The year is 1993 and you’re a struggling toy store owner. You hear that these tiny stuffed animals called “Beanie Babies” are selling well, but your target customers are children more than adult collectors. Do you stay the course or switch niches?
Hindsight is always 20/20, but the challenge lies in predicting the next big thing before it becomes the next big thing. Just like playing the stock market, “investing” in the right ecommerce niche can make retailers win big — or lose it all.
So how can ecommerce owners identify the best niches? In this article, we explain everything you need to know about breaking into niche markets, including the top 10 trending niches of 2020 to give you a head start.
What Is a Niche?
Pronounced like either nitch or neesh (depending on how fancy you want to sound), a niche is simply a small and specialized market. You know people who have pictures of dogs on all their shirts, pillows, and blankets? Those dog-printed products are a good example of a niche market — just like homemade jewelry, merchandise for a specific sports team, and tech gadgets for early adopters.
Essentially, niche markets are just more focused markets. The more you can narrow down your target customer group, the more niche you become. A national grocery-store chain with all kinds of food is less niche than a chain with only organic goods. A chain that sells only gluten-free, vegan organic food is more niche than a chain that sells just organic food. The more specific the market, the more niche.
Niche stores may have less customers than large, department-style stores, but that’s precisely the point. With less customers, you can more accurately optimize your sales strategies, especially when your customers have a lot in common. Although there’s no official definition, niches are often divided by these categories:
- Pricing — from premium, luxury items to affordable, dollar-store brands
- Demographic — by personal characteristics like age, gender, income, etc.
- Psychographics — similar to demographics, but with mindsets: moral principles, religious beliefs, attitudes, etc.
- Geographic — by location, particularly important for weather- or climate-related products
Niche groups may be smaller, but niche shoppers tend to share characteristics and shopping behaviors. While “general” stores struggle to keep everyone equally happy — parents, children, the elderly, teenagers, etc. — a niche store can focus on only keeping their specific group happy.
In other words, niche store owners can more accurately optimize product selection, pricing, marketing, and every other aspect of their business.
Why Are Niches Important for Ecommerce?
The short answer is competition. There are a lot of ecommerce stores online today, and if you’re a small or medium-sized company, you don’t have the resources to fend off rivals for every single market group. A smarter and more resourceful choice is to pick a specific market group (an ecommerce niche) and invest your resources there. If you succeed, you can always expand into other niches later and build your brand market by market.
Moreover, niche customers tend to shop in similar patterns, making it easier to predict and plan which products to sell and how to market them. That trickles down throughout your entire business, even reducing storage fees by reducing hard-to-sell inventory.
In general, the more you understand your shoppers, the more you can optimize your sales strategies. Pricing, deals (when and what kind), and sales techniques like upselling can all be tailored to specific shopper types to increase success.
Then there’s customer outreach. Look at the Twitter account of Amazon, who targets a broad and unspecified group of people. Their content is a lot of generic, feel-good content that appeals to everyone, but also no one in particular. It’s all over the place.
Compare that to the Twitter account of Powell’s Books, a famous indie bookstore in Portland. Because Powell’s Books has a niche audience, significantly smaller than Amazon’s audience, they can cater their content better — it’s almost all about books, authors, and other literary topics that their niche audience adores.
That’s the appeal of niche marketing in a nutshell — instead of getting a bunch of people to like you okay, get a smaller group of people to absolutely love you!
Pros of Selling Niche Products
- Optimized product selection — as long as your products stay within the niche, they’re likely to sell; so less guess-work in choosing what to offer.
- Optimized pricing — because your range of customers is smaller, you can use previous sales analytics to estimate the perfect prices.
- Simpler brand management — with a more targeted range of products, you have less listings and maybe even less channels, making your entire brand easier to manage.
- More effective content — it’s easier to create valuable content when you cater it to the preferences of a single group, rather than trying to please everyone at once.
- Sense of community — targeting specific niches makes you “in with the out group,” leading to greater customer loyalty and more personal relationships in general.
- Precision online marketing — you can more precisely use SEO keywords and web design features to target specific group behavior rather than general group behavior.
- Lower storage fees — product turnaround is faster when you can better predict best sellers, plus less chance of clogging the pipelines with “duds.”
- Less expensive campaigning — targeting less markets means less ads, less diverse content, and less market research.
Cons of Selling Niche Products
- Requires understanding of target groups — niche marketing demands an intimate understanding of your niche customers, which is why we always recommend targeting a niche you already personally understand.
- Limiting at first — choosing one niche means ignoring all others (but you can always expand later when your business is stable enough).
