Small Business - What is a niche market?

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Everyone wants to have their own business and with e-commerce, it has become easy to create your own online store. But what to sell? People often get stuck on this though, as it has become extremely hard to find products/services to sell. Online sales generate billions of dollars across a variety of industries: consumer packaged goods, clothing, health, etc.

niche market

What is a niche?

Niche markets are groups of people or companies sharing similar characteristics. You can offer them your products or services because you know they have the exact need or problem your business solves. When managing a niche market, you offer a custom-made solution that’s hardly being taken care of by other competitors. This is due to niche markets not being as big and big competitors aiming to sell products in markets where they can make substantial growth in their businesses.

Benefits of going after niche markets

  1. If your business segment is well defined, you can charge better prices. When focusing on a well-defined user segment, they will be willing to pay more for products or services specifically designed for their needs. In the beginning, Amazon used to solve a big problem for its first users. There were many readers looking for a specific book in many different bookstores. There wasn’t a centralized place to check for stock or look for a specific location to buy it. Amazon was charging the same amount or higher than traditional bookstores for resolving this issue, while also charging for shipping. These first users were willing to pay more because this was a specific solution designed for them. It solved their specific problem.

  2. Big companies are interested in segments which give them greater income. For many, the main fear of starting an online store or any other online business is related to the competition and its capacity to take them out of the market at a moment’s notice. If you focus on a specific niche and you do it well, is very unlikely that a big competitor will try to steal your business, don’t worry. This is unlikely to happen for two reasons: First, big competitor companies see these small niches as market segments outside of their area of interest due to their small size compared to the rest of the market. Changing their processes to sell to a niche that won’t improve their final results in a substantial way doesn’t make sense to them. Second, they won’t be prepared to offer customer service like yours. Even if they try to get into your niche market, your loyal customers will notice the services offered by the competition are general and not personalized as they need.

  3. Marketing and communications are more effective. Knowing the starting niche you would be selling to perfectly will allow you to create a detailed customer profile which will guide your marketing decisions in general: Positioning, brand, communication channels and prices among other things. Today the internet allows for the creation of a variety of effective communication channels at a low cost (social networks, chat services, etc). This will allow you to establish a long-lasting trustworthy relationship with your niche.

  4. A niche allows you to create effective sale strategies. If you haven’t defined the type of customer you want to go after, you will lose a lot of time when trying to get new clients. You’ll be knocking on doors that will never open. The focus is on finding those people who can relate and are interested in the message. Investing time, money and effort in people not matching your ideal customer profile is very expensive. Too much effort for poor results. Instead of pretending to get to hundreds of thousands of potential customers, focus on a much smaller group with particular needs for whom your product/service is exactly what they need.

  5. It’s easier to create content if you have a blog. Developing content is key in e-commerce. It’s an effective way to lure visitors in with the intention of buying at a low cost. Whether they are articles on your blog or any other medium you’re using for your niche, it will be far more effective and simple if you have a specific customer profile. One that belongs to the market niche. You must know their interests exactly and what challenges they face. This is the key to generating any kind of attractive and relevant content for your customers.

  6. The conversion rate for sales is higher. Many online stores focus on the main metric, based on the amount of daily or monthly visitors. This is one of the so-called “Vanity Metrics”. Thousands of users visiting your store might sound good, but it means nothing if none of them generates sales. Having a well-defined niche will generate visitors for your store who will have a real intention of buying. They’re not only there for the variety of products you’re offering, but also because the solution offered is designed for them.


Focusing on niches is one of the most effective e-commerce strategies to start an online business. It makes it possible to start with a small, well defined and distinct type of customer that will allow your company to optimize its processes and start off on the right foot. Don’t think that if you start with a niche you won’t have the opportunity of selling to others in the future. Niche market strategy is only a starting point.