Choosing a Niche for Your E-Commerce Store

Starting an e-commerce store can seem like a straightforward way to make money online. However, there are potential pitfalls along the way – including choosing the wrong products to sell.

To help you budding sellers find your feet; this article looks at why finding the right product category is important and sets out the steps to choosing an e-commerce niche for your business.

Why is Finding an E-Commerce Niche Important?

Driven by the Covid-19 pandemic, the global e-commerce market is worth an estimated $7.75 trillion, and this figure is expected to rise to $20 trillion by 2028. For new online entrepreneurs, this might look like a fool-proof opportunity to make profits; no physical premises are required, so setting up an e-commerce store requires relatively low overheads, while drop-shipping means the owner of an online store doesn’t even have to find space for stock.

However, despite the opportunities, a reported nine out of ten e-commerce businesses fail during their first few months of operation. Among the reasons for failure include an inability to compete with established players (namely Amazon) and store owners finding there is no market for their products. As such, choosing the right product category or niche is one-way e-commerce entrepreneurs can help protect their businesses from failure.

Steps to Choosing a Niche

1. Research the Market and Current Trends

The obvious place to start finding your niche is by conducting research into market trends. When doing this, think about your intended geographic reach; popular products in your local area or home country might not have a viable market internationally, or vice versa.

Also, consider whether certain products might be seasonal or cyclical. For example, how many face-mask businesses that made lots of money during the peak of the pandemic are still in business in 2022 when many countries no longer have mask mandates?

2. Think about Your Passions

While it’s unwise to rush into a business based on your heart alone, setting up an e-commerce store and running it day-to-day is difficult. This is especially true in the early days when set-up costs come into play, but sales and revenue are non-existent. Still, a genuine love for your products and niche can help you keep going, as well as make you more engaged in promoting your business.

Launching an e-commerce business in a product category in which you have expertise can also make life easier. You can share your knowledge and become an authority niche retailer that customers trust, setting you apart from Amazon and other mass e-commerce giants that focus on high-volume discount sales.

3. Consider the Logistics

Think about the realities of getting your products to your customers, not just at the beginning when you have limited sales but in a future scenario when you could have hundreds of orders a day. While drop-shipping can provide a solution to selling physical products, it’s not without risks.

As a small business, reputation is vital. If you want customers to choose you over one of the larger online retailers and recommend you to other buyers, you will need to ensure you can deliver what you promise every time. Also, don’t forget that shipping physical products can pose additional logistical issues, such as age-limited items and export regulations.

4. Visualize Your Marketing Activities

Two common reasons cited for many e-commerce stores’ failures are a lack of online visibility and poor marketing. In the e-commerce world, a store that isn’t visible essentially doesn’t exist. You aren’t just selling products; you’re building a brand – and you need to get it out there so people can see it.

From blogging and podcasts to get your business’s name out there with brand merchandise from companies such as Anthem Branding, many different promotional activities can give you online and offline visibility. Ultimately, the niche you choose will partly determine the types of marketing that will be the most effective and influence the strategies you can employ consistently.

5. Assess the Potential for Expansion

Choosing a niche requires walking a fine line between picking one that’s too broad and one that’s too limiting. Generally, it’s easier to start small and become well-known in a narrow product sub-category before expanding.

Start by finding existing gaps in the wider product category. If, for example, you want to open a store in the pet niche, you might want to start with luxury dog toys before broadening your range to include related items.

If you do plan to offer other products, make sure this is reflected in your online presence. For example, if you go all-in merely with luxury dog toys and then expand into cat toys or dog food, you’ll be faced with trying to get online traction for a whole new product sub-category.

Final Thoughts

Despite what seems like a saturation of e-commerce, there are still opportunities for the committed online entrepreneur. While many internet businesses fail, this article has hopefully shown that dedicating ample time and research to choosing the right product niche can help set you up for success.