How to Pick a Niche for a New Ecommerce Businesses
My girlfriend and I recently got a dachshund puppy.
As new dog parents, we’re constantly looking to get him new stuff. We ended up finding this website that only sells products for sausage dogs.
This got me thinking about how this was the perfect niche for a new ecommerce business.
It reminded me of the ecommerce business I sold last year, Laces Out. Laces Out only sold shoelaces, specifically, shoelaces for sneakers.
While the site wasn’t raking in millions in revenue, it was putting an extra $12,000 month of profit into my account.
By choosing this specific niche and selling a specific product, it made marketing, operating, and selling the business much easier.
In this article, I’m going to show you how to pick a “niche” for an ecommerce business.
NOTE: While this is applicable to anyone, it will have the most value to people looking to start their first ecommerce business.
What is an ecommerce niche?
A niche is a small market within an industry. Going back to our sausage dog example, the big industry would be pets. You can narrow / segment that industry to just be dogs.
But you can keep niching down into a specific type of dog, like how the sausage dog website did. This is called a sub-niche (a niche within a niche).
Niching down allows you to be hyper relevant to your customers.
This allows you to build trust, relevancy and sales much faster.
I choose to purchase dog products from the dachshund website because I trust their product selection over a generic one from Amazon or Chewy (even though the products are likely the same, just branded differently).
On top of that, the site performs really well in organic search, with very few backlinks.
They’ve established authority in Google without backlinks – they’ve done so by owning that niche.
If you’re willing to go small, you can grab market share much faster.
Wait! Before you “niche down”…
Before you pick a niche, there’s things to consider.
The further down the niche you go, the lower the market cap will be. a website that only sells products for dachshunds will have a smaller cap and less potential than a product meant for all dogs.
Niche products have a lower barrier of entry. This means:
- Less investments
- Lower costs
- Less competition
Now onto how to actually pick a niche.
We’ll be using this concept I call the low-high matrix. It breaks down what you need to consider before choosing a niche.
How to pick a niche with the Low-High Matrix
This matrix covers everything you need to consider before selecting a niche and a product to sell for an ecommerce business.
Let’s start with the low side of the matrix.
The Low Side
When choosing a niche and product, you want to sell a product that is low in:
The High Side
On the opposite side, there’s some elements we want to look for that are “high”:
Wrapping it up
It wouldn’t be wise to jump into a bloody ocean swarming with hungry sharks. In the same way, it wouldn’t be wise to jump into a niche that is dominated by big brands.
To start and grow a successful first time e-commerce business, you need to pick the right niche. If you follow the low-high matrix covered in this trusty guide, you will be miles ahead of the competition.
As always, drop a comment below if you have any questions or concerns.
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