Running an online shop: Finding your niche

March 3, 2011

I was e-mailed recently by a fellow craft shop owner, congratulating me on my move to full-time motherhood and also praising what I did with Sewbox and asking for some advice.

“How did you find your niche market? As well as selling on-line, I have a small high street shop and because of our name we could sell so many craft things that would be a niche – as there aren’t any craft shop, wool shops, haberdashery or model shops near by. I dont know wether to specialise or just keep adding new product ranges from other areas.”

One of the golden rules that has been drummed in to me since university: in order to gain new customers, you need to offer something different for your customers (your unique selling point, or USP). The “something different” doesn’t have to be unique products (though it helps): it can be a better website, better customer service, and/or a different shopping experience. But you need to give your customers a reason to shop with you, rather than somewhere else.

To find that niche, that ‘something different’, can take time, patience, and a lot of trial and error. It helps to really get in to the same mindset as your target customer so that you really understand them, and can think about the sorts of things they might want that are difficult to buy at the moment, or some other way you could make their lives easier. It’s hard to find gaps in the market if you can’t think like one of your customers.

In trying to find your niche, don’t just ask your existing customers. You also want to get feedback from potential new customers, especially ones who may have looked at your shop but then decided to buy elsewhere. In a way they’ll have the most valuable feedback, about why they prefer a competitor’s store to yours. Think about where your target customers hang out, either online (which forums? which Facebook pages?) or in bricks-n-mortar land. Look online in forums, and blogs. Become an active member of online communities and join in conversations – what are people looking for that’s hard to find? What are their current frustrations with what’s available in the market? What do they have to buy from abroad? You’ll find so much information this way and you’ll really be able to start thinking like a potential customer and finding a great niche for your business.

You could also run a competition survey (make sure one of the questions is “Are there any products you wish we stocked?” or something similar!) and publicising it either by various social networking channels (Facebook, Twitter, blogging etc) or, for a bricks and mortar stores, asking passers-by in your area.

The very reason I launched Sewbox was because I was looking for something specific online (all-in-one sewing packs), and I couldn’t find it. And at the time, most of the dressmaking shops online were not very user friendly, were targeted squarely at the more mature customer, and not very appealing to the 20-30-something sewers. When I realised there was a gap in the market, the original idea behind Sewbox was born: a shop for modern dressmakers, selling carefully selected beautiful fabrics, modern sewing patterns, and time-saving all-in-one sewing kits. I had a few USPs for my customers: an easy to use shopping experience with a very user friendly website ; lots of beautiful printed dressmaking fabrics (as opposed to quilting cottons);  I sold sewing patterns that were hard to find elsewhere in the UK; and, of course, the all-in-one sewing packs were a new concept for dressmaking.

Since then, lots of lovely new shops have popped up, which brings me to my next point: how important it is to continually review your product offering and your niche, based on customer reactions and feedback. Be prepared for new competition, even if you have identified a gap in the market that no-one else has thought of yet: if it’s a good idea, chances are that others will follow you. And take a close look at what your customers are buying, and be sure to ask them for feedback: are there things they would buy if you stocked them? Or if they haven’t bought certain items you sell, is there a reason? Maybe the way they’re presented, or maybe the product description is confusing, or the perception is it’s too expensive? How about overall shopping cart behaviour – if they buy one item from you do they tend to buy another type of product at the same time or not? Finding your niche is a ongoing journey and you’ll continually want to adapt and refine your model based on what is working and what isn’t.

For me, I decided quite quickly that the model of selling all-in-one dressmaking packs wasn’t going to work out. It was one of my niche products, and they were quite popular, but it just wasn’t making business sense. The profit margin on the packs were lower than selling the individual items separately, but the work involved in putting them together much higher, so it was a time consuming process that wasn’t very profitable. Another important point: there’s no point in offering a niche product just because no-one else is doing it, unless of course you are so passionate about your hobby that you don’t mind working for free! Sometimes, if there is no-one else offering that product, there might be a very good reason. I since spoke to someone from one of the big 4 pattern companies and they told me they tried something similar a few years back and it didn’t work for them either.

