Researching Market Niche: Finding the Perfect Product for Your Ecommerce Store

Super Market Tulelake California

What is a niche market?

Simply put, a niche market is a specific market that caters to a generally smaller, albeit more focused group of consumers. This is not to say that running a niche ecommerce store is less profitable; on the contrary, offering these specialized products is often an excellent option for small businesses that cannot compete with larger online retailers.

Riding the long tail of success

Niche ecommerce stores fall under the banner of “long tail” marketing and products. Chris Anderson, who coined the term with a Wired magazine article and the subsequent book The Long Tail: Why the Future of Business is Selling Less of More, brought attention to the phenomenon of niche marketing – that a less popular item carried by a smaller number of retailers could rival the sales of an extremely popular item more easily available at a number of retailers.

In many ways, niche markets and small online retailers are a match made in heaven. As Niche Modeling notes “Niche markets are important for small businesses, as they can find it profitable to serve markets too small for mainstream businesses.”

What are some of the benefits to having a niche market ecommerce store?

As noted above, it’s quite potentially a more advantageous market with less competition. Unlike the general market, it’s not necessary for your small online business to constantly diversify and compete with big box retail pricing when you are offering a product that is not widely available elsewhere.

  • Greater search engine optimization – your online store is likely to index better given less competition, allowing you to make the most of organic search and shopping results. Of course, you’ll still want to carefully optimize your site with original content and powerful meta tags.

  • Customer service – the people who are seeking your product tend to be familiar with it and have realistic expectations. This minimizes potential returns and given a positive shopping experience, your customers are more likely return to you for their shopping needs. As The Heron Academy points out, “the information people are looking for becomes increasingly specific. If therefore you can create or find a suitable product or service for this market, the match between what you have to offer and what the prospect is looking for is even more clearly defined.”

Examples of niche market products

So, what categories might a niche product fall under?

  • Hobbies – If you have a particular hobby or activity that interests you, it may be a great start to your own niche ecommerce business. Consider what you look for when you shop for your hobby, and what you have a hard time finding – it may be something that other similar hobbyists are searching for as well.

  • White label products (customized t-shirts, mugs, hats, etc) – You might be a graphic designer who specializes in creating unique designs, or perhaps you have the resources to inexpensively produce personalized items based on customer materials or artwork. While white label products can be a part of the general (and more competitive) market, infusing your store’s white label products with our own individual flavor can successfully put you into a more specialized, less competitive market.

  • Eco or green products – While environmentally sound items are becoming increasingly mainstream, there is still plenty of room to carve out your own particular eco-friendly niche.

Perhaps you already have an online store and have noticed that you have a quirkier product that nonetheless seems to have found a dedicated audience. If you wish to pare down your overall store selection and focus on an item or type of item that sells well for you, you could start with this item.

Conversely, you may have experienced customers seeking a particular item that is not readily available. If you have any sort of production or manufacturing capabilities, you could look into developing a specialty item and being its sole online retailer.

Sizing up the competition

Before you launch your online niche product store, your first step of research should be looking at your potential competitors and audience so that you can gauge how viable your business will be. Some points to consider:

  • Who is the online competition? Can you compete with their resources, and can you compete with the number of competitors?

  • What sets your business apart from your competitors and makes it unique? How can you use this to your advantage?

  • How competitively can your price your item(s)?

  • Who is the audience? Is your niche a market that has dedicated online customers and thus staying power? Is it one that lends itself to repeat business?

Research tools of the trade

To further research and develop a greater understanding of your niche, try these online keyword tools:

  • Google’s external keyword tool – Not only does this keyword tool come from the number one search engine, but it’s free, allowing you to do long tail keyword research to your heart’s content.

  • NicheBot – A paid service that calls itself “keyword research on steroids”, Nichebot combine four keyword research tools in one and offers three levels of service.

  • Wordtracker – Search engine optimization service Wordtracker offers paid keyword, link builder and strategizer services, as well as a free keyword suggestion service.

  • WordStream – Another keyword research service, WordStream has a free edition that allows you ten free searches on profitable niches.

  • Amazon product listings – You can sort listings by best-selling or best-reviewed to get a feel for which niche products are performing well. Don’t see your product listed? This may mean that your product will have little online competition. However, as Entrepreneur cautions, it could also mean that others before you have tried and failed to connect with this particular niche’s audience. If your product type is suspiciously absent from the market (on Amazon or otherwise), you may need to do a little more digging to find the cause.

With all keyword tools, when evaluating search demand/global monthly searches, make sure to select exact match type as opposed to broad search, as it will considerably alter the number of results and give you a more accurate estimate.

What other resources exist to market/promote your niche?

  • Blog coverage can be a great grassroots way to drive traffic and generate interest for your business. Promoting to blogs rather than print publications generally requires less lead time and has more of an immediate effect, allowing the interested reader to simply click directly through to your ecommerce site.

  • Social networking sites encourage customer interaction and submissions, and are a great way to provide value added services to your customers like blog post, giveaways and exclusive promotions.

  • Community sites on particular topics can prove to be great ambassadors for your niche product or site. Satisfied customers can recommend your ecommerce store to other community members looking to find a particular item.

  • Consider partnering with another website or product that has a similar sensibility to your niche product and may have a certain overlap of customers, but is largely non-competitive.

Are you finding success with niche markets? Tell us about it below, and follow us on twitter to stay updated!

[Photo credit: ceiling]

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