“You need to find a niche.”
You have probably heard this phrase from me many, many times. And you’re sick of hearing it, because finding a profitable niche becomes more and more difficult and problematic as there are probably ten times more online businesses nowadays compared to say 10 years ago.
From the emails I receive from my blog readers I know that finding that perfect niche is one of the most difficult tasks for people who are just starting online. In many cases it’s because people simply struggle to think out of the box and can’t see anything beyond the usual phone accessories, designer clothing and video games.
But do you REALLY need to find a niche to make money on eBay?
That’s what I’m going to try and answer in today’s blog post.
What is a Niche?
For those of you who are new to the whole “selling online” game, let me explain how we use the term “niche”. You can probably find dozens of various definitions online but to put it simply:
“A niche based business is a business selling a specific product or group of products, targeting a specific customer profile”.
It simply means that you don’t sell EVERYTHING (like Amazon) but concentrate on specific product categories (possibly even single products) or customer profiles.
Just to give you some examples of typical niche businesses:
- BigDug.co.uk (sells warehouse equipment)
- NaturesBest.co.uk (sells supplements & vitamins)
- SwanFlight.com (sells DJ/professional sound & light equipment and cases)
- CamLab.co.uk (sells laboratory equipment & supplies)
- SportsDirect.com (sells clothing & sports/fitness equipment)
These are all classic examples of niche businesses. These companies sell a specific range of products targeting a specific customer profile. You won’t find video games on Big Dug’s website or designer clothing on CamLab.co.uk
Just to compare, there are also companies that sell almost everything:
- Best Buy
- and similar.
On such online shops you can buy a wide range of goods starting from food and electronics and ending up with fitness equipment and furniture. These are all multi-billion pound companies with huge infrastructure, massive buying power and yearly sales to match.
Why I recommend working in a niche market?
There are several reasons why I recommend you set up a niche business instead of a general, sell everything type of business:
1) Better use of your buying power.
Most people start selling on eBay with a very limited budget of a few thousand pounds, often even less. There’s no way you can start an all in one type of business selling hundreds of products with such low buying power. You would need millions to even think about it.
But with niche businesses, everyone can find a suitable niche and products for their buying power. There are big niches, there are small niches and there are very small niches. If you pick a very small, specific niche product, you can fill your shop from day one and start making real profits instead of having cash flow issues for many years if you pick a niche that is too big for you.
2) Higher conversion rates.
People love to buy from experts – that’s simply how it works. I would go to Swan Flight for a case for my new keyboard simply because I know Swan Flight are experts on musical equipment cases and will provide the best offer and service for such products.
3) Repeat customers.
It’s so much easier to get return customers when you work in a niche market, especially if it’s a consumable type of niche (ink cartridges) or a niche where people buy new products all the time (fashion/clothing).
4) Proper long term expansion.
This is very important – I have already touched upon this topic in my eBay, Amazon or Online Shop guide, but just to remind you – to create a stable, long term business you want to sell on at least two of these platforms, ideally all three – so eBay, Amazon and your own ecommerce shop. With your own shop being the most valuable selling channel over time.
And this is where the niche concept plays its biggest role – while on eBay and Amazon you can easily sell all kinds of products with relatively high success, that just won’t be possible on your own ecommerce shop as you’ll effectively be competing with eBay, Amazon, Tesco and similar large marketplaces/stores selling tens of thousands of products. That’s not even talking about the difficulties you’ll face marketing your online shop as you can’t spend millions on press and TV ads. With a niche based online shop, you can achieve great results by having laser targeted advertisements in search, forums, related blogs, YouTube and other websites… as well as free traffic from search engines.
There are some other advantages but I hope you get my point here – for small businesses, people who are just starting out, picking a niche really is the best way to go, UNLESS….
You DON’T need a Niche!
There are 2 situations when choosing a niche is optional:
1) If you decide that you will sell on eBay and only eBay.
Yes, if you only want to sell on eBay, you can still do it successfully without having a niche. Your conversion rates will be lower compared to expert/niche sellers (presuming price and everything else is the same) but you can still get tons of sales in and make decent profit.
The reason behind this is that people go on eBay and mostly use the search function to find specific items and then click on listings they’re interested in. They basically have that one product mindset and if your listing is decent, you can make sales even with a general brand/shop.
But as I explained, this will work only on eBay and Amazon. It’s not viable to create an online store like this, due to the reasons I’ve just gone over.
2) If you have spent several months trying to find a niche with no success.
If you feel you’re getting nowhere with the market research process and simply CAN’T find a niche that interests you, just start selling something, seriously. That will still be better than doing nothing and maybe after some time selling all kinds of products, you’ll find a niche you would like to work in and then you can simply re-brand your shop and continue working in just one niche.
This should answer the question – do you need a niche or NOT?!
Ideally, with a long term business in mind, yes, you need to find a niche as that’s the only concept where you can build a successful ecommerce shop in the future. Not talking about the other advantages a niche business gives you over the general, all-in-one type of business.
If you need step by step instructions and help on how to properly do market research and find a profitable niche, check out my Easy Auction Business video course where I cover this topic in great detail.
Any questions, as always – feel free to leave them below this post and I will personally answer each one of them.