Guide to Finding a Profitable eCommerce Niche

A common way for many online retailers and eCommerce businesses to start out is by carving out a niche, and then gradually expand their product selection. Like any other business model, online retail may require some trial and error and plenty of research, even well before you start thinking about finding premises or getting set up with pallet racking storage systems for your warehouse. Use these practical strategies for discovering a profitable eCommerce niche.

Benefits of the Niche Model

Paul Greenberg, the co-founder of the online department store DealsDirect, has stated that if he was starting from scratch today, he would focus on a niche opportunity.

It’s useful to remember that the niche business model can come with a lot of benefits. These largely centre around the fact that it usually takes little investment capital to get started.

  • Product differentiation. Finding your eCommerce niche allows you to differentiate your products from others, a vital strategy for getting ahead in the online environment.
  • Start up capital. Relatively smaller amounts of investment capital is required to get started, and as a result, online retailers can reduce or eliminate risk.
  • The online retail environment. The online retail environment is uniquely suited to some niche markets. Businesses can make use of tools to build trust and a sense of expertise through dedicated eCommerce sites for a specific product range.


It’s ideal to choose a product or product range with which you already have some familiarity, and all the better if you have passion for the product, as this can help you better connect with customers and know what they’re looking for.

The bottom line is that it should ideally be a product with which you’ll be able to understand and sell.

  • Create a list of products that you have interest in, familiarity with, or are able to understand and learn about.
  • Note down as many products as you can come up with. Don’t censor yourself at this stage.

Once you’ve created your first list of products, it’s time to shortlist candidates.

  • Group products into categories if possible. Is there an overarching theme?
  • Now apply a critical analysis. Which products can you reasonably expect to attract good demand, find a good supplier, and make a profit online?
  • Narrow down your list until you have a manageable shortlist of products.

Don’t throw away your brainstorming list. This can prove useful later on when you’re expanding your online store.


The next step is to find out as much as you can about all aspects of selling the products on your shortlist. Use the internet, talk to industry bodies, and consult experts where appropriate.

Questions to ask during the research stage include:

  • How will you find and source the stock? Will suppliers be local or based overseas?
  • What are the likely margins on the product?
  • What is your target market? What are their demographics? What are their shopping habits?
  • Is there a market for the product? How much competition will you have?

Market Testing

Market testing doesn’t have to be a formalised or costly process. You can make use of popular online shopping sites, and auction sites. Online marketing tools like Google Adwords Keyword Tool can be used to boost your research and identify potential market volumes for niche markets.

Identifying Your Niche

After conducting research, you should have sufficient information about the product, market conditions, and competitors to make an informed decision. Depending on your budget, it may be a good idea to focus on just one or two top niches as you’re starting out. Once you’ve settled on your niche, you’ll need some storage and shelving systems, appropriate IT infrastructure, and a good-sized warehouse or storage space to move into the next phase of marketing and selling your product.

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