With 2 billion customers now shopping online for goods or services, there’s never been a better time to dip your toe into the ecommerce industry.
However, many ecommerce markets are crowded spaces, and competition for customers is high. And with little room for differentiation aside from pricing, one way to ensure the success of your ecommerce venture is by finding your ecommerce niche.
Over the past few years, we’ve seen many ecommerce trends come and go or become saturated too quickly for businesses to remain viable. The antidote? Find your ecommerce niche by pinpointing untouched gaps in the market that will enable you to scale rapidly.
Here, we’ll take you through:
- What exactly is an ecommerce niche
- The advantages of discovering an ecommerce niche
- Examples of niche ecommerce businesses
- Strategies to help you find your ecommerce niche
What Is an Ecommerce Niche?
An ecommerce niche is a specific segment within a given industry or market. To be considered an ecommerce niche, there must be a unique differentiator.
Ecommerce market at large: Protein powder
Ecommerce niche: Protein powder that caters for intolerances (lactose-free, gluten-free, etc)
An ecommerce niche is simply about identifying smaller, less competitive segments within oversaturated markets. The best ecommerce niches give you room to expand your product offering and grow at scale.
There are several ways to further your search for an ecommerce niche by drilling down into market segment such as:
- Demographics (age, income level, gender identity, etc)
- Customer location
- Pricing (high-end versus affordable pricing points)
- Psychographic information (hobbies, values, life goals, lifestyles, etc)
What Are the Benefits of Finding a Niche for Your Online Ecommerce Business?
In the U.S. alone, there are over 1.8 million ecommerce companies each vying for customers. Without an ecommerce niche, you’ll be vying for those very same customers.
Most fledgling ecommerce businesses opt to target large customer bases in a bid to capture a large share of those customers. Even though choosing an ecommerce niche reduces your potential customer base, there are still many benefits of going down this route. Let’s take a look at a few advantages of choosing an ecommerce niche.
With an ecommerce niche, your target audience may be smaller, but you’ll also have fewer competitors. This gives you a better chance of capturing the lion’s share of your target market.
Since you’re serving a gap in the market and/or a particular pain point for customers, and you’ll have fewer competitors, you’ll likely be able to charge more for your products.
Increased Customer Loyalty
Appealing to a smaller customer base allows you to craft messaging that’s highly targeted and relevant for this audience, which encourages customers to trust you. Plus, if you get this right and successfully corner a part of the market, these customers will turn into returning customers, increasing their customer lifetime value.
Lower Marketing and Operational Costs
Since your target market is smaller and more specific, investing in digital ad campaigns will likely come at a fraction of the cost than if you were to sell in an oversaturated market.
Plus, since you’ll likely offer fewer products, you won’t need to spend as much on inventory and storage, and you’ll also save money by marketing fewer products across your sales channels.
What Are Some Examples of Niche Ecommerce Businesses?
So far, opting for an ecommerce niche over a broader market sounds like a no-brainer, right? So, what does one actually look like?
There are tons of successful niche ecommerce businesses that have seen success over the years — let’s take a look at a few to get you thinking about what constitutes a niche ecommerce product or service.
Consumers are more environmentally conscious than ever before. You name it, they want a sustainable version of it. From eco-friendly beauty products and reusable coffee filters to recycled ocean plastic eyewear and portable water filters, this category holds huge potential for those looking for an ethical and effective ecommerce niche.
The market for pet products has exploded over recent years. However, this is a market that’s ripe with opportunities for ecommerce niches. Although products aimed at cats and dogs dominate the market, there are many other animals that owners love to pamper and take care of.
CBD oil for pet anxiety, specialized cleaning products, and customized pet clothing items are just a handful of niche products in this market.
Home Office Equipment
While this is generally a pretty saturated market, the onset of the pandemic and companies opting for remote work means that people are on the hunt for the best equipment to make their offices more ergonomic and appealing.
Space-saving furniture for awkward room shapes and sizes, headset technology, and soundproofing equipment are a few examples of how this broad market has been narrowed into several ecommerce niches.
How To Choose Your Own Niche for Ecommerce
As you can see, there are plenty of opportunities to find the right niche — but what’s right for someone else may not be the best choice for you. There are several key factors to keep in mind when you begin thinking about your own niche for ecommerce, such as:
- Which ecommerce platform will work best for you and your products
- Whether you’ll manage customer service in-house or outsource the function
- Whether you’ll need to hire employees to manage operations
Once you’ve got a better idea about these factors, you can get started with the tips below to help you discover the best ecommerce niche.
Identify Trends and Target Customers
You’ll first need to identify any gaps in broader markets to help you narrow down your niche. Google Trends is a great tool for identifying what’s trending, what’s a fad, and which trends are on the up and up. To do this, make sure you change your search range from “Past 12 months” to “2010-present” to make sure you identify products that are experiencing a genuine upward swing in search volume rather than seasonal or one-off trends.
Once you’ve identified a few opportunities, you’ll then need to use an SEO keyword tool to work out which search terms have good volume and can therefore be viable and profitable.
Assess Your Competition
If existing companies are already selling the products you’ve identified, you’ll need to work out whether you have a viable chance of competing with them.
For example, if the product is already being sold on Amazon by multiple sellers, you might need to reassess whether you can realistically compete. However, if there are only a handful of sellers on Amazon with few customer reviews, you might have an opportunity to differentiate on pricing, delivery fees, or marketing.
Work Out Your Profit Margins
So there’s a gap in the market and little existing competition. However, can you really make a decent profit selling the product you’ve chosen?
Smaller markets make for smaller customer bases, so check out the cost of a single product against how much you believe people would be willing to spend on the product. You’ll also need to take into account functions like marketing, dropshipping, and inventory management before you can get a firm idea about how wide your profit margins will be.
Consider Selling More Than One Products
Most ecommerce niches allow for “upselling”. If someone buys a yoga mat made from recycled plastic, they may very well want a yoga mat bag or an eco-friendly mat cleaner to go with it.
Look for opportunities to scale your ecommerce business in order to keep profit margins high and safeguard your business from any decline in product popularity.
There’s a Niche Ecommerce Product for Everyone
Even though ecommerce is a crowded space, finding your niche can prove extremely lucrative. With a good amount of effort put into the initial data-driven research stages, we’re positive that almost anybody could find an ecommerce niche that’s right for them.
Once you’ve identified your product or range of products, you’ll also need to find the best ecommerce platform for you and your customers. Luckily, we’ve spent over 40 hours reviewing 60+ of the best ecommerce platforms to help you decide which is the right one to help you kickstart your niche ecommerce business!
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