Let’s talk a little bit about your niche. So your niche—your market. I want to talk to you about going deep– not wide. This is a common misconception that a lot of people have, because they look at major retail as kind of a goal or an angle to go for. You know, the bigger the market, the harder it is for you to grow an ecom business.
I don’t mean the larger the size of the customer base– I’m talking about the larger the category of the market you’re trying to serve. So let’s think about this, you’re not Amazon, you’re not Walmart, on a niche entry level — you’re not even Cabela’s or REI or Bass Pro Shops which are fairly niched down, category specific retailers.
Unless you have a massive marketing budget– millions of millions of dollars and the capital for hundreds or thousands of skews worth of inventory, you’re not going to be able to compete. How can you compete with Cabela’s or with Amazon or any of the other ones who have massive budgets, some of them are funded, they’ve got deep pockets, and they can afford to have you know thousands of products worth of inventory on each different skews that they sell. We just can’t do it.
The wider you go in your market, the wider the market you choose to serve, the larger the quantity of products you’re going to need to be able to meet the demand of your market. The wider you go, the more products you need, and that’s the more individual skews and each one of those skews needs to have its own inventory so that you don’t run out of stock. That can get very very expensive very very quickly.
Now large retailers like this, they sell commoditized products. You go to Walmart, they have everything. You walk in there, and they’re gonna have what you need, but they only compete on price. That’s 99% of the way these retailers compete is on price. You go to Best Buy, they’re competing on price with other things, there’s very little additional value, besides how cheap is it going to for me. So you don’t want to be like that.
If you have to have a wide category of products like that, you’re gonna have the same problem. Now the other reason is these big retailers have economies of scale. They’re buying units at such a large quantity and they’re getting massive volume discounts that you’re never going to get. So even if you could compete with them on product, you could never compete with them on price. They could always under price you and still win. Again, if you go wide with your market, how do you find them? how do you target them? who is your market?
If you go real wide within the fitness market, it’s like who is your market? People who like Fitness? People who like health? People who want to be healthy? How do you target that? That’s not specific so you can’t get laser targeted and laser focused on who your customer avatar is and who your exact ideal buyer is. You’re not going to be able to build a business. If you have a limited amount of money and a limited budget, then the best thing you can do to get maximum ROI is to niche down and laser focus in on a very specific sub segments of the marketplace.
Niche e-tailers, when you niche down and get very specific… now it’s easier to build customer loyalty, build brand awareness, and get that longevity out of your product because it’s easier to stay top of mind when you have a specific focus and your customers actually want to belong to something like that. You can have an identity that people can get involved with.
Now a great example of that is beard brands. $4 beard Club… you’ve seen all these different ones for the beard. They don’t have 500 products. They categorically specifically work on one very specific niche. The important thing is to make sure that niche is big enough. But people are rabid fans of these brands because they niche down and get very specific. They don’t need 500 or 1000 products skews in order to serve their market. Maybe 3-5 maybe. When they’re fully expanded, maybe as many as 20. So it’s not a crazy need.
The other thing is you can go too small. It is possible to niche down too small. The idea is to niche down to get behind a very defined, hungry and still sizable market to sell to. However, if you try to niche down too much, you could niche yourself right out of the market… like if you decided you are going to sell Siamese pattern socks for men… you might have just niched yourself right out of the market. Or if you decided you’re going to go after the underwater basket-weaving market right… it’s too small.
But a market like the beer brands, or deer hunting, or fishing, or fly-fishing, or mountain biking, or downhill biking… those are all more category specific niches that get very focused and you speak to one specific subset of the audience and you don’t need a huge array of products in order to serve them and still sell a ton.
So with that think about your niche. Your market, your brand, is it specific enough?