If you discover your niche has serious competition during your research, subscribe to their email list to see what they’re doing. Look to see if they are selling higher priced products and services, or are all their products and services discounted? If you uncover higher prices, then you know that there is a market. If they’ve continued to offer high priced goods for many years, then you know that there is definitely a market that is sustainable.
If you discover that the average price for a product in the niche has a reasonable profit margin, then it will allow for smaller players to enter the market and co-exist with the larger, established brands. However, if the market competes on price alone, and the profit margins have been squeezed until they are paper thin, then you might be better off looking at a less competitive niche with better profit margins.
You also want to be aware of competitors discounting each other in a small market. When this happens, you could end up struggling just to get your business off the ground. However, when there are several tiers of pricing in a niche, it can be a lot easier to not only get into the market but slowly increase your prices as well.
Generally, when it comes to search engine competition, the lower the number of competitors, the better. However, if you discover a niche that has no competition, you need to be cautious because this could mean that there is no money to be made in the niche.