Open almost any product research tool and one metric stands out: monthly search volume. The larger the number, the more exciting the opportunity appears. 200,000 searches. 500,000. A million.
The assumption is obvious — large market equals large opportunity. It feels intuitive. If more people are searching, more people can buy.
Yet some of the most valuable businesses were built by deliberately ignoring the largest markets and becoming indispensable inside much smaller ones. That seems counterintuitive, until you understand what market size actually measures.
Market size is not opportunity
Suppose someone tells you a category is worth a billion dollars. Sounds attractive. Now ask a different question: how many companies already want that billion dollars? How sophisticated are they? How much capital do they have? How optimised are their supply chains, their brands, their advertising systems?
Market size tells you how much money currently exists. Opportunity depends on how much remains available. Those are not the same thing.
Imagine opening a coffee shop
You have two choices. Open in the busiest commercial district in the city, or open in a growing neighbourhood with fewer customers and almost no serious competition.
Most entrepreneurs instinctively choose the first. Experienced business owners pause, because the busiest street also attracts the strongest competitors: higher rents, higher expectations, more experienced operators, more expensive marketing, thinner margins.
Sometimes the smaller neighbourhood creates a much better business. Amazon categories behave the same way.
Big markets attract big companies
Success leaves footprints, and the larger the market the more visible they become: large brands, private equity, aggregators, international manufacturers, agencies, data scientists, sophisticated pricing algorithms, advanced inventory systems, experienced operators.
Entering an enormous market isn’t simply competing for customers. It’s competing against organisations with years of accumulated advantages. That doesn’t make success impossible — it changes the economics dramatically.
Small markets are often misunderstood
Imagine a category generating ten million dollars a year. Many sellers dismiss it immediately as too small. But ask another question: how much revenue does your business actually need?
If your goal is a company generating five million a year, that market may indeed be too small. If your goal is a business generating a million in annual profit, the same market might be extraordinary.
Market size should be evaluated relative to your objectives. Not someone else’s.
Most sellers confuse TAM with SOM
Amazon sellers frequently stop at TAM, because the largest number feels exciting. Yet businesses survive inside SOM. Your company doesn’t need the entire market — it needs enough of the right customers.
Imagine fishing in the ocean
One fisherman chooses the largest ocean in the world. Another chooses a smaller lake with very little competition. Which catches more fish?
The answer depends on far more than the amount of water: fish density, competition, knowledge, equipment, access, conditions. Markets behave similarly. The amount of demand matters. The amount of accessible demand matters much more.
Large markets hide smaller communities
Consider fitness. Enormous, and extremely competitive. Now look closer.
- Powerlifters
- Yoga instructors
- Physical therapists
- Rock climbers
- CrossFit athletes
- Triathletes
- Rehabilitation patients
- Senior mobility
- Postpartum fitness
- Adaptive sports
Each has its own language, purchasing behaviour, influencers and opportunities.
Experienced companies often dominate communities before attempting to dominate categories.
Niche expertise compounds faster
Suppose your company serves commercial bakeries. After five years you understand customer workflows, regulations, suppliers, seasonality, operational challenges, emerging technologies, replacement cycles and competitor weaknesses.
Now imagine serving random consumer categories instead. Knowledge accumulates far more slowly. Expertise compounds inside focused markets, not broad ones.
Customers don’t buy market size. They buy trust.
One hidden advantage of smaller markets is credibility. People notice specialists.
Imagine buying climbing equipment. Would you rather purchase from a brand that sells everything, or one known exclusively for serving climbers? The specialist immediately feels more trustworthy.
Focus creates authority. Authority creates pricing power. Pricing power creates extraordinary businesses.
The largest categories often have the lowest margins
Large demand attracts investment. Investment improves competition. Competition compresses margins. Advertising becomes more expensive. Customer expectations increase. Operational standards rise.
The biggest markets are frequently the least forgiving. Smaller markets often allow healthier returns, because fewer competitors possess specialised knowledge.
Imagine reading Amazon backwards
“Where are the most customers?”
“Where are the most underserved customers?”
Demand matters. Unmet demand matters far more.
The goal isn’t market share. It’s market leadership.
Small markets make leadership attainable. Large markets often make it elusive.
Small markets can expand naturally
One misconception about niche businesses is that they eventually stop growing. Often the opposite happens.
Imagine beginning with products for professional barbers. Eventually opportunities emerge: salon furniture, cleaning systems, storage, scheduling accessories, training equipment, retail products, professional apparel.
The original market becomes a foundation rather than a limitation. Growth happens through adjacent opportunities instead of random expansion.
The dashboard we actually need
Imagine evaluating a market and seeing, instead of search volume, estimated revenue, a competition score and a seller count:
- Customer concentration
- Brand loyalty
- Pricing power
- Repeat purchase frequency
- Supplier specialisation
- Advertising efficiency
- Barrier to entry
- Knowledge advantage
- Expansion opportunities
- Market fragmentation
Suddenly small markets begin looking very different.
Great businesses become famous somewhere first
Very few successful brands began by serving everyone. They became indispensable to someone — one profession, one hobby, one community, one lifestyle, one industry — and only later expanded.
Dominating a focused market creates capabilities generalists struggle to imitate. That’s how small markets quietly produce large businesses.
Final thoughts
Amazon sellers naturally gravitate toward the biggest opportunities: the largest search volumes, the highest estimated revenues, the broadest categories. Those numbers are impressive. They also attract everyone else.
Experienced operators eventually realise the objective isn’t finding the biggest market. It’s finding the market where they can create the greatest advantage. Sometimes that sits inside a category worth billions. Often it sits inside a specialised community most competitors ignore.
Because businesses aren’t built by serving the largest number of people. They’re built by solving meaningful problems better than anyone else.
Not “how big is this market?” but “can we become the best company in this market?”
One question encourages chasing opportunity wherever it appears. The other encourages building expertise, trust and durable advantage.
Ironically, companies that become exceptional inside small markets often discover something unexpected: their market wasn’t actually small. Their definition of it was. And by the time everyone else notices, they already own it.
This narrows what winning markets argues for — that piece says choose a market, this one says choose a smaller one than you think. See also the best products don’t look exciting on why attention and opportunity rarely coincide, and the wrong data on the metrics that mislead.