Select a Niche Market for Ecommerce

By: Ray Yee

Choosing a carefully pinpointed niche market should be one of
the first steps that an internet business owner has to take. A
very common way of describing a niche market is ‘a targeted
group of individuals with very specific and similar needs or
interests.’ These people engage in similar activities and hence
they would most probably demand the same goods or services to
cater to their needs. Online businesses that drop ship their
products to their customers would thrive by focusing on a
specifically targeted niche market. In this article, I would
focus on the advantages a niche market can bring to an online
Drop Ship business. This article also provides you with
practical steps for you to select your niche market.

By focusing on a specific niche market, Drop Ship businesses
gain an edge because they are like ‘monopolies’ for that
particular niche. The ‘monopoly’ for that niche would be able to
provide a much wider range of products and better services for
that market, enabling it to dominate. Because there is a very
large number of niche markets on the internet, most Drop Ship
businesses are able to survive and thrive online by selecting a
niche that no major competitor is targeting, and directing their
marketing efforts to their respective niches. With limited
resources, a small Drop Ship business just starting out cannot
hope to sell ‘mainstream’ products that are also supplied by
huge competitors like Wal-Mart.

It is critical to first establish a market with an unfulfilled
need and then develop products or services to meet these needs.
Most online ventures fail by first selecting a good product, and
then looking for the market for that particular product. They
fail when the product’s demand is insufficient, or when the
product already has a strong competitor supplying to the market.

The internet is not the only medium where niche marketing
dominates. In our corporate world, the majority of the
successful companies also selects a niche market and develops
products or services that cater to their specific niche.
Microsoft develops software as operating systems and platforms
for computers. Nike offers shoes and footwear targeted at the
sporting population. This illustrates the importance of first
selecting a niche market for your business to focus on.

There are a few simple stages in the selection of a niche market:

1) Brainstorm for niche markets that are related to your area of
interest or expertise. It is simply easier to succeed if you
focus on an area that you are passionate about and have the most
expertise in. This way, along the learning curve of starting an
online business, the frustrations that you face along the way
will be reduced because whatever you are doing feels more like
fun instead of work.

2) Research the market in detail. This involves producing a
detailed profile of your market, including the estimated demand
for your products, the products in the niche likely to have the
highest demand, and where these prospects normally congregate
online.

You can use the free Overture search term suggestion tool to
gauge the market size for the products you have in mind. It is
available at
http://inventory.overture.com/d/searchinventory/suggestion/.
Simply type in the product keywords and this tool can suggest
more specific keywords, and also the number of times this word
has been searched over a period of time.

Chat rooms, forums and newsgroups are where your target market
normally congregates online. By monitoring these discussion
boards, you should be able to determine the evolving needs of
your target market, and what new product is likely to be in high
demand soon. Forums can also be a good source of ideas for your
products. Google Groups is a good place for you to start finding
newsgroups or forums for your niche market. It is available at
http://groups.google.com.

3) Select a niche market that has a need not currently being
adequately met instead of targeting a niche whose need a
competitor can fulfill very well. From the newsgroups,
discussion boards and forums, you can get valuable information
about business opportunities. For example, if consumers voice
out their dissatisfaction about any unfulfilled need, you can
quickly find and offer any product as a new solution to their
problem. This fills a ‘gap’ in the market and your business is
established.

4) For the niche markets that do not have their needs adequately
met, conduct research on the major businesses in that field. If
there are no major competitors, you can congratulate yourself on
finding a suitable niche market for your Drop Ship business. If
there are several major market players, you have to either
develop a Unique Selling Proposition (USP) to differentiate your
products from your competitors, or you can narrow down the
definition of your niche market to a more specific level. For
example, if your niche market is the group of individuals
passionate about oil paintings, you can narrow down your focus
to abstract oil paintings by Rembrandt or Renoir.

If you want to be a retailer of Rembrandt oil paintings, for
example, note that your competitors are not the websites selling
oil paintings from all artists, but the websites that focus only
on Rembrandt oil paintings. All things being equal, an online
shopper will certainly choose a website focusing only on
Rembrandt oil paintings, instead of a website selling paintings
from all the famous artists. This is the edge that a niche
market can give to a small Drop Ship business.

You can use the free Overture ‘View Bids Tool’ available at
http://uv.bidtool.overture.com/d/search/tools/bidtool/ to gauge
the competition for your products. Overture is a Pay-Per-Click
search engine, which provides search results ranked in order of
how much businesses are paying for every click-through to the
business websites. This tool lists the amount that each business
is paying for every click by visitors. The higher the bid for
the keyword, the more popular the keyword, thus the stronger the
competition you face for your products.

5) Test your market. Once you have confirmed your niche market,
you must test your products for that market. Start off your
business by selecting a few of the most popular products and
placing them in your catalogue. Next, you announce your products
to newsgroups and discussion boards and gauge their response to
your products. Observe how well the individuals are reacting to
the introduction of your products. If you did your research
properly and fulfilled a need well, most probably you would
receive a very warm response from forums and newsgroups.

Finally, as the online retailer for your niche market, you
should aim to be the best online resource for the market.
Articles, strategies and guides should be included on your
website to provide your niche market with valuable information.
For example, you can write your own guides on how to properly
use tools for magician tricks if that is what you are selling.
However, it is not advisable to start off by selling an enormous
catalogue of products. You should first establish your
credibility by supplying your market with useful know-how for
the products, and recommending them a few popular products. As
your business stabilizes, you can slowly expand your business
catalogue to include other products.

Selecting a niche market is one of the most important steps for
setting up a Drop Ship business. It lays the foundation for how
your business will develop in future. Thus, spend some time
carefully deciding on your niche market before taking the plunge
into your business.

You are welcome to reprint this article as long as you include
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article remains unchanged.

Ray Yee:
About the Author: Ray Yee is the founder and president of
Dropshipperscentral, a website which provides a wealth of
informative articles, tips and resources on everything you’ll
ever need to know about setting up a Drop Ship Business and
marketing it. Click here: http://www.dropshippers
central.com