But don’t necessarily let that put you off altogether – the challenge here is, is there a way to produce and sell the packs profitably? There are several things I could have tried to see if it would work for me, but I had to shelve these ideas mainly because of being a mummy to a young baby at the same time, so I thought the simplest solution was to refine my offering and drop the packs for the time being.

Focus, focus, focus

Something else I learnt through experience was the importance of focusing on a particular target customer or part of the market, as opposed to trying to please everyone (and thereby pleasing no-one). At the beginning I went off in a million different directions, chasing different product ideas and basically trying to do too much at once. I spread myself far too thinly and ended up not being able to devote enough time to any specific product area, so my early offering was a mix of a bit of this and a bit of that.

Decide on a specific set of customers whose requirements you can meet, rather than trying to be all things to all people, and then satisfying no-one. If you offer a little bit of everything but not much range in anything, people are unlikely to think of you as the shop to go to when they need something specific. As an example, let’s say you are a general craft shop that sells a few fabrics ; a few balls of wool; two or three types of knitting needle; a few cross-stitch kits; and a few items from lots of different types of craft. If a potential customer is looking for some knitting supplies, they might look at your store and think “hmm, I really want a different colour of wool and they don’t have much choice: and I want a different sized knitting needle which they don’t offer. I’d better find a shop that specialises in wool”. The kind of customer most likely to shop at your store is someone who is buying some general supplies for lots of different crafts at the same time, which isn’t how most crafters tend to shop.

So unless you have unlimited resources and can offer extensive ranges across several different crafts, you are far more likely to be successful by picking a one or two product areas and really focusing on those. After I decided to focus on just my core customer and the core product offering they’d be looking for, there was a smaller but deeper range and it had a great impact on my sales as I could concentrate more on getting those areas right and promoting them.

The online market vs. bricks and mortar stores

My reader that asked me about how I found Sewbox’s niche runs a bricks and mortar shop as well as an online shop. I don’t profess to know anything at all about running a bricks and mortar store, but thinking about it I imagine that the issue of finding your niche market has some very different considerations. On the internet, it is easier to run a profitable business for a niche market, because the size of your market is so much larger. The potential catchment area of a bricks and mortar store is much smaller, and a shop offering a narrow niche may not be feasible. As an example, Sewbox specialises in stylish sewing patterns that are hard to find elsewhere (example: Hot Patterns) and its marketplace is the whole of the UK & Europe. A bricks and mortar store in a medium sized town may have a marketplace of only 250-500k people and may not be able to sell enough of these niche sewing patterns to make the business feasible.

All I can suggest is that it’s all the more important to get out there and research: decide what type of customer you want to attract and concentrate on trying to think like them. Ask your existing customers; try and identify sources of new customers; and ask them: what do they like about your shop? what don’t they like? What would they change? Would they prefer a narrow, deeper range in your shop or a little bit of lots of different crafts?

I’ve ended up writing rather a long essay. If you’re still reading, thank you! Please let me know by commenting, if you found this blog post useful – I’m thinking of doing a series of posts about running an online business if there’s enough interest. Oh and, if you have a burning question about running an online business send it to me and maybe I’ll answer it next (if I can!).

Oh , and here’s a random picture. Of a snail. When I typed in “niche” in to istockphoto it was the most interesting one that turned up. And I hate writing a blog post without pictures.

{ 3 comments… read them below or add one }

Cally Robson March 3, 2011 at 9:11 pm

Great article. Even without the snail.
I’d love a copy for the Members area on She’s Ingenious! website http://www.shesingenious.org
With full credit and link back to your blog.
May I?
Best, Cally

Reply

Claire Hemming March 4, 2011 at 9:31 am

Thanks for a great and helpful article. I’m just setting up an online business and I’m glad that I am not the only one with a garage that resembles Aladdin’s Cave, although perhaps that might be less diverse! Good to know it’s ok to bumble along a bit in the beginning, but that it builds experience in the long run. Thank you – would love to read more.

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Vicky Martin March 22, 2011 at 3:40 pm

Good article, I think articles on running on online business would be great, especially in the current financial climate and people trying to get going on their own. Thanks x

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