25 min read
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Updated: July 14, 2022

How to Choose an Ecommerce Niche to Better Sell Your Products Online Store

Currently, there are over 12 million to 24 million eCommerce stores worldwide.

As much as business owners want to be the next Jeff Bezos selling every product under the sun and raking in $116,444 billion in the first quarter of 2022 alone, it’s not necessarily wise to be a commercial commodity seller.

Instead, by focusing on a specific niche, your online store will be able to rapidly scale because of the unique product it offers as it hones in on a specific gap in the market.

One company that has done this exceedingly well is Jeni’s Ice Cream.

There is absolutely nothing new about ice cream, it’s been around in China since 618 AD. Yet, the company, founded in 2002, is now worth over $30 million because it offers unique ice cream flavors.

So, what’s the secret?

Of course, any sensible owner wouldn’t have gone into business without first knowing it was feasible, and you can’t underestimate the massive role marketing plays; however, Jeni focused on a niche market!

In this blog, we explain how determining your eCommerce niche can bring you unbridled success, as well as how to choose the most profitable one.

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Why Your Ecommerce Store Needs a Niche

The Difference Between Commoditized and Niche Products

Commoditized and Niche Products

When it comes to selling online merchandise, you have two options: niche or commoditized products.

Commoditized Products

These mass-produced products are needed by everyone. Online stores buy them in bulk, often with discounts, based on the order size.

They don’t require sellers to educate target audiences on the features and benefits of the products because they already know what they are.

These products are also in high demand, so sellers know there will always be a need for them.

The major disadvantage is commoditized products have low margins because competition is sky-high. As such, a consumer’s decision will be price-based, i.e., the lowest cost for decent product value.

Remember we said, it’s not always best to aspire to sell as many products as Amazon. This is mainly because huge corporate giants have already negotiated the lowest possible price, which makes it much harder for smaller businesses to enter the marketplace.

Niche Products

Niche products serve a specific target audience with unique needs and preferences, that differentiate them from larger customer segments.

For example, let’s pretend you want to sell women’s clothing. A niche within this market might be selling clothing for petite or oddly sized women, who struggle to get mass-manufactured clothing to fit.

Profitable eCommerce niches are typically defined by:

  • Price (luxury or discount);
  • Demographics;
  • Quality (premium or economical); and
  • Geography.

Niche products are also usually made in small batch runs or on-demand (made to order). Some eCommerce niche stores rely on handmade and craftsman business models.

However, most niche eCommerce businesses have exclusive or semi-exclusive arrangements with small-scale manufacturers.

These products can be sold by multinational companies, but they mostly involve smaller, private firms that stand a greater chance of success because there is less need for economies of scale and high output.

Niche products can be provided by multinational companies, but they also give a better chance for smaller, private firms to be able to compete – because there is less need for economies of scale and high output.

The Benefits of Finding a Profitable Ecommerce Niche

eCommerce Niche Benefits

Choosing to focus on a niche in the eCommerce landscape is a strategic online business decision to better serve a certain customer base than large competitors who target large markets.

Consequently, there are quite a few benefits to doing so:

Less Competition

We touched on it in the previous point, but a niche eCommerce business will have less competition. This makes it easier to get started, and the more unique your products are, the greater the competitive advantage you have.

High-Priced Inventory

Since niche products aren’t mass-produced, they are limited and cost more. Exclusivity is also what makes them appealing to discerning consumers. Some are willing to pay extra if it means they have a unique product that not everyone can get their hands on.

Lower Advertising Costs

Because you are selling to a very targeted audience, you have a higher chance of converting leads. The ROI is better because there is less competition, so marketing data is hyper-targeted, and specific, which helps to refine strategies.

Stronger Customer Loyalty

Sealand image

Online stores selling niche products that appeal to specific customers who resonate with their brand will automatically build a loyal customer base. When your customers view you as an expert in your niche, likability and trust soon follow.

Take sustainable outdoor gear brand Sealand. There are other well-known much more established brands out there, yet this company makes its products from waste material and is carbon-neutral.

This appeals to outdoor adventure-goers (who are naturally concerned about the environment).

Additionally, because outdoor clothing has recently become trendy, the company is well-positioned within its niche market which doesn’t mind paying more for sustainable products.

Can a Niche Harm Your Business?

When business owners take the time to conduct proper competitive analyses and research to determine viability they are less likely to experience business failure.

Business owners simply require awareness of the strengths and weaknesses of these types of eCommerce businesses. The more specific eCommerce brands are, the smaller the target audience.

Since a niche eCommerce business appeals to a specific target audience, growth and expansion may be more limited. This can lead to narrow-mindedness that prevents consideration of other great product ideas to sell online.

Yet, having said that there are many profitable eCommerce niches. It’s just about acquiring the business acumen and picking the right one.

Questions to Find a Profitable Ecommerce Niche

Trying to launch an online business in a crowded market will be an uphill battle against more established businesses.

Therefore, focussing on a profitable niche helps you double down on a specific part of the market. So, instead of selling beauty products in general, you might focus on the teen market.

