Last Updated on June 2, 2022

Is Ecommerce Oversaturated for My Niche

The conversations around ecommerce have changed. Not long ago, online selling was a world that ran in parallel to regular retail, each sticking primarily in its own lane. Brick-and-mortar stores did their thing while a growing world of online merchants did theirs. Digitally native brands were born, and at an increasing rate, they had less and less to do directly with the development of products they sold. Dropshipping order fulfillment was on the rise, and an entrepreneur simply had to decide which manufacturers’ products to sell directly to consumers.

Creating a coherent brand for each seller was, of course, where the work came in. A seller couldn’t just link a dozen dropshipping apps to a Magento storefront and then expect consumers to buy. Instead, each seller had to decide how his or her brand would be defined, what specific kinds of products it would sell, and how it was going to compare against the next guy doing the same thing.

With the bar to entry nonetheless set relatively low for willing entrepreneurs, the question then became:

Is My Niche in Ecommerce Over Saturated?

For example, you could say that the last thing the internet needs is another t-shirt seller. As a product of this and other niches’ saturation, ecommerce has come to revolve around creating powerful brand differentiators from one seller to the next—even when their products come from the same dropship manufacturers.

Today, the focus has shifted in an unprecedented way.

Whether an ecommerce niche is saturated is no longer a guessing game for the entrepreneur searching for an entry point into the market. Instead, ecommerce is now a necessity for almost every industry, and the question is not just whether a niche is over saturated but what a brand can do about it. In the face of the 2020 pandemic and worldwide lockdowns, online shopping became the principal access point for consumer purchases. Brands quickly had to embrace a multichannel approach to reach their customers.

In the rush to ecommerce, many industry niches have tipped the scale and become over saturated. Traditional borders of market share have been blurred now that online sales and worldwide shipping overshadow local commerce. What used to be competition from a shop down the street has become a much larger race that everyone is running in.

In the context of this new world, how can a brand determine the level of market saturation they face in a niche? Is there such a thing as a niche that isn’t over saturated? With all this competition online, what is a brand to do?

Your Ecommerce Niche Can Be Adjusted from Your Physical Store Niche

Online ecommerce has been overcrowded as long as it’s been around. That said, there are specific corners of the market that are particularly bloody seas of brands fighting for market share. There are also, thus, corners of the market that are still less competitive (at least by comparison).

For the early adopters of ecommerce who were quick to hang digital shingles with any combination of drop shipping integrations, their choice of niche was a fun question to think through. For brands entering into ecommerce in response to the “digital-or-die” market push from the pandemic, however, choosing a niche isn’t a possibility. Existing brands already have a niche and are stuck at evaluating how saturated that niche is in ecommerce. Right?

Sure, but those same brands already cubbyholed into their corner of the market might still consider related-but-different niches for their online presence.

An ecommerce niche is the narrow category into which a brand’s products fall. The narrower a niche is, the easier it is for a brand to stand out in that niche, though the target audience will be smaller. A manufacturer of women’s shoes will have a larger audience than a manufacturer of high-heeled women’s shoes. If the payoff of the smaller audience for high heels gives the brand more market share to take over, then the more specific niche will be the better one to focus on.

Brands with existing niches and product lines can get more specific with their niche online as a strategy to stand out.

Don’t be scared to eliminate potential customers if your brand can create greater demand among fewer competitors in a niche where the target audience is crazy about exactly what you sell. Marketing also gets easier the more specific your niche because you can hone in on the specific pain points of the target customer.

Imagine you sell furniture and are known as the “budget furniture brand.” Then COVID-19 hit, and you began the move online to sell directly. Budget furniture was already selling through the roof by other sellers who saw the spike in need for in-home offices, but none of them specialize in budget furniture for small homes. So, you feature your small-home-friendly furniture online. Your collapsible budget furniture is what sells the best, and over time you realize that you’ve found your very own micro-niche: collapsible budget furniture for small homes.

No one can compete with you in that space. You pretty much own it. Your in-store sales continue to cover the needs of a wider audience, and as lockdown restrictions loosen you see those brick-and-mortar sales pick up. Your in-store success takes nothing away from your online success in your new micro-niche, and your brand enjoys each channel for what it offers.

Marketplace Search Bars: Your Barometer to Check Saturation Levels

Whatever online marketplaces you’re thinking of selling on, go to those sites right now. Type in the niche you think you’ll sell the most in, and you’ll immediately see how many sellers there already are.

If you’re discouraged by the number or size of sellers you find, don’t worry. On the same marketplace, you have the perfect tool to start thinking about micro-niches you can carve a bigger piece of the pie from. For example, take Amazon. If you type in “furniture,” you’ll see over 30 sub-departments within that bigger niche. Want to browse living room furniture? Perfect, click on that next. Even then, you’ll find options like “TV and media furniture” and “living room chairs” as smaller niches to choose from.

This exercise helps you see how niches are broken down by the marketplaces you’re most interested in selling on. It helps you get the wheels turning on which niche you could best stand out in by seeing what specific products of yours are the most sought-after, and which sellers are already competing for that business.

If you’re entering ecommerce for the first time and have an existing in-store presence with a well-defined niche, consider starting with a shorter list of products in a super-specific niche online. This will allow you to determine how saturated your existing or potential niches really are and you will also find a few profitable website ideas to implement.

Use Competitors’ Reviews

Another element of just how saturated your niche is will be made apparent by online reviews. If there are loads of reviews for products like yours, but they’re often negative, that means your niche might have a lot of sellers who aren’t reaching consumer expectations. Online reviews have become even more important in the pandemic era with consumers buying items they were accustomed to being able to first hold in their hands in a physical store. Reviews also help you assess the saturation of your niche in three ways:

  • 1. An unusually high number of bad reviews could mean the competition is not meeting consumer needs
  • 2. Specific complaints in bad reviews expose what your brand can do to stand out
  • 3. Specific comments in positive reviews show you where the bar is set for you to even enter the competition in the quality of products and level of service

Customers who take the time to leave a review always have strong opinions. Use those reviews in your target niche as a barometer of market saturation. Reviews can be found anywhere from ecommerce marketplaces to social media channels, particularly on the profiles of your competitors, so be sure to look around and take notes.

If Your Niche Is Over Saturated…

There’s a high likelihood today that your niche has already reached a breaking point in market saturation. Start by side-stepping some of the tougher competition by choosing a micro-niche. There are also additional ways to make lasting impressions if you at least take saturation into account.

Saturation, after all, means there’s strong demand for your product.

Start by giving your customers something your competitors can’t (based on the research you do of their reviews). Or, get more strategic than the next guy when it comes to your keyword research and product data optimizations. If your product listings are strategically superior, and you optimize your product pages for a more pleasant and actionable user experience, you’ll provide a better buying experience that will snowball into more recommendations and more loyal buyers.

The rise of ecommerce platforms and drop shipping sales changed the landscape of retail forever. Then, right when savvy sellers were starting to stand out on the bright ecommerce horizon, a global pandemic hit and everyone had to move online. Every industry has been shaken, and with all the new competition, ecommerce niche saturation has been taken to a new level.

An over saturated niche doesn’t have to mean a dead end for your brand selling online. Knowing what level of competition you face is an important first step, and then succeeding in your market can be a question of using the right strategies to stand out from the crowd.

Author

I am an eCommerce consultant, a member of the Forbes technology council with a decade of experience in the ecommerce development segment. My expertise can make your business overcome any obstacles while you are dealing with the Magento ecommerce platform!