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Digital strategy How retailers can find their niche in online retail

Published on 03.12.2019 by Alexis Chappatte, Digital Commerce Consultant, Post CH Ltd

A niche strategy is essential for SMEs or start-ups wanting to prevail amidst large retailers or those joining the fray against large digital platforms. This is because they cannot keep up with the low prices and range of products offered by the major players. But what does a niche strategy look like for online retail in the 2019? What are the benefits? And how can you find your niche?

Niche strategies in e-commerce

A niche strategy involves a retailer concentrating on a specific market segment. They focus their range on certain products for a defined target group. Implementation of the strategy affects all areas of e-commerce: from product design to promotion.

A niche strategy provides a range of benefits to a retailer:

  • A niche is characterized by less competitive and price pressure. Greater