How to Find a Niche Market for Ecommerce

Imagine starting an ecommerce store from scratch 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 within such a crowded industry.

It’s a lot easier (and more profitable) to build your store around a smaller, more engaged niche market. Niche markets allow you to get specific about what you sell (and to whom) so you can hit the ground running and have a better chance of building a stable market position, even as a newcomer.

In this guide, we’re going deep into:

  • What a niche market really is, and why you should try to find one
  • Things to consider when choosing a niche for your online store
  • Three methods to help you narrow in on niche audiences within a broader market

Niche Markets Explained

A niche market is a small subset of a larger market. This subset includes characteristics, needs, and preferences that often differ from the broader market. Instead of choosing an industry and trying to sell to everyone in it, savvy ecommerce sellers target a niche segment of the market that has a more distinct, cohesive audience.

Typically, niches are defined by a series of qualities, 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 determining factors are precise enough that they appeal to only certain members of the larger market rather than everybody in the market.

Graphic of market segments, including Industry, Market Segment, Niche, and Microniche.

Examples of Niche Markets

One popular example is Apple’s high-end iMac computers, which are designed for a particular subset of the broader computer market. The audience Apple targets with their most capable (and expensive) iMac models have interests and/or jobs that require considerable computing power; large, vivid displays; and more—and they’re willing and able to pay a substantial sum to get those features. The niche iMacs compete in is based on unique needs, psychographics, and budget.

Here’s another example: eyewear company Felix Gray launched eyeglasses with lenses that filter out blue light. This product is designed to meet the unique needs and style preferences of young people who stare at computer screens all day. Their niche is based primarily on age, preferences, and unique needs.

Image of Instagram post by Felix Gray.

Source: Instagram

Benefits of Targeting a Niche Market

Sometimes, a potential niche market idea can strike out of nowhere; however, more often than not, finding a niche market in which to launch your store takes research and a little elbow grease. So why is it worth that extra effort of refining and focusing your market, audience, and product?

  • No store can be everything to everyone: this is one of the most universal truths of business. 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.
  • Meeting specific needs breeds loyalty: 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.
  • Niche markets are, by virtue, smaller: that means they tend to be less competitive than the broader market (with a few notable exceptions), increasing your likelihood to pull sales from the competition.
  • Less competition means more authority: a niche product makes it easier and more natural for your brand to become an expert within your niche, meaning that you can more quickly and easily stand out from stores focused on the broader market.

Things to Consider When Choosing a Niche

You don’t have to look far or think too hard to come up with a potential niche market, but it’s important to note that not all niche markets are created equal. When it comes to launching an ecommerce store, you need to find a niche with enough demand and staying power to sustain your business for the long-term. That being said, here are a few things you’ll need to consider when evaluating any potential niche market.

We’ve all watched countless fads and trends sweep across the market and fizzle out before they even hit the one year mark. That’s not the kind of market you want to spend time building and launching a brand into.

When evaluating any of the potential niche markets you come up with, ask yourself—will that market still be around in 5 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?

In a similar vein, even if the niche is evergreen, it still may not contain enough market demand to sustain a thriving business. This is particularly true if there are already competitors sucking up some of that demand.

A good method for determining the demand in a given niche is to take a look at those competitors already operating 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?

Speaking of competitors, it’s always important to look into the overall competitive landscape of any industry you’re thinking of entering. The more competitors that already exist in the niche market, the more of a challenge you’ll have to in trying to take over some of the market share as a newcomer to the industry.

To get a good feel for the situation, map out the positioning of everyone in the market and ask yourself whether there’s a gap you can fill. Often, 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 can be a barrier to entering a specific industry, but it isn’t the only hurdle your store could encounter. That’s why it’s important to also feel out any barriers to entering a niche market before you commit.

For example, renting out rides on a private jet is a niche market with high demand and willing consumers, but the cost of buying that initial equipment—the jet—creates a pretty high barrier.

Here’s another example: 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

At this point, you should have a good idea of what to consider when evaluating potential niche markets for your brand. Now let’s talk about the best ways to come up with those ideas in the first place.

If you don’t have any markets or broader industries in mind, you won’t have to look far to find recommended and popular niche markets to consider. You will find endless lists of niche markets ideal for ecommerce businesses just by doing a simple Google search. In fact, we share 9 ecommerce-friendly niche markets in this post from our blog.

Method 2: Survey Consumers

If you’ve narrowed your niche search down to one industry (or a few), the next step is to evaluate them according to the considerations we talked about above. One method for finding the best potential niche markets within larger ones is to go directly to the source and survey the very consumers you hope to serve. Ask questions like:

  • Who their current brand of choice is
  • What they like and dislike about the product
  • Additional or different features they’d like to see offered

Method 3: Use Keyword Research

I know what you’re thinking: keyword research is for SEO and paid search. That’s true, but keyword research by definition taps into what consumers are searching for, what they need, what they like, and more. That’s why it can be a useful tool for identifying potential niche markets.

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.

Find the Right Niche Market for Your Brand

If the ecommerce 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 ecommerce world that you can effectively corner and dominate. Once you’ve done that, you’re guaranteed to be set up for success.