to sell the same product.

Popular products like Yoga mats, for example, will have pages and pages of high-quality videos. However, less popular but in demand, products may only have a few high-quality videos.

This means that there isn’t too much competition on Youtube. You can also look at the view counts of the videos to see how many people have seen the video.

However, it is subject to error because it is widely known that some people buy fake views.

Although Youtube tries to stop it by banning people, it still happens. So, take the data with a grain of salt.

4. For some products look on Linkedin

Specific products and manufacturers can be found on Linkedin. Some companies primarily use Linkedin to sell their products. You can find them by going to Linkedin.com and using the search feature. Linkedin works best when you have an account. 

From there, search for the industry your product is in. For example, if you’re selling yoga mats, search for Yoga. It will bring up a list of people that are yoga instructors that sell yoga products. It’ll also show Yoga companies, and you can look at how many staff they have and information about what they do. 

You can be methodical by copy and pasting their company into a spreadsheet with some notes about them. And then tally up the number of people and companies so that you can compare it to other industries. Or, just try to get a gauge for how many there are and how competitive it is. 

Looks can be deceiving, so don’t get discouraged if you find many people in your niche. Based on my experience on Linkedin, most people won’t sell the exact same thing as you and are interested in other projects or products.

5. Calculate the cost of operation

Before starting a business in a certain industry, you should look at the cost of operation and whether it is a viable business model. Some ideas that sound good on the surface can not be good business when you do the math.

For example, a car wash I was working at was offering their car grooming services relatively cheap. They could do a 1.5-hour wash and charge $60. Once, they paid their employee $20 and spent $5 on cleaning products, and he paid the rest to the manager and rent. They would be in the green.

They wouldn’t be losing money. But on top of all of their expenses, they would have much money left to invest in growing the business to make more money.

When a product or service has become oversaturated, it makes the price of the product go down.

The easiest way to tell is by looking at how much money the company is making per sale. You can do a rough estimate using an excel spreadsheet.

For example, a typical company break down will look like this:

Expense	Price (month)
Rent – electricity, internet, water	$3000
Employees (4 employees at $3000 a month)	$12000
Tea and coffee for employees	$50
Total	$15050

From there, you can get an estimate of how many sales they would need to break even. For example, their total fees for the month are $15,000.

To keep the business going, they would need to make $15,000 in sales a month. So, if you look at how many units they sell, you can come up with a guess.

You have to consider inventory costs that weren’t included in the break down as it’s not a fixed price. Inventory pricing varies typically. For purposes of the example, let’s say inventory costs were $1000.

You can get a rough estimate using some math to figure out how many items need to sell. For example, if a kid’s toy sells for $10, you can divide $16,000/10 to see that they need to make 1,600 sales of products each month to break even.

It’s quite a large number. By doing these estimates, you can see that you need to sell in high volume.

You can also do a rough estimate of how much money a person is making from each sale. This will let you know:
1) Whether the product is worth selling yourself.
2) How saturated the market is.

When there is very little profit on each item, it means that the company has to sell much more volume to make any significant money. If you’re a small business owner without huge amounts of money to spend on advertising, then you won’t be able to compete with whoever is selling it at such a low price to profit ratio.

For example, let’s say a yoyo costs $2 to buy. But, you see people selling it for $2.50 that is a low margin. For each sale, the person is only making $0.50. This means if they wanted to make $500 dollars, they would need to sell 1000 of them.

Is Shopify too saturated?

Shopify is popular for doing e-commerce, and e-commerce has been growing steadily since it first began. It is more convenient for customers to buy online. For this reason, Shopify, e-commerce stores, and marketplaces are popping up.

I’ve examined in depth if Shopify is saturated or not and if it’s worth it. After some research, it’s not at all, and it might be the way to go for your online selling.  To learn more in depth about if Shopify is saturated, click here. 

The main thing you want to watch out for when setting up an e-commerce website using shopify is not choosing products that are oversaturated. So, as long as you follow the steps above, you’ll be in pretty good shape.

Are t-shirt businesses oversaturated?

Although many people sell t-shirts – it looks like every brand does, there is still more room. This is because t-shirts are consumable. Most people will replace their t-shirts once every three months if they wear them once a week or so.

Over time they will pill and not have that brand new look. At which time, people decide to donate them to a gift store, or keep them like old clothes for doing yard work. So, the demand for t-shirts is always there and will always be there.

A huge benefit of t-shirt business is that you can use a print on demand service. Which means you don’t have to print the t-shirts ahead of time. You can use the money the customer gives you upfront to print the t-shirt. It is a similar model to the unique to e-commerce dropshipping. 

Dropshipping is where you make the sale of a physical product, and another company sends out the product for you. You don’t have to do any of the packaging and don’t have to store the product somewhere. The dropship provider takes care of all of it.

So, there is very little upfront cost, only a small amount to register with the t-shirt company. However, many of them are free. For a full breakdown of whether a t shirt business is oversaturated then click here Are Startup T-Shirt Businesses Oversaturated to read my in-depth article. It also has a guide to starting a startup t-shirt business.

How do you find profitable products where there isn’t a lot of competition?

The main way to do this is through identifying some product ideas, researching how many competitors are selling them, and then doing some demographic estimates.

I compiled a list that has the top trending products right now. I update it regularly when things change. There are some good products to start with, because they are selling so well. You can find the full list by clicking What Are Some Trending but Not Oversaturated Products?

You then want to see how much you can buy them for and how much you can sell them for. You can do this by looking at what they sell for. You can also find products that people are selling and then find their supplier. From there, you can sell the product to your own audience.

For example, most people build up an Instagram account, a blog, or a Youtube channel and talk regularly with their audience. They then suggest their products and give links to where people can buy them. 

The full method with step by step instructions is available in the complete guide I put together: How Do You Find Profitable Products Where There Isn’t a Lot of Competition? You should go to that article and read it to get the full details and step-by-step instructions. It’s too long to fit all in this article.

Conclusion

You can know whether an industry is oversaturated by looking in some key places. These are by:

• Looking at banner ads in your niche/industry
• Doing a Google search for the product and counting how many websites come up
• Look on Youtube for the amount and type of videos there are
• Look for some products on Linkedin
• Calculate the cost of operation

Based on what you find when doing that research will give you a very clear picture of how many competitors are selling what you want to sell, and whether it is oversaturated.

The website you are on now is an online marketplace. They offer a free account that gives you up to 3 listings at any given time. All transactions are between buyer and seller via paypal. Best part of our Marketplace is you don’t get hit with any selling commissions or hidden fees. If you have some products you want to sell and are moving on to better ones, then click here go to the create account page.

Sources

• Wikipedia: Web banner
• Linkedin.com
• Amazon.com
• Alibaba.com