Analyzing your competitors and being aware of what’s going on in the market will help you find a niche business with high-profit margins.

If you want to find a niche market demand, you need to know what is currently trending and likely to have longevity.

You can find a niche using Google Trends and Google Adwords. Along with conducting online research, you should also ask yourself these five insightful questions:

1. Does Your Niche Product Solve a Problem?

Niche product

The service or product you provide doesn’t have to be complicated or large, but it should address customer pain points. For instance, the eCommerce business The Grommet offers a variety of household products that solve annoying household problems.

You also don’t have to invent an entirely new product. Take Uber and the iPod, this service and product, respectively, just enhanced existing features. Even Airbnb didn’t reinvent the wheel; it simply revolutionized accommodation.

If you’re unsure where to start, think about issues common to you, and the types of products that could solve them.

2. Are Potential Customers Passionate About Your Niche Product?

The great thing with eCommerce is you can market your products internationally. There are plenty of eCommerce niches, and online marketing allows companies to target specific consumers interested in niche products.

The trick is making certain there is an audience for them. For instance, comic book lovers are spending an average of $35 each month on comics and related collectibles. Therefore, there is existing marketing for second-hand comics and related memorabilia.

3. Is Your Idea Too Trendy?

According to Statistica, there is an increasing trend in the sales of wearables. Last year 230 million devices were sold worldwide. Sure, there’s a chance an eCommerce business selling wearables will do well, but the question is for how long?

It’s fine to take advantage of trending products, but you should also think about selling timeless products to ensure your sales remain constant. The easiest way is to include trendy products with classic staples.

So, for example, you may decide to open a homeware store selling crockery and cutlery. To capture the market segment interested in trends, you might sell rose-gold cutlery alongside traditional silverware.

4. Is There a Product People Want but Can’t Find?

Conduct market research in your area to find out if there are certain products potential customers are looking for but can’t find. Bingo! You have strategically discovered a niche!

For instance, you might find a greater demand for disinfectant and hygiene products because of the pandemic outbreak, or maybe there is a higher demand for hygiene-related child or pet products.

Don’t be afraid to ask what customers are looking for. If you can meet their requirements, and there is an adequate and constant need for a particular product or service, you’ll have a great niche business and are more likely to succeed.

5. What Can People Buy Repeatedly?

People's choice

People buy hygiene and food products over and over again. In other words, there is a constant demand. Selling products customers are continuously interested in doesn’t automatically reduce their quality.

For instance, note the increase in eCommerce stores selling vintage clothing and homemade goods!

The vintage goods store Casa Shop is an excellent case study in the way clever online marketing can products more attractive.

Although it’s a niche shop, not everyone wants to buy second-hand goods, yet it knows there is always a market for people who are looking for the items it offers.

Furthermore, the fact items are second-hand enhances product appeal as it helps create a circular economy. This is attractive to environmentally conscious consumers.

How to Develop the Best Ecommerce Niche Strategy

eCommerce entrepreneurs always need a business strategy to help make sound investment decisions, provide prioritization, and allocate and optimize resources effectively.

To give you a basic idea, you should go through the following steps:

  1. Select your target audience. As we discussed earlier, you’re not selling to all online shoppers. Your target market is highly specific in terms of interests and demographics. Spend time developing buyer personas, so you know exactly who they are, and how to market to them. While tedious, this ensures your marketing efforts deliver a high ROI.
  2. Determine an unmet need. This is about identifying gaps in the market. Your products and services should resolve customer pain points. So, perhaps you’re opening an eCommerce laundry service, and the reason you pick up and deliver is that you know your customers don’t have time to. Hint: You should always choose a niche that has anticipated growth.
  3. Create your business plan. This documentation can be long and complex but provides a road map outlining your business’ mission and goals. It addresses how you’ll service your ideal customer, grow online sales and achieve a compound growth rate.This is a living document that is updated as your business grows. If you’re new to business in general, you might want to hire a business development specialist to guide you through the process.
  4. Develop a digital marketing plan. Unless you invest in a robust eCommerce website and marketing plan to sell your goods, you won’t reach your niche audience. Over the long term, digital marketing generates better income that enhances business growth. It connects businesses with prospective customers where they already are online and is effective across the most profitable eCommerce niches.

If you need help with your digital marketing plan or website development, then contact Comrade Digital Marketing Agency!

Think Beyond a Single Niche Product

Selling a single niche product can limit your sales. However, there is a way to increase your revenue but still stick within your niche market.

CBD companies are a prime example. They know the primary reason their customer base buys their products is for their calming properties.

Honestly, there probably isn’t a gap in the market that CBD companies haven’t exploited.

Bear in mind what CBD is used for. Now, look at this long list of different CBD products:

  • Beauty products
  • Pet products
  • Edibles
  • Tinctures
  • Oils
  • Vapes
  • Fizzy drinks

CBD companies have found incredible scope within their niche market. And this is just one example of many!

