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Features and Benefits of Niche Online Stores as an E-commerce Business Model

Many people believe that the golden years of e-commerce, when any nondescript online store could be profitable with minimal marketing costs, has already passed. Markets are divided between the leading players, marketplaces are rapidly opening up and offering the widest range of goods in hundreds of product categories, which suit every taste, and there is practically no chance to survive in such fierce competition. However, it is not quite true.
To date, more than 10,000 online stores on the Shopify platform have used our applications. We see clearly how different stores are developing and would like to share our observations, as well as talk about the benefits of niche online stores.

The main mistake of a beginner is to boil the ocean.

About 60% of those who start an e-commerce business believe that the most important thing in an online store is a huge range of goods and attractive design. Beginners buy multifunctional expensive themes and fill the store with a huge amount of goods, thereby trying to be like an online supermarket. Unfortunately, due to the lack of business experience, newcomers overlook a huge amount of nuances and difficulties to be encountered while working and promoting such a store, and after a couple of months, they close their brainchild being deeply disappointed and suffering losses.
Online stores can be divided into three large groups:
1. Multi-brand supermarkets that offer a large number of unrelated product groups
2. Marketplaces, the main task of which is to provide huge traffic of buyers to ensure the sales of their customers
3. Niche stores that specialize in selling a certain type of product.
Due to the lack of resources for professional development, promotion and logistics in a multi-category online supermarket, a niche online store is more likely to succeed in case a theme of a store is well-chosen. The fact is that a niche online store has a number of advantages over large multi-category online stores, not to mention marketplaces.

Weaknesses of multi-category supermarkets and marketplaces:

1. Information about the product on the site is missing or is presented in a small amount, insufficient for the buyer.
2. There is no expert advice, as consultants are not able to know the full information about products in all categories of the supermarket. In the case of the marketplace, consultation is completely absent.
3. There is no flexibility and individual approach.
4. There is no additional service connected with a specific category.
5. Low margin, you have to make a profit on the cycle of money

Advantages of niche online stores

An important advantage of a niche online store is the ability to trade with a large mark-up, compensating it with a verified range of goods, professional advice and all sorts of additional services.
Specialized online stores can influence the pricing policy of suppliers to get the lowest possible price for a particular product. Thus, promotions and special offers can be very attractive to buyers. Online supermarkets with a large range must maintain a certain level of profitability.
The range of niche online store will also be a competitive advantage. The business owner focuses on a specific niche and is able to work it out more competently, including the selection of the range.
Niche expertise is a key competitive advantage. You know your product better than the big players. You are able to provide your customers with more detailed answers to the questions about the product and to give advice on its use comparing with the operator of the multi-category online store call center. Marketplace excludes any expert advice.
Managing and maintaining a small niche online store is much easier than an online store with thousands of products and a complex structure.
You will spend less time and money on the quality promotion of a specialized online store.
Creating a specialized online store, you reduce your risks, since you will need much less financial investment, compared with the creation and promotion of a large multi-category online store, and there is no guarantee that the cost of it will pay off.
Despite all the advantages of specialized online stores, a novice entrepreneur should first examine the directions they choose carefully and pick a niche that is focused on repeat sales, and which also has the potential to upscale. As the owner of a specialized online store, your main task will be to capture the maximum market share in your chosen niche. To do this, you need to concentrate on the development of your business and sales growth to ensure a return on investment.
Some tips that might really help novice entrepreneur at the beginning:
1) When developing an online store and testing a niche of choice, use ready-made solutions as much as possible. For example, Shopify offers to open a fully-featured running online store rather quickly for a very small price and for a free period which is large enough, and Shopify App Store offers a huge number of various paid and free applications that will help in promoting, work optimizing and expanding the functional possibilities of your online store.
2) You should refuse to develop an expensive custom design. You better leave this stage for later when your store starts making a profit. Many platforms offer a sufficiently large number of ready-made free online store themes, which look quite acceptable.
3) Save money to invest in advertising. No wonder it is said that it is the engine of trade. The expensive design will not bring you as much sales as contextual advertising.
4) Do SEO optimization of your online store. Firstly, SEO-optimization of a specialized online store is simpler and less time-consuming in comparison with online supermarkets and marketplaces. Secondly, SEO optimization will provide you with an increase of potential customers from search.
Let’s summarize. Specialized niche online stores have a number of advantages compared with marketplaces and multi-category large online trading sites. This model is the best option for people starting to trade on the Internet. Niche online stores can provide the buyer with a personalized approach, which involves not only highly qualified advice, but also the so-called customer support, handling complaints and after-sales service, which in the conditions of the utmost competition become the most important competitive advantage.

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