How to Find a Niche Market for Ecommerce

Niche Market

Consider beginning an e-commerce business from the ground up in a market like health and beauty. It will be an uphill battle to secure your spot in such a crowded industry because there are many items, customers, and competitors.


Building your store around a smaller, more dynamic niche market is much easier (and more profitable). Even as a novice, niche markets allow you to get specific about what you sell (and to whom) so you can get up and running quickly and build a stable market position.


In this guide, we’re going deep into:

  • What is a niche market, and why should you aim to locate one?
  • Three techniques for focusing on particular audiences within a larger market


Niche Markets Explained

A niche market is a portion of a bigger market. This subset has traits, needs, and preferences that are often distinct from the general market. Rather than picking an industry and trying to sell to everyone in it, clever eCommerce marketers focus on a small section of the market with a more defined, coherent customer.


Niches are typically defined by a set of characteristics, preferences, and needs, such as:

  • Budget and price
  • Demographics (like age, gender, and income)
  • Psychographics (values held, topics of interest, attitudes, and preferences)
  • Geolocation
  • Unique needs


These influencing criteria are specific enough to appeal to only a subset of the bigger market rather than the entire market.

Things to Consider When Choosing a Niche

You don't have to look far or think long and hard to find a potential niche market, but keep in mind that not all niche markets are made equal. When it comes to starting an e-commerce company, you need to discover a niche with enough demand and staying power to keep your firm afloat in the long run. As a result, there are a few factors to think about while considering any potential niche market.


Is the niche evergreen or trending?

We've all seen a slew of fads and trends flood the market and fade away before they even reach the one-year mark. That is not the type of market in which you want to invest time and resources in developing and launching a brand.


Ask yourself this question while considering any potential niche markets you come up with: "Will that market still be around in 5 years?" What're ten years? What will be the demand for your specialty products as the industry develops?


While it's essential to capitalize on trends, you shouldn't base your brand around them because they aren't long-term. Instead, look for an evergreen niche market with the longevity to help your company develop and thrive.


Is there enough market demand?

Similarly, even if the specialty is evergreen, there may not be enough market demand to sustain a flourishing business. It is especially true if competitors are already squeezing some of the orders.


An excellent way to determine demand in a specific niche is to look at the competitors currently in the field. How many are there in total? What are their financials alike? How long have they been operating in that market? Answering these questions will provide you with a realistic picture of whether the niche has sufficient market demand to support another participant.


How competitive is the existing market?

When it comes to competitors, it's usually a good idea to research the broad competitive environment of any business you're considering entering. The more competitors there are currently in the niche market, the more difficult it will be to gain market share as a newbie to the business.


To obtain a good sense of the situation, map out everyone's market positioning and ask yourself if there's a gap you can fill. Even niche markets frequently have smaller micro niches to which you may design your brand, and distinguishing yourself as much as possible will provide you a significant advantage.


Are there barriers to entering this industry?

Fierce competition can impede entering a given industry, but it isn't the only one your store may face. That is why, before you commit, it is critical to identify potential impediments to joining a niche market.


Renting out flights on a private aircraft, for example, is a niche business with solid demand and interested clients. Still, the expense of purchasing the initial equipment—the jet—creates a significant barrier.


Another example is that you've uncovered a niche market where people clamoured for clothing with vintage logos. The garment and fashion industries might be fertile ground for niche markets, but how much will it cost you to obtain the rights to utilize those historical logos? How long will it take to complete the process? Will you require the services of an intellectual property lawyer?


Find the Right Niche Market for Your Brand

If there is one thing to say about the e-commerce landscape, it is that it is competitive. You'll be in a better position to select an area of the e-commerce industry that you can effectively control and dominate if you research and understand niche markets and how they might benefit your business. Once you've done that, you'll be well on your way to success.