How to Find an Interesting Niche for Your Shopware Store
Interesting Niches for Your Shopware Store
Sometimes, it makes much more sense to find a niche instead of going into the same direction everyone else is heading. The saying better a big fish in a small pond than a small fish in a big pond greatly summarises the advantages of operating in a niche. But what niche should you pick for your shopware store? A good idea is finding one that you actually care about. This will make it so much easier for you to learn more about it and pursue it long-term. Both aspects are important if you actually do plan on achieving some success with your online shop.
What is a niche and what advantages does a niche offer?
A niche is essentially a specialised part of a business area. In terms of clothing, this could be clothing for especially tall or comparatively small people. In terms of food it could be a shop for seafood or even more specialised just for Japanese seafood. Some might fear that the more specialised a niche is, the smaller might its revenue be. Such worries are certainly understandable. Yet, they can also be completely unwaranted. If you choose a very attractive niche, you might not have to sell a lot of items, because when you do one sale, you already have excellent margins. This rule generally applies to premium/luxury items.
Is it a niche or a fad?
It is always a good idea to recognise a niche early on. An important question will be, if the niche is here to stay or a fad which will be disappearing in a few months. Why does that matter? Mainly for your risk management. It is great to have a lot of stock, if demand is high. However, if you have too much stock and there is no demand, you might have a few problems. One issue is the capital at hand. Instead of having cash available, your capital has been invested into inventory. If you are operating with perishable goods (these can be food or drinks, but also cosmetics) your money might also become worthless, if you don’t manage to sell those goods before they hit their expiration date. At times, it is close to impossible to foresee, if your niche is here to stay or just a trend that will disappear soon. Please keep that in mind when ordering new stock.
Do entry barriers exist?
This is an important questions to which you should have some answers. Those entry barriers can be licences or certain laws. It can also be a large amount of capital that is required to start a company. Maybe there are also ways to operate with less capital, i.e. by using drop shipping or leasing goods. You should definitely look at some of the entry barriers certain industries/niches might be having.
Research is always a good idea
Research matters for a number of reasons. First of all, before you decide to invest a certain amount of money into something, you should always conduct some research. Maybe the niche that you picked is already saturated with entrepreneurs. Or you can find a way to market your goods that other competitors have not thought about. Please don’t just invest a lot of money into your niche without properly informing yourself. This is like gambling, with the difference that you might be more likely to actually gain money when you gamble.
It is not always very easy to find a niche to pursue
How will you market your niche products?
Whenever you become a shop owner and set up a Shopware store, you will have to think about how to market your merchandise. These days, it is a good idea to combine both online and offline. There are quite a few things you can do online. Of course, using different social media platforms is important. Depending on who your target audience is (mostly in terms of age and income), some platforms might be more suitable than others. Yet, if you have different target audiences, you might also use multiple social media platforms with different content; customised to the relevant target audience. In addition, it is also a good idea to look at SEO ( Search Engine Optimisation) and SEM (meaning paid ads like Google Ads or Facebook Ads). Furthermore, it can also be a helpful idea to work with a newsletter. Please also be advised, that it will take some time for your marketing efforts to show results. Some shop owners tend to be a bit impatient; especially when you are starting out with your marketing efforts, patience is a very important virtue. In addition to online marketing, there are also quite a few advertising efforts that can take place offline. You can print flyers or buy an ad in a local newspaper. You could also have an open day with free food and drinks, if you happen to have a physical store front. Playing the local angle can generally be a good idea; that way you might also be able to get on a local radio or a local TV show and talk about your challenges and hopes as a local business owner.
Build up a good reputation
At first glance, this might sound a bit like a no-brainer. After all, who wants to have a bad reputation? Yet, it is not that easy to build up a good reputation. It tends to happen over time. Meaning you have stayed in business for a while and helped customers, as well as the community. As odd as it sounds, people do sometimes remember really small details years later. So, when dealing with customers, it might make sense to keep that in mind and try to treat them as good and authentic as possible. Also, if there is a chance to help your local community, think about doing so. This can help you to start a dialogue with local people, but can also benefit your shop.
Finding problems and solutions for your Shopware store
When looking at a niche, it can also be helpful to identify a problem. Sure, if you are selling consumer goods like party hats or video games, the problem might be just to escape boredom. But some niches can solve bigger problems. If you are still looking for a niche to engage in as a business owner, try to find a problem that multiple people have. There might also be a solution on the market, but maybe this solution does not solve the problem well and you could come up with a product that solves the problem better or just at a cheaper price. As you can tell, being active in a niche does not always just mean to buy goods and sell them again. At times, it can also mean to manufacture your own goods, because they are superior to what is currently on the market. You can then go on and sell them via your Shopware store.
