If you’re having trouble coming up with your initial product concept, finding a specialized niche is an excellent place to start.

Besides, a solid market niche means one thing: a sure buying market. And therefore, if done right, it will definitely increase your profit.

What is a niche market?

A niche market is a component of a larger market that can be characterized by its own particular requirements, preferences, or identity, which distinguishes it from the market as a whole.

For example, pet products are a large market and can be segmented into various niches like products for dogs, cats, fish, etc. 

Even more specialized niches are possible; for instance, in the market for cat items, you may offer the top products for a certain breed of cat. 

Almost every market can be further segmented or modified based on the unique requirements and preferences of its consumers.

Advantages of a niche market

Compared to mass marketing, which aims to reach everyone and hopefully catch the right audience, one might think that targeting a specific niche might limit the business.

But the fact is the mass market may already be too saturated. Moreover, the competition between sellers is probably too tough to beat, especially if you’re just starting out.

Given that, carving out a niche is one of the best things you can do to improve your odds of success.

Here are other advantages of a niche market

Reduced competition

Since you’ll be serving a specific group or segment, there’s a big chance that there’s little to no competition at all. 

Products for a niche market are innovative and highlight specific features that only serve that specific market. Most companies or brands offer a jack-of-all-trades kind of solution, yet that solution usually doesn’t satisfy the actual needs of the target consumer.

Price range advantage

Another advantage of having a niche market is that you can set good price points that will reflect the exclusivity and availability of your products. Yes, the production cost may be higher, but you can easily recoup your investment because you’re offering a unique aspect in comparison to mass-marketed items.

Brings brand loyalty

One of the defining features of niche marketing is brand loyalty, and brand loyalty takes years to cultivate, especially when you’re selling online. 

But with niche marketing, you’ll be catering to their specific needs and wants, and therefore gives you a higher chance of satisfying your customers.

This give-and-take relationship helps build a strong bond between your brand and your customers. 

Become an expert

Niche marketing can help you develop your skills more quickly because it calls for more focused practice in one area. One advantage of niche marketing is that it helps you establish yourself as an authority or thought leader in your industry.

Nowadays, expertise is more considered than the actual brand name. This will give you more exposure since you will not only attract consumers but also the media. 

Remember, once you do something different from the crowd, you will stand out. 

How to Choose your eCommerce niche?

Here’s a common question: Do you have to be passionate about your chosen niche?

The truth is the idea that you have to be passionate about the things you are selling or that you have to be a user is a common misunderstanding about niche marketing.

Although this is a great advantage since you can create content quicker, and you can easily relate to your target audience and motivate them, it isn’t necessary.

In fact, even if you are passionate about your niche, it doesn’t mean you already know everything you need when it comes to selling it. You’ll be surprised at how others also experience the niche you are in once they enter the online marketplace. 

So how do you pick one?

For one, don’t choose a niche based on hype. Hype always dies down eventually.

What we consistently recommend here at Split Dragon is data analysis

And in this case, that would be niche market analysis. 

What is a niche market analysis?

Niche market analysis is the process of gathering and studying a niche market from a wider sector in order to spot opportunities. Niche market analysis includes analyzing your competitors and your target market. 

The key here is to precisely define your target market so you can effectively channel all your marketing efforts towards that specific niche.

The best niches are those that belong to a currently underserved market or to large market potential. 

4 steps in finding the next eCommerce niche ideas

Although there is a great advantage in turning your passion into a business, without doing research, it will be hard to achieve lasting success.

So, to help you find the right niche for your business, follow these steps:

1. Current trends

The best place to start with your eCommerce niche idea is to begin with the general market. Ideally, you should focus on the areas that you are knowledgeable about.

But you can also check out the current trends to see if you can find some specific niches that are either completely new to you or you have very little knowledge of.

Use these guide questions to help you identify possible markets: 

  • What are the most unmet, neglected, or underserved needs in that market?
  • Who are its ideal customers?
  • Are those customers accessible? 
  • What are the needs, motivations, and goals of this target market?
  • How can I solve their unmet needs?

Once you narrow down your list of potential niches, it’s time to dig deeper. Most of the questions can be answered by doing the following steps as well. 

2. Do a competitor analysis

A competitor analysis will allow you to study your competitors and spot missed opportunities or unaddressed pain points.

This means conducting a competitor analysis is necessary to help you make your business different and better.

Here’s what you should check out in your business’s competition:

Their pricing

In eCommerce, pricing is crucial since it will define the value of your product. This is the most tangible point that has a major effect on your customer’s buying decisions.

By knowing your competitors’ price points, you can safely decide on a competitive price without compromising your profit margin. 

Their market share

Market share is a key indicator of market competitiveness. In other words, by knowing the market share, you’ll know where you are in the market. 

For example, if consumers bought 100 bags and competitor A sold 50 bags, competitor B sold 30 bags and competitor C sold 20, then company A owns 50% of the market share and is the leading industry competitor.

To compute the market share:

niche marketing analysis: Formula


You can also use a market share analysis tool, so you can scope out the market size of your chosen product at any time, anywhere.

And to make all of these processes easier, you can subscribe to a competitor tracking tool where you can get automatic updates on any of the changes they’re making.

3. Target market analysis

A target market analysis evaluates how your product fits into a certain market and where it will gain the most attention. 

It provides a broad view of the industry and typically identifies possibilities and barriers for businesses wishing to enter that market.

Basically, it will help you understand your potential customers better. 

The most common methods for doing target market analysis are: 

  • Surveys
  • Focus Groups
  • Interviews
  • Customer observation
  • Projections

Create a document that contains all the data that was generated and written during the analysis. And if further information, facts, or conclusions are needed, add them.

4. Identify niche influencers

Once you’ve identified the niche that you want to venture into, it’s now time to consider your niche influencer. 

Influencer marketing is a powerful method in eCommerce, and they carry the most weight when they speak and engage in a niche. 

Since you’re targeting a niche, you don’t need an influencer with a huge following. Instead, you can connect to “micro-influencers” or those who have under 100,000 followers. 

These influencers are the most effective since they are usually more focused on engagement and specialization compared to the bigger ones. 

Beat the competition with Niche Marketing Analysis

Data is the most precious advantage you can have when you sell online. The valuable insights it provides will help your business get into a good position with minimum risk.

However, data gathering and analytics like niche market analysis will take time if you do it manually.

We are already in the technology age where you need automation to compete on a higher, if not global scale.

Split Dragon has created tools that give online sellers an advantage over their competitors. These tools are designed to give you all the necessary information in real-time, so you can strategize your marketing and selling efforts almost immediately.

Our market & niche analysis tools have helped not only big brands but also small businesses in scoping out their market strategies, including market visibility. Find out if it’s the right tool for you here or contact us for more detailed information. 

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