It’s the age of the entrepreneur! If you have the dream of running an e-Commerce store from the comfort of your laptop, it might be your passion. Before you dabble in how to start an online store let’s figure out why your online store needs a niche!
Secure A Niche
It might be an online store but it needs a theme. Given that you’ve built out your brand and what you hope to represent, always ensure that your store reflects that. Your store should reflect what you are selling and to whom you are selling. Some first time entrepreneurs don’t put much thinking into their niche.
In any enterprise your niche is made up of three components. These are the audience, price and market opourtunity.
Ah! The fun part, but not for some. If you sell cheaper items more people are likely to buy, your Average Order Value (AOV) is going to be lower. If you sell more expensive items, it’s likely that fewer people will buy, but your AOV will be larger. Thus, a higher AOV allows you to make more in your profit margin. A typical eCommerce store has a profit margin of 20% -40%.
For Instance if your item is priced at $100 with a profit margin of 30% it allows you to make a profit of $30. While an item priced at half that only makes $15. Thus, ensure your product is niche specific and valuable. Avoid small and cheap trinkets because the profit margins are small.
This is a group of people who are interested in a particular product. So who is your audience? And do you share your audience with a competitor? These questions relate to brand loyalty.
Brand loyalty is a positive feeling towards a brand and a commitment to consistently buy the same product or service, regardless of the behavior of a competitor or environmental changes. Other behaviors such as positive word-of-mouth advocacy can also impact it.
Thus you ought to be cautious in particular niches that are occupied by household names. Consumers aren’t really interested with more options when niches are dominated by large companies. When consumers think of common products, their brand loyalty kicks in and they’re heading straight for the brands that are occupying their top-of – mind consciousness.
With that being said, try to avoid niches that are already dominated or over saturated.
In sociology, popularity is how much other people like or assign a status to an individual, idea, location, item or other concept. Popular products are surrounded with a cloud of interest, as tempting as it may seem try to avoid these items and niches. Why? Because the sales drop when the season has passed. Not to be worried, you can dip your toe in the trendy pool. To do this simply spot the trend first.
How to spot a trend?
With technology we have more tools at our fingertips to utilize, Google Trends, try typing in keywords and comparing the searches overtime. Try to lean towards products that have a gradual growth in interest over two years. This ensures that the season hasn’t passed and it isn’t too late to enter the market place.
Longevity and Customer Lifetime Value
In marketing, the lifetime value of the customer, or the lifetime value, is an estimate of the net benefit attributable to the whole future relationship with a company. So you’ve successfully made your first sale, how do you intend to keep that customer?
Firstly, you must ensure that your niche allows you to extend the longevity of your clients. The wedding niche is one of those that rarely have return customers despite its large margins. Thus you would spend alot of time and money on attracting new customers instead of re advertising to the customers you already have.
Getting a niche is crucial, because your overall messaging and product won’t reach anyone if you seek to appeal to everyone. You may also align your niche with who your ideal client is. So, it is important that you have a focused niche audience and that you communicate with the client or consumer in a manner that they can really connect to.