What’s your margin?
If you want to stay in business for some years to come, you should calculate well. In most cases this means having solid margins. Sure, if you sell something for 1 Million Euros and get only one percent of that, you would still make 10.000 Euros of that sale. But, most people don’t sell goods that expensive and you’d still have to do so a few times in order to pay for all our bills. So, if you are exploring a niche, please look at the margins you would have from selling goods, especially after you deduct your costs for further aspects like rent, advertising and employees. At the end of the day, you still want to make a profit. That is only possible, if you earn more than you have to pay.
Customer loyalty matters a lot
As a responsible business owner, you should think about how to get and increase customer loyalty. There are different ways to do so. The easiest way is monetarily, i.e. by providing discounts or a free item for regular customers. In addition and this might bring you even more loyalty, it is a good idea to act as a trusted source. Even when a customer comes to your store or contacts you without a buying intention, gift them with some knowledge or entertainment. That way, they will realise that you not only want their money, but actually care about the human being in front of you.
What does the market size look like?
This questions tackles a few important points. One of them is the number of people interested in a certain niche. Is the market even large enough for numerous competitors or is the demand for your products simply not big enough? Is there a way to increase the market size, i.e. by advertising heavily and getting people more interested in a certain niche/particular products? You should also know the players that are currently operating in a niche and think about how you can legally obtain some of their market share.
Identify threats to your niche
One factor that will affect your margins are threats to your niche. These can come in many forms. One is an increased number of competitors. The more companies sell a certain good, the stiffer the competition between them for customers. It is thus always a good idea to keep an eye on your competitors and what changes they are implementing. Sometimes, new laws are enacted. These might require further steps from you as a business owner or from the buyers (which can be consumers or other businesses; depending on what niche you are operating in). Also, some businesses are only seasonal. Let’s say, your Shopware store is are selling Christmas items. Sure, some people will buy these items during the year. But the lion share of your sales will be 1-2 months before Christmas. This means during the remainder of the year, you should either sell something different or have 2-3 months of such fantastic sales numbers that the money earned will be enough to sustain you for the rest of the year. Another threat, at least if you are doing online marketing, can be changes in algorithms, i.e. with Google or social media platforms. In most cases, those changes aren’t super significant. But they have been known to cause problems to some business owners. It is thus a good idea to familiarise yourself with some of those algorithms and how they work. Doing so can help you to not get penalised when the next algorithm change will take place. It will certainly benefit your Shopware store.
Don’t be afraid to analyse and admit mistakes
The truth is that we all make mistakes. Yet, admitting them is not always easy. Towards oneself as much as towards others. In business, it is important to realise when you made a mistake. Not doing so can cost you quite some money. So, as a good entrepreneur, you should often reflect yourself and analyse where you might have gone wrong. This will help you to grow and can also help you to not repeat the same mistake multiple times.
Look for trade shows
Trade shows can help you quite a bit. Sure, almost every business has a website. But meeting someone in person is an entirely different experience. Thus, it is a good idea to look for trade shows that could suit your niche. Attending them can help you learn more about your customers, find more customers and maybe also with locating other companies that you can form an alliance with. They can definitely help you with your Shopware store.
Don’t be afraid to experiment
When you found a niche and did start your business, try different tactics. It is very exciting to start a new business. However, you also should be comfortable with uncertainty, as you will experience a lot of it. On the other hand, said uncertainty can offer plenty of options. Maybe you should try some guerrilla marketing? Or change your marketing efforts every now and then. As a business owner, you will realise that your path isn’t set in stone. Rather, you have many options at hand. Try finding one that suits you and your goals well.
Sustainability is a very important subject. Not only because it makes your company look good. Please don’t just try to greenwash yourself. Rather, think about ways to run a modern business that helps the environment, instead of stealing from it. There are many options for recycling or using objects and energy more than once. Same goes for packaging. Maybe you could also involve your customers and ask them what you could do to be more sustainable. There are quite a few options available to do something good for the environment.
We provided you with quite a few ideas on how to find an interesting and financially worthwhile niche for your Shopware store. We hope our advice will help you on your entrepreneurial journey.