Although running yours e-commerce business can be an exciting entrepreneurial venture, it is undeniable that many online stores do not make a profit. After a short time, they are bankrupt, permanently closed.
Although many factors can lead to the failure of an e-commerce store, one of the biggest problems that entrepreneurs face is their inability to recognize and exploit a profitable niche. However, by doing a thorough analysis of the current market, you can find an area in which you can make a lasting impression.
1. Solve a significant problem.
As with any other business idea, a successful eCommerce product can have its beginnings when you try to solve a real and significant problem. You can get ideas from your own experiences, talking with friends or neighbors, or online, to see the challenges others face.
That’s exactly what worked for the Active Hound dog toy brand. As a Shopify blog Explain, the brand’s founders spoke with dog owners at a local park and learned that “the expensive dog toys they bought did not have the durability to withstand the wear and tear of a pet playful. Hearing about this frustration has prompted them to create a line of ultra-durable dog toys. ”
2. Find a gap between potential competitors of online stores.
If an e-commerce niche has marketing potential, it is likely that other stores are already selling a similar product. However, this does not mean that you have to abandon this idea completely. By searching for your competitors, you can find areas in which their offers do not quite meet the needs of your customers – and that’s where you can build your unique value proposition.
For an expert, I contacted Sultan AlBanyan, co-founder of FLTR, because his company is the perfect example in real life. FLTR is a manufacturing company that produces facial filtration masks. “There is a great demand for efficient and elegant filtration masks in our country, Saudi Arabia. But these masks do not last forever – they need to be replaced periodically. ”
AlBanyan continues, “Our research revealed that our competitors in our niche did not use model directly to the consumerwhich resulted in higher prices and prevented some from systematically buying the masks they needed. By identifying what was missing in their offers, we were able to define our place in the market. ”
3. Discover the trends.
You will not gain much if you create an exact copy of a pre-existing idea. However, when you examine the trendy product niches and you are considering other possibilities within this category, you can simply find the unique angle needed to launch a successful ecommerce store.
The good news is that there are many resources available to help you get an idea of the trend categories in the world of e-commerce. Google trends is a great place to rate the search volume for different keywords. Numerous electronic business platforms like Oberlo have also mailing lists current trend products, which can help fuel ideas for your own store.
4. Know the margins.
It’s one thing to sell a product online; it is another to sell it for profit.
MarketingSherpa’s research has revealed that e-commerce stores with annual sales of less than $ 100,000 have Median gross margin of 30%. Successful stores know if they can compete on price or value and use them to maintain these types of margins.
When evaluating a product slot, you can not set an arbitrary price. You need to research what your target audience is willing to pay for this product, and then account for your business expenses, such as manufacturing, shipping, and web hosting. Thin profit margins will make it difficult ladder or adapt to changing market conditions.
5. Look for recurring sales.
A study from Harvard Business School revealed that one increase of five percent in terms of customer loyalty can increase profitability by 25 to 95%. It is therefore logical that the most profitable e-commerce niches focus on areas in which customers are more likely to come back for a repeat purchase.
This is part of the reason for the success of subscription boxes and subscription services in general. Each client becomes a recurring source of income. This also makes other items that need to be replaced regularly, such as diaries, dietary and craft materials, to name a few, a good choice. Offer a quality experience from the first time and customers will get back to you again and again.
6. Know your interests.
A study of e-commerce entrepreneurs published in the Huffington Post revealed that 45% entrepreneurs cited their love for what they do as the main reason for opening their store – far ahead of other attributes typically associated with horseplay, like the freedom to work where and when you choose.
In the end, no matter the potential of a potential e-commerce product. If this idea does not appeal to you, you will not have the motivation to solve unexpected problems or innovate to offer better products or services. Find something that interests you and you’ll be better equipped to stay with your store for the long term.
Your chosen product niche will ultimately define everything about your e-commerce store, from its target audience to the way you market your brand. By doing your due diligence to find a niche that interests you and that has real market potential, you will be able to lay the foundation for a thriving e-commerce store.