What Is a Niche Product?
Examples of Niche Products and Reasons Why Choosing a Niche Product for Your Online Ecommerce Store Increases Your Chance of Success
If you are considering entering the world of ecommerce, I highly recommend that you focus on a single niche product. There are good reasons why this is the best idea. We’ll get to that, but first things first.
A niche product is simply a narrowly focused sub-category of a broader, more general category. Think in terms of navigating a large website - perhaps one devoted to lawn and garden products. The home page of a lawn and garden website would include many shopping categories such as seeds, chemicals, tools, power equipment, etc. The power equipment navigation might be further sub-categorized into chainsaws, lawn mowers, weed eaters, etc., any of which could be considered a niche product. These sub-categories are very specific with only individual product models residing within them.
Niche product examples:
- artist easels (part of the larger art supplies category)
- ferret cages (part of the larger pet supplies category)
- solar water heaters (part of the larger solar equipment category)
I'm sure you get the idea.
Reasons Why Choosing a Niche Product for Your Online Ecommerce Store Increases Your Chance of Success
I created and operated my own successful ecommerce business and I know that there are good reasons why focusing on a niche product rather than a broad category will increase your chance of building a successful online business.
Better Profit Margins – Part of the process of selecting the best niche product (a lengthy discussion for a future installment) includes an acceptable profit margin. Ideally, you want to find a niche product that offers a healthy amount of profit per item so that you are assured that each order processed provides enough profit to make processing that order worth your time and processing costs. In other words, you should not focus on a niche where the average retail price is too low. If we go back to our lawn and garden example, focusing on lawn mowers which have fairly high retail prices, would be much more profitable than focusing on seeds which have a much lower retail. When focused on a niche product line that offers an acceptable level of profit, you will find that your margins are consistent and what you expect. In contrast, if you are selling products from the broad lawn and garden category, it is possible to process orders with very little retail value and consequently very little profit. If you only make $1.50 on a pack of seeds and you just processed an order for a single pack, you have lost money based on the labor involved in processing the order, emailing the customer, checking the vendor invoices, etc. A well selected niche product line that offers acceptable margins will protect your business from such a scenario.
To summarize, if you would like to establish an internet retail business but lack substantial capital to invest, a niche product line (preferably drop shipped from your supplier) is the best way to proceed (in my opinion). Focusing on a niche makes it much easier to rank in the search engines and compete with large competitors. Find an item that you like, brand yourself as the authority on the product, understand the importance of strong customer service and you will be well on your way to establishing online income from the comfort of your home.
If this topic interests you, be sure to visit merryseeker.com. I am creating a step-by-step outline(in progress and based on my experience) for how to start and grown your own internet retail business.