You immediately increase your odds of success when you start with trending products but then drill down to find other possible eCommerce niche products that have a market fit. Even niche markets have niches!

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Test Your Products

Market testing is a business strategy used to gauge the potential of a service or product before it’s launched on a large scale, i.e., to find its limitations and strengths, based on customers’ reactions.

It’s widely used by businesses to determine if their products meet consumer needs.

It also provides real insight into how your products will perform in a natural market setting, as well as which distribution channels work best.

Moreover, market testing can highlight where your product is performing worse or better than expected.

Data received will help you improve your product and marketing strategy pitfalls.

Some useful data points you’ll want to measure include; customer persona, distribution channels, consumer behavior, demand size, purchasing power, general feedback, etc.

It’s always advisable to test things before risking a full-scale launch. You can save massive costs on branding, manufacturing, and marketing if your product isn’t yet up to scratch.

For example, recalling a product from a test audience is much better than launching it to a much larger group of people only to create a PR nightmare.

Thus market testing is as much an exercise in profitability as it is in reputation management.

5 Trending Ecommerce Niches in 2022

The most trending eCommerce niches include online courses, print-on-demand, educational toys, pet food, and handmade jewelry to name a few.

Below are our favorite niche ideas, which, we think, are cost-effective and have a promising compound annual growth rate.

1. Subscription Businesses

Subscription Businesses image

From fashion accessories to fresh produce and instant meal kits, subscription boxes are all the rage. The subscription economy has grown by 435% in the last nine years. Sometimes five to 10 times faster than traditional businesses.

It’s fuelled mainly by younger smartphone-savvy generations and accelerated during the pandemic lockdowns. Many consumers want convenience, but they have also realized that having the experience of owning something is sometimes just as good, as actually owning it. For instance, subscribing to a car rental company.

Subscription businesses also help create a sustainable number of loyal customers generating recurring revenue. The best eCommerce niches in this market are vitamins, beauty products, and groceries, as well as service-based businesses like laundromats.

2. Home Office Equipment

Since the pandemic, home offices have played a more significant role in everyone’s lives. People are no longer satisfied to sit in a drab office every day that they only ever used once in a blue moon.

Whether it’s buying decor to update interiors or purchasing ergonomic furniture to increase comfort, the home office furniture niche is expected to grow by 5.5% by 2025.

Although a segment of the workforce has returned to their offices, numerous people are still working from home or engaging in hybrid working models. And, they will need furnishings for their offices!

They will also need additional stationery supplies too, which is an opportunity to sell more than one niche product. If you require any more convincing, a recent survey by Gartner found that 74% of companies intend to keep some of their workforce remotely.

3. Eco-friendly Products

Eco-friendly Products image

Unless you’re living under a rock, everyone nowadays is more environmentally conscious. 45% of consumers are interested in purchasing products with environmentally friendly attributes.

These types of products include things likes products made from bamboo and plastic-free cleaning products.

To qualify as an eco-friendly product, an item has to be reusable and biodegradable (or recyclable), as well as made from natural materials.

You can buy these types of products from suppliers or make them yourself. Just make sure they aren’t tested on animals or are manufactured under exploitative conditions.

4. Gym Equipment

Gym equipment image

Due to the pandemic, the home gym industry has also experienced a boom. Market trends suggest the sector, currently valued at $11.5 billion is going to reach $15.2 billion by 2027.

With a rise in online classes and app-lead workouts by Nike and Adidas, more and more people are working out from home.

The great thing about gym equipment is you don’t have to specialize in treadmills or bikes. You might sell weights, gym attire, or simply yoga-orientated products. A home gym fitness eCommerce business, like CBD, can branch into selling various niche products.

5. Health and Wellness Products

Healthy Products

The health and wellness food market is expected to grow by 9% by 2026, which is no surprise since the pandemic put a harsh spotlight on health in general. There are so many products you can offer to a target market in this niche.

For example, you can sell plant-based products, collagen supplements, vegan-friendly food products, and organic products. While you might think this industry is over-saturated, you could happen to find a gap in the market.

A successful case study is the scent company Happiness Abscissa which sells scents developed by neurologists that supposedly increase happiness. Clearly, it’s found a niche in an already established perfume industry.

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Help With Your Niche Market

If you’re in the process of launching or creating your eCommerce niche store, and require assistance in the development of your website or digital marketing, our experts can help.

From keyword research to search engine optimization and everything in between, Comrade Web Digital Marketing Agency can guide you in the right direction. We’ve helped businesses in several eCommerce niches refine their competitive advantage.

As a full-service digital eCommerce agency, we’ll recommend the most suitable website and the digital marketing strategies that you need to ensure your business succeeds in its eCommerce niche. Contact today us for a free and no-obligation consultation.

I hope you enjoy reading this blog post.

If you would like to discuss your project, reach out to our specialists.

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About the Author
Ivan Vislavskiy
Ivan Vislavskiy is Comrade Digital Marketing’s co-founder and fearless leader, spearheading the agency’s production department.
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