- Hit or miss — it’s hard to hedge your bets with niche marketing, so your early campaigns may be either hit or miss.
How to Find Your Perfect Niche
One of the most important business decisions an ecommerce owner has to make is which niches to target. It involves not only choosing niches you’re personally passionate about, but also profitable niches whose market can support your company. You have to consider factors like market demand, niche customer shopping habits, and the availability of products.
While we don’t want to bury you with those details here, if you want to learn more, read our more thorough guide on how to choose your perfect ecommerce niche. There, we explain step-by-step all the considerations of choosing the best niches that suit your brand.
Best Ecommerce Niches of 2020
If you’re targeting upcoming and trending niches, timing is everything. Wait too long and everyone jumps on the bandwagon, leaving the market flooded with competition. But if you can strike at the right time, you can establish your brand as a niche leader before all the copycat brands hop on.
Based on search trends and expert recommendations, we’ve collected a list of the top 10 best niche products for 2020.
1. Eco-friendly Versions of Everyday Products
Climate change has been on everyone’s minds lately, including online shoppers. To support environmental efforts, lots of new manufacturers are creating eco-friendly versions of everyday products.
One of the fastest rising products is reusable food wrap like Lilybee Wraps, which aims to reduce single-use plastic wrap with cleanable (and prettier) food protection. Another niche to go environmentally conscious is feminine hygiene, with eco-friendly pads like Lunapads seeing more and more interest (as the site claims, each one replaces over 125 disposable pads).
This is a popular and wide-ranging niche, one with plenty of sub-niches that you can further hone in on. The beauty of eco-friendly niches is that you can accommodate them for every industry, even if just a few products. Almost every type of store has environmental versions.
2. Preplanned Meals and Ingredients
Somewhere between the need for convenience and eating healthy, a unique ecommerce niche starts to bloom. Preplanned meal delivery — which sends prepared ingredients to your home, ready to be cooked by you — is projected to rise substantially in 2020.
The appeal of services like Plated is the convenience of not having to shop for your own meals, but also avoiding the unhealthy choices that dominate delivery by cooking it yourself. Again, this niche is wide enough to support plenty of sub-niches, like specializing in a certain type of cuisine. Part of the appeal, though, is having meals selected by professional chefs.
3. Shapewear/Bodycon Apparel
To some it’s fashionable, to others it’s just a modern girdle. Regardless, tight-fitting fashion items that grip the body to accentuate curves, known as shapewear or bodycon (“body conscious”), are hot sellers.
Fashion is always a niche industry divided by personal taste, but adding body image preferences makes it even more niche. You have to make sure your shoppers will be into these products if you offer them, or else you risk offending them. But if it sounds like something your shoppers will like, the website of Macom explains how the clothing works.
4. Weight Loss Items
On the heels of body-shaping garments, there’s other trending niches that take a completely different route to arrive at the same, slimming results.
Specifically, cellulite removers are on rise, namely those that use sonic lift technology. Although the results are inconclusive, brands are marketing these massagers as the long-sought solution to the age-old problem of cellulite. For more details, check out niche leader Glo.
Aside from this new product, you can still offer the basic evergreen items like keto supplements or home gym equipment.
5. POD Clothing and Apparel
With modern technology, retailers are no longer chained to the model of storing inventory. One such advancement is Print on Demand (POD), which is likely to upset the low-end apparel market in 2020.
POD clothing and apparel lets you target any variety of different styles, allowing you to really hone in on your niche. Because the apparel industry is already dangerously saturated, it’s best to dive deep into a niche to reduce competition — fitness clothes, ironic T-shirts, animal prints, etc. Take a look at Redbubble’s POD selection for inspiration.
6. Smartphone Accessories
The market for smartphones and other mobile devices is reaching unprecedented levels — enough to support smaller submarkets like the smartphone accessories. Not everyone owns a smartphone, and not every smartphone owner buys accessories; but there’s a specific niche of people who want to deck out their smartphones and make them more efficient.
Although there’s still enough demand for traditional smartphone accessories, what we’re seeing now is some “next-level” tech for consumers who want a little extra. For example, BodyGuardz tempered glass screen protectors offer more protection than the normal flimsy plastic guards. Likewise, rather than deal with the usual cord charging, consumers are predicted to buy more wireless charging stands in 2020.
7. Marijuana and CBD Products
Talk about niche — this entry is downright illegal in certain places. But if you live somewhere where cannabis is legal, you have a lucrative opportunity to participate in one of the most profitable ecommerce niches of the 21st century.
