How to Find a Profitable eCommerce Niche

How to Find a Profitable eCommerce Niche

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There is a lot of money to be made in eCommerce, but there is also a lot of competition. According to etailinsights, there are 7.1 million online retailers in the world — 1.8 million of which are in the U.S. Needless to say, if you want to have a profitable eCommerce business, you need to be very strategic about what you’re going to sell. That’s where niches come into play.

Niching down will help you in a number of ways:

  • Your audience will be smaller, which means your advertising costs will be lower
  • You’ll have less competition
  • You’ll attract a loyal customer base from the start
  • You’ll be able to market more efficiently since your messaging will be very specific and targeted

This is great and all, but it doesn’t happen overnight — nor does it happen for every niche category. To help you build a profitable eCommerce niche, we put together the following guide that covers:

  • What an eCommerce niche actually is
  • How to find niche business ideas
  • How to pick a niche product
  • How to market your niche eCommerce business 

Let’s begin…

What is a Niche in eCommerce?

By definition, a niche is a place or position suitable or appropriate for a person or thing; a distinct segment of a market. In eCommerce, your niche refers to the types of products you sell — i.e. your unique and specific category. For example, rather than selling anything and everything, you’d sell a very specific type of product to a very specific type of person. So instead of selling pet supplies (a very broad and competitive category), you could focus on sustainably-produced accessories for small dogs, like collars, leashes, and sweaters.

Another way to think about a niche in eCommerce is in terms of supply and demand. In other words, an eCommerce niche is a unique product or category that is in high demand and low supply. As a result, you’ll have a smaller but much more defined audience to target.

eCommerce Niche Research: Where to Find Niche eCommerce Business Ideas

Before picking an actual niche, you’re going to need to do some research to make sure you pick something that’s not only viable, but also profitable. To get started, put together a list of ideas that you can then narrow down. Here’s where to find inspiration for your list:

  • Google Trends: Google Trends shows you what people are searching for right now. You’ll be able to see what’s trending, what’s “on the rise,” and what just isn’t getting traction. A good rule of thumb for an eCommerce niche is to focus on areas that are just starting to trend. If you go with something that’s already trending, you’ll likely only see short-term profit.
  • Keyword Research: If you already have an idea of a particular category or product, do relevant keyword research to gauge current search volume, competition, etc. As you’re doing keyword research, consider semantic keywords for inspiration. Semantic keywords are words or phrases that are similar in some way to a given keyword. So if a specific keyword you searched for isn’t niche enough, a semantic keyword (which would likely be in the same category) might be the right size.
  • Amazon: You can find a LOT of product inspiration from Amazon itself. Start by selecting a category from the search drop down then click go (leaving the actual search field blank). This will bring you to that category’s page on Amazon, where several subcategories are listed. You can click on those subcategories and see even more below those. All these subcategories are potential niches to consider. When looking at products in these subcategories/niches, you can sort the results by “Best Seller” to see what’s popular and what’s not.
  • Etsy: Like Amazon, Etsy is filled with niche product inspiration. As a niche marketplace in itself, every corner of it features niche verticals and niche products. So it’s easy to discover a product category you’d like to enter or a niche product you can put your own spin on, especially if you’re interested in exploring handmade, jewelry, accessories, home, craft, wedding, or party planning niches. 
  • Brainstorm: In addition to looking at online data for inspiration, you can do your own brainstorming based on a number of variables, including:
    • Problems/Unmet Needs: Are there any areas of your life (or a friend’s or family member’s) that could be improved with a particular product that either doesn’t exist yet or hasn’t taken off? 
    • Your Passions: What are you passionate about? Is there an area of your life that really motivates you and that also has some type of product gap? If you find something you’re passionate about, it’ll only add to your dedication to making it a success.
    • Guilty Pleasures & Vices: Are there common guilty pleasures or vices that people have? Do you have one? Do any of your friends? Doing research to see what people might impulsively buy should generate some ideas as well.

Now that you have a (long) list of ideas, it’s time to narrow it down, which brings us to our next section…

How to Pick a Niche for eCommerce

Narrowing in on a profitable eCommerce niche requires some important considerations, such as:

  • Your Target Customer: You need to understand who your customer is — this includes their passions and interests, hopes and dreams, struggles and pain points. This will help you determine which area of theirs you’ll serve — and how best to serve/market to it.
  • Price: One niche seller says that “expensive niche products perform better” and recommends items around or higher than $200. This means targeting an upper-middle class audience with disposable income and existing online shopping habits. Typically, niche products are not mass produced — hence why they are “niche”. This commands a higher price point.
  • Competition with National Brands: Find a niche that doesn’t heavily compete with established/national brands that have super loyal customers. For example, once an Apple user, (most) always an Apple user. So look for products that don’t already compete with established brand loyalty — i.e. with a customer that is willing to spend a lot regardless of brand. 
  • Shipping Weight: The heavier the item, the more expensive your shipping costs will be. This of course will affect your margins. Not necessarily a deal breaker, but just something to consider.
  • Supplier Availability: Make sure you can find a supplier that will be able to manufacture the product you’re leaning towards for your niche.

Factoring in this information will help you further narrow your focus and find a profitable niche. For reference, some popular niches include beard oil for men, CBD for pets, sustainable fashion, and vegan beauty. Some areas to think about that would fit the ideal market (i.e. disposable income and confidence/comfort in shopping online) include: travel (like luggage and carry-on bags, packing accessories, etc.), obscure or emerging hobbies (like paddleboarding, for example), etc. 

If you find a couple promising leads, you could start by dropshipping a particular item. There’s less risk and fewer upfront costs involved with dropshipping, so you can test the viability and profitability before making a major investment.

How to Market a Niche Product for eCommerce

There are a lot of creative ways to market a niche product for your eCommerce business. At the end of the day, you want to establish your brand so that you build loyalty, repeat business, and referrals. To get there, you first need to find and convert customers, then nurture them along the way. With that, here are six ways to market your niche product and establish brand loyalty:

  1. High-Quality Content: This includes everything from your product descriptions (which should be in-depth and include high-quality images showing your product on its own as well as in a real-life setting), your website (the copy itself, how the website looks, is it user-friendly and responsive, etc.), social media and ad copy, and blog content (like user guides, video tutorials, eBooks, etc.).
  2. Your Whole Offer: In addition to the product itself, what else will a customer get when they buy from you? Think about things like shipping (is it fast? Is it free?), return policy, customer loyalty programs (like points that ultimately act as cash back they can redeem on future purchases), etc.
  3. Cause Marketing: Aligning your product or brand with a cause or charity can really make you stand out, especially among millennials and Generation X buyers. People get a sense of satisfaction from buying products that support the greater good. In many cases, they are even willing to pay a premium for them. TOMS Shoes, Sseko Designs, Hiptipico, and Warby Parker are great examples of brands built on social impact and cause marketing. When looking at two similar products, chances are customers are going to choose the one with a mission. Promoting social good through your products is not only good for the world and your brand, it also helps you create a unique story that customers will remember. 
  4. Your eCommerce SEO: As you create your assets — like your website, product descriptions, marketing and sales copy, etc. — remember to use the right keywords and HTML tags in the right places. Doing so will give your Google SERP ranking a boost from the start. Check out our eCommerce SEO guide for more information.
  5. Customer Engagement: Encourage repeat business and customer referrals with a customer engagement strategy involving email nurture streams, feedback/review requests, and more.
  6. Social Media: Look up relevant hashtags that your ideal customers are using and include them in your posts; join Facebook groups, Reddit communities, or niche social networks that are relevant to your niche and engage with your ideal customers as appropriate (note: many of these forums don’t allow overt solicitations/sales, so you’ll need to be thoughtful in your approach here); etc.
  7. Advertising/Paid Promotion: Launch AdWord or PPC campaigns or partner with relevant influencers/bloggers who can help spread the word. You can also run Facebook ads targeted at your niche customer.

As you start marketing your niche, pay attention to what the data is telling you so you can make necessary tweaks and ultimately reach more ready buyers for less.

Next Steps

Launching a niche product will require upfront investments in cost and time — both of which can be scarce resources for online sellers. If your cash flow is tight, we might be able to help. As a financing company designed specifically for online sellers like you, Payability offers a variety of friction-free funding and cash flow options designed for eCommerce businesses. So you can invest in new products, launch marketing campaigns, and grow your eCommerce business as soon as tomorrow. 

Victoria Sullivan
Victoria Sullivan is a Marketing Manager at Payability. She has over eight years of social media, copywriting and marketing experience. Prior to joining the Payability team, Victoria developed social media content and strategies for top technology brands such as Skype and Samsung. She holds a degree in Advertising from Syracuse University’s S.I. Newhouse School of Public Communications. She can often be found in a yoga class or working on her fashion blog.

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