Standing out from the crowd is crucial in eCommerce marketing, but with so many online shops competing for the same audience, how can your online business truly differentiate itself?
Here are a few ways…
- Being the cheapest
- Having the best quality product or service
- Selling exclusive products
- Personalising your product or service
- Investing in your brand
While these are valid strategies, they often require a significant time or financial investment. However, there’s one powerful strategy that can set your business apart without needing a big budget and can pave the way for all of the above in one fell swoop. That strategy is called niching down.
What is Niching Down?
Niching down refers to narrowing your business focus to target a specific, often smaller, segment of a market – and it’s a great strategy for businesses of all sizes.
Rather than trying to appeal to a broad audience, a niche business hones in on a particular group of customers with distinct needs, preferences, or problems. This focused approach allows businesses to cater specifically to that audience, creating products, services, and marketing strategies that resonate deeply with them.
Why Would My eCommerce Business Need to Niche Down?
There are several situations where niching down might be a good option for your business. The most common scenario is where your business faces intense competition from selling in a broader market, perhaps you expanded too soon, or have never really specialised.
A great example of this is LEGO. In the early 2000s, LEGO, the iconic toy company, faced a financial crisis after expanding too quickly into areas outside their core product – like opening theme parks and producing video games. This over-expansion diluted their focus and led to financial losses. It wasn’t until they returned to their core offering – focusing on their beloved building blocks and creating sets based on popular themes like Star Wars and Harry Potter – that they regained their financial footing and re-established themselves as a global leader in the toy industry.
Another situation is when a business might notice that its products or services appeal strongly to a particular subset of customers, which means it can narrow its focus to serve this group more effectively and build better customer relationships and loyalty – becoming the go-to brand for that niche.
Similarly, a business might notice that a specific group of products or services are outselling the rest of their offerings and providing a better return on investment if they were to double down on them.
Nintendo is a great example of this. After years of trying to compete directly with Sony and Microsoft in the high-powered gaming console market, Nintendo shifted its focus to a more specific audience – casual gamers and families – with the launch of the Wii in 2006. Even now, the Switch doesn’t directly try to compete with the Playstation or XBox, it’s a different core audience.
Whatever the reason, any business trying to compete in a broad market against its rivals faces a tough time, and if your business has limited resources or a smaller marketing budget, niching down can make your marketing efforts more targeted and cost-effective, as it focuses on a well-defined audience rather than trying to appeal to everyone.
The Benefits of Niching Down:
- Reduced Competition: By targeting a specific subset of a market, you face fewer competitors than in a broader market.
- Increased Customer Loyalty: A specialised focus often leads to stronger customer relationships, as your business is seen as a go-to expert in your niche.
- Improved Marketing Efficiency: With a clear understanding of your audience, your marketing efforts, especially your paid media campaigns, become more targeted and effective.
- Higher Profit Margins: Unique or niche products or services can often command premium pricing due to their specialised nature.
How to Find and Choose Your Niche
Finding the right niche for your business is obviously going to take some consideration and should be considered a data-led exercise wherever possible, looking at customer data, shopping data and market trends.
Of course you might just be starting out, with little to none of your own data to work with. Either way, here are some steps to help you identify the perfect niche for your ecommerce business:
- Identify Your Expertise: Every business has its unique strengths, and so does yours. Begin by identifying what you and your team are good at and what you are passionate about. Focus on the areas where you have the most knowledge and experience. When you genuinely love and understand a product or service, it’s easier to market it effectively, create engaging content, connect with your audience, and establish yourself as an authority in your field.
- Research Market Demand: Look at your current offering and use tools like Google Trends, keyword research, and social media listening to gauge interest in various niches. Look for niches that have steady or growing demand but are not oversaturated with competitors. Look for your place in the market.
- Analyse the Competition: It’s always worth keeping your eye on your competitors to see what they offer, what their strengths are, and where there might be gaps in the market. Bear in mind, a niche with some competition is good as it indicates demand, but too much competition can make it hard to stand out. Find the right balance in a growing trend and that’s the sweet spot.
- Define Your Audience: Narrow down your target market by demographics (age, gender, location, etc.), psychographics (lifestyle, values, interests), and behaviours (buying habits, brand loyalty). The more specific you are, the better. Try to build a strong picture of who your audience is made up of.
- Evaluate Profitability: Not all niches are created equal when it comes to profit potential. Consider the purchasing power of your target audience, the average transaction value, and the potential for repeat business. So you’ve found something nobody else is doing – why is that? It could be a non-starter.
- Test Your Idea: Before fully committing, test your niche with a minimum viable product (MVP) or a pilot campaign. Use this to gather feedback, gauge interest, and refine your approach. Use feedback to help improve your products and help your business take off.
A Great Example of Niching Down
Liquid Death – Murder Your Thirst
Liquid Death is a striking example of a brand that successfully found its niche in the beverage market.
Target Audience:
Liquid Death identified a niche market within the broader category of bottled water – namely, a younger, rebellious audience who might be uninterested in traditional, or “boring”, water brands like Evian or Buxton. By targeting this demographic, they differentiated themselves from the more generic options available in the market. I mean, come on – it’s water!
Unique Branding:
You can’t mention Liquid Death without mentioning the brand’s edgy, irreverent branding and packaging – designed to appeal to a modern, alternative culture. The use of a heavy metal aesthetic, including skull imagery and bold, provocative language, helps them stand out in a category often dominated by more conservative brands. Even the name alone – who wouldn’t be intrigued by a product called “Liquid Death”?
Product Positioning:
Instead of just selling bottled water, Liquid Death positioned itself as a “hardcore” choice for people who like to make a statement. Whilst you may think it’s over the top, for what is effectively just water, their tagline: “Murder Your Thirst” has created a memorable, strong brand identity that resonates perfectly with their target audience.
Turning Specialisation into Success
Niching down can be a powerful strategy for eCommerce businesses and online shops looking to differentiate themselves in a crowded market. By focusing on your audience and catering to their unique needs, businesses can build a strong, loyal customer base, reduce competition, and often command higher prices for their products or services.
So, whether you’re just starting out or looking to refine your existing business strategy, consider niching down as a way to stand out and thrive in the world of ecommerce.
Want to talk to us about your eCommerce business and how we can help boost your brand visibility and sales? Get in touch today.