Cannabidiol (CBD) oil is a medical product proven to remedy pain, anxiety, cancer-related symptoms, and even acne! Because cannabis legislation is fairly recent, the medical marijuana and CBD industry is one of the best niches to break into at the moment.
CBD products are legal in most places across the U.S. and might be a great starting place while you wait for the other stuff to iron out.
Just be careful about which channels and payment gateways you use, as some don’t allow cannabis sales. While there are obstacles, CBD Essence proves that selling CBD online is both doable and profitable.
Well over a year ago on the ecomdash blog, we posted 5 Exciting New Technologies for Online Retail, where we cited drones as an “Honorable Mention” with the caveat that it still needed government regulation. Well, as of October 2019, new commercial drone approvals are starting to come in, suggesting that drones and their accessories will be one of the trending niches of 2020.
The likely course of events will see drones first authorized for deliveries (like UPS’s recent permission) and then more options for commercial hobbyists will enter the market.
9. Car Accessories
Just like with smartphone accessories, there’s a niche of consumers who want to customize their cars with new tech and gadgets. One of the most common are rear cameras, which actually make driving safer.
Likewise, smartphone holders are on the rise, as more drivers are opting for their device’s GPS over those built into the cars. These are relatively cheap too ($1 – $5), making them a risk-free addition to most stores.
10. Handmade & Minimalist Jewelry
The fashion industry historically popularized the luxury brand and exclusivity models, but in our modern economy, more shoppers are flocking to handmade and minimal jewelry. For one thing, the more affordable prices appeal to younger customer groups, but really it’s a stylistic preference that’s pushing this fad. At the moment, simple jewelry is “in.”
Keep in mind that minimalist jewelry isn’t an untouched niche market, it’s just recently seeing more attention. The truth is this niche is already old and established, and even has its channel Etsy dedicated to it. If you’re a fashion ecommerce seller and want to break into this niche, you’ll need to spruce up your social media skills, especially Instagram — that’s where all the serious marketing for simple jewelry is done.
How to Source Niche Products
Of course, choosing your niche is only half the battle. You also need to take care of all the usual ecommerce responsibilities, like product sourcing and streamlining your supply chain.
No matter which niche you choose, chances are you’ll have a variety of different product sourcing methods to choose from. If you’re new to ecommerce, here’s a list of the most common product sourcing methods, with links to guides outlining their best practices.
- Wholesale — the traditional method of product sourcing where you buy products in bulk with a price break and store them yourself until sold.
- Subscription Box — curating collections of products on a subscription payment model, rather than a per-sale model; a popular choice for niche marketing because it’s easier to guess customer preferences.
- Liquidation — buying products in bulk from another store that needs to unload them fast (at a big discount), typically from going out of business.
- Private and White Label — products are manufactured by a third-party, but you can legally rebrand them and sell them as your own; great if branding is a top priority in your sales strategy.
- Retail Arbitrage — fueled by elbow grease and personal effort, you actually go to other stores, buy products at a discount (i.e., a 2-for-1 at Walmart), and then resell them online with a profitable markup.
- Dropshipping — you sell items online, but the manufacturer handles the shipping; you make less money per sale, but handle less ecommerce duties. Learn how to choose the best products to dropship.
- Artisans — handcrafted goods made by specialists instead of manufacturers; a niche category on its own, but can always be more specialized (i.e., handmade jewelry, handmade furniture, etc.).
- Second-hand, Thrift, or Used Goods — another niche category on its own, you resell used goods either for the affordability niche or the retro niche.
Whichever product sourcing methods seems best for you, make sure it passes this 5-point checklist for viability.
An ecommerce niche is really just a specific group of shoppers that are all interested in a similar topic, think environmentalists or coffee connoisseurs. Selling in a niche helps you market effectively and build a community around your brand. The hottest 2020 ecommerce niches are:
- Eco-friendly products
- Preplanned meals
- Weight loss items
- Print on demand apparel
- Smartphone accessories (think of customizing these for your niche for a double win)
- Marijuana & CBD products
- Car accessories
- Handmade jewelry
No matter which ecommerce niche you choose we hope you have a wonderful (and profitable) 2020.
Do you think we missed any niche products? Let us know in the comments!
Once you’ve chosen your niche, your ecommerce journey is just beginning. You still have all the other issues to deal with — managing inventory, updating listings, monitoring shipments, maintaining a budget, and many more duties.
Luckily, our ecommerce software can help with all those aspects, saving you time and stress with convenient workarounds and automated task management. From inventory management software to dropship automation, we have everything you need to manage your online retail shop.