Imagine starting an e-commerce store and trying to compete in a market like health and beauty. There are so many products, customers, and competitors that it will be an uphill battle to secure your own place in such a crowded industry.

It’s a lot easier (and more profitable) to build your e-commerce business around a smaller, more engaged niche market. A niche market is a small subset of a larger market that has a more distinct, cohesive audience. They allow you to get specific about what you sell (and to whom) so you can have a better chance of building a stable market position, even as a newcomer.

Benefits of Targeting a Niche Market

Remember, no store can be everything to everyone – but it’s worth the extra effort of refining and focusing your market, audience, and product. Finding a niche market helps you hone in on who your store and product(s) are really for, and that makes everything from pricing to marketing easier and more focused.

Because niche markets are smaller, they tend to be less competitive, opening up the opportunity for more sales as well as more authority for your brand to become an expert. Additionally, niche audiences have such unique needs and preferences that they tend to be more highly engaged and loyal when a brand finally creates exactly what they’re looking for.

Things to Consider When Choosing a Niche

When it comes to launching an e-commerce store, you need to find a niche with enough demand and staying power to sustain your business for the long-term. Ask yourself the following:

Is the niche evergreen or trending?

We’ve all watched countless fads pop up and fizzle out. When evaluating any potential niche markets, ask yourself—will that market still be around in five years? Ten years? What will demand for your niche products look like as the market matures?

There’s something to be said for capitalizing on trends, but you shouldn’t build your brand around them because they aren’t sustainable. Instead, hold out for an evergreen niche market with the staying power to enable your business to grow and thrive.

Is there enough market demand?

A good method for determining the demand in a given niche is to take a look at competitors in the space. How many are there? What do their financials look like? How long have they been doing business in that niche? Answering these questions will give you a realistic picture of whether the niche encompasses enough market demand to sustain another player.

How competitive is the existing market?

Map out the positioning of everyone in the market and ask yourself whether there’s a gap you can fill. Even niche markets contain smaller microniches that you can tailor your brand to, and setting yourself apart as much as possible will give you a major advantage.

Are there barriers to entering this industry?

Fierce competition is only one barrier to entry; that’s why it’s important to also feel out any other potential barriers to entering a niche market before you commit.

Let’s say you’ve identified a niche market where consumers are desperate for apparel with vintage logos on it. The apparel and fashion industry can be ample ground for niche markets, but what will it cost you to secure the rights to use those vintage logos? How long will the process take? Will you need to hire an intellectual property lawyer?

How to Find a Niche Audience and Product to Sell

By now, you should have a good idea of what to consider when evaluating potential niche markets for your brand. Here are some of the best ways to come up with those ideas in the first place:

  • Method 1: Look for Recommended Niches Online: You will find endless lists of niche markets ideal for e-commerce businesses just by doing a simple Google search.
  • Method 2: Survey Consumers: Go directly to the source and survey the very consumers you hope to serve. Ask questions like “who is your current brand of choice?” “What do you like and dislike about the product?” “Any additional or different features you’d like to see?”
  • Method 3: Use Keyword Research: Not just for SEO! Keyword research by definition taps into what consumers are searching for, what they need, what they like, and more. If you have a broader industry in mind, type that into Google and take note of the additional keyword strings Google suggests, “People also ask” questions, and related searches at the bottom of the results page.

If the e-commerce landscape is one thing, it’s competitive. By researching and understanding niche markets and how they can benefit your business, you’re in a better position to identify an area of the e-commerce world that you can effectively corner and dominate. Once you’ve done that, you’re guaranteed to be set up for success.

Alison Garrison is Volusion’s Senior Director of Services, overseeing a team of passionate marketing and design experts.

E-commerce stock photo by one photo/Shutterstock