How to choose the right niche for an online store

One of the unwritten rules of e-commerce is to not get too attached to your online store. In other words, don’t treat your online business like your baby; a webshop is just what its names suggests – a shop that allows you to sell goods on the internet.

Why is this rule so important? Because as an online business owner, you should first and foremost focus on profit. As dry and insensitive as it may sound, it’s the truth: without profit your online shop won’t survive. So in today’s article we’ll show you how to choose the right niche for an online store that sells, generates profit and supports your offline business.

1. Put customers’ needs first, and start from their problems

Creating your first online store is a unique experience: it’s exciting and challenging and gives you the chance to finally share your passion with the world by selling products you love and think could be useful to others as well. But here’s a fact: people don’t care about your products, no matter how cool, original or useful they are; people care about their problems and needs, so unless your products address those specific needs and solve those specific problems, they may very well go unnoticed.

Now, the ideal situation would be to find a niche that you’re passionate about and that comes with a growing community of enthusiasts who talk about those products, share recommendations on groups and ask questions on forums. People who are really into those categories of products and can help generate buzz, eventually turning into brand enthusiasts and advocates.

Here’s a practical example: let’s say you’re passionate about fitness and want to create an online shop and sell sports equipment online, from clothes to gym machines and so on. Let’s analyze this idea objectively: what is more likely to be purchased online, gym clothes or gym machines? Surely, a fitness machine is more expensive and could generate more profit, but how many people are likely to pay $3000 to an online store for purchasing a treadmill, without previously seeing it in action, in a showroom or gym?

On the other hand, gym clothes are affordable and you only need to know your size, preferred material and cut for finding great products online. Even if you’re not familiar with the brand, you may still pay for a pair of running shoes or a gym t-shirt if you like the color and it’s your size; the brand or name of the online store may not be that important.

So here are the facts in this case:

• there’s a growing online community of fitness enthusiasts and gym rats;
• people who hit the gym daily love buying new fitness outfits;
• clothes are more affordable than gym machines;
• fitness enthusiasts are more likely to have a gym membership and invest in gym clothes than to build their own home gym and thus invest in fitness machines;
• you can generate profits by selling a larger volume of products instead of selling more expensive products.

The first conclusion is therefore to focus on a niche that has the potential to generate profit. People will always need clothes, food, electronics, presents, decorative products, personal care items, kitchen ware and so on. These are products that are likely to be ordered online and people who are passionate about a niche can spend impressive amounts of money on products they like.

Just check the wardrobe or a fitness junkie!

2. Don’t go too broad: find a niche inside a niche

Zappos.com is widely recognized as a top online retailer for shoes. While they have expanded to sell clothing and accessories, their initial focus on shoes has solidified their reputation as a leading "shoe store" in the minds of many customers. Unless you have the resources of major retailers like Zappos or Amazon, it's advisable to narrow your niche and find a sub-niche to focus on. Instead of aiming to be the number one online shop for all things fitness-related, consider becoming the most reputable, beloved, and trusted retailer of fitness clothing.

By narrowing your niche, you create an opportunity to excel in a specific area and differentiate yourself from competitors. You can curate a selection of brands, including some that may be unavailable in other stores. Analyze your competitors' offerings and explore international webshops to discover beloved brands that could resonate with your target customers.

To illustrate this point further, let's consider IKEA. While they are renowned for their furniture, they also offer kitchenware. If you intend to sell furniture online, competing directly with IKEA might be challenging. Instead, it may be more effective to focus on a narrower category of products that is less readily available offline in your local area. This approach allows you to offer a more diverse and accessible range of products, catering to a specific customer need.

By honing in on a specific niche within your industry, you can establish yourself as a specialist and deliver a focused and exceptional customer experience.

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In this example above, a niche that’s very board would be “office furniture”, while “office tables” respectively “conference tables” would be narrower niches.So when narrowing down your niche, ask yourself questions like:

• Are these products more likely to be purchased online or offline?
• Are they easy to find in physical stores in my area?
• What can I offer to my clients and offline competitors can’t? If I offer discounts to make them purchase online, will I still be able to generate profits?

An online retailer that sells travel bags is more likely to generate consistent profits than one who sells tea; a client who needs a travel bag for an upcoming trip will probably buy it several days or weeks in advance, and will probably look for online options as well before going in a physical store, but one who’s out of tea packs will probably buy a new box on his way home from work.

3. SEO matters: build your online store with keywords in mind

A niche that’s very narrow may mean fewer monthly searches, but may also mean that keywords that are used in Google queries express the purchase intent. For example, a client who Googles “bikes online” may not be ready to purchase, but one who searches for “basket for Gazelle bike online” may be closer to a purchase decision.

So when planning your online store, try to think of it from the SEO perspective as well: do your keyword research and identify your competition, take a look at monthly search traffic for the targeted keywords, and try to visualize some headings for your store’s blog as well. Some products have a lot of features you can write about, so you can plan in advance complete blog series about those features besides creating product content for your online store.

If you want to create engaging content for your online shop, it's essential to differentiate yourself from competitors and avoid replicating their blog. Your goal should be to stand out and show customers that your online store and products offer something unique and special.

To achieve this, stay updated on trends and assess the potential market size for your chosen niche. Some products experience higher search volumes during specific seasons, while others are in demand year-round. Certain products may be more popular in specific countries or regions. Additionally, complex products with numerous accessories provide opportunities to educate your readers about their features and functionalities.

When selecting your niche, utilize a keyword planner to identify relevant keywords, both short-tail and long-tail. Consider factors such as monthly search volumes, seasonality, and latent semantic indexing (LSI) keywords. Analyzing your competitors will also provide insights into their targeted keywords and backlink sources.

Competition can be beneficial if there is a sizable market for the products you plan to sell. However, if the products have low search volumes (e.g., 300 searches per month) and there are already 10 well-established online stores offering the same products in your country or area, it may be wiser to explore a different niche that presents more opportunities for success.

4. Local availability and local demand

Expanding your online store to cater to multiple languages is a great initiative, but it's equally important to consider local demand in each specific region. Customers in your country or area are more likely to make online purchases, especially if you offer free shipping within the region. For example, someone in Spain would prefer to buy from a Spanish online shop rather than a French one, even if the price is slightly higher, due to the convenience and reduced shipping costs.

From an SEO perspective, optimizing your online shop for local searches can significantly improve your website's ranking and increase monthly visits. If the products you offer are not readily available in local physical stores, there is a higher chance that people searching for those products will make a purchase from your webshop.

If you observe a high demand for bikes through online searches in your area, it would be wise to consider selling bikes on your e-commerce website. On the other hand, if the demand for coffee makers is low, you may want to explore alternative niches or optimize your webshop for regions where there is greater interest in coffee makers. Additionally, providing incentives to your customers, such as rewards for repeat orders, free shipping, or loyalty points, can help attract and retain their business.

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This example highlights the importance of considering local demand when selecting a niche for your online store. For instance, in cities like Eindhoven or Amsterdam, there is a significant number of new students and expats each year, leading to popular search queries for "second-hand furniture" or "second-hand bike." While the competition may be high in this market, finding a unique selling proposition that sets your store apart can make it a lucrative opportunity.

Remember to keep these factors in mind as you choose the niche for your online store. Selecting a profitable niche is just as crucial as creating an SEO-friendly URL and name for your webshop. In upcoming articles, we will delve into these topics further and provide additional tips and recommendations for driving traffic to a newly created online shop.

If you already decided on a niche and you’re ready to create your e-commerce website, make sure to check our gallery of free e-commerce themes which allows you to create an online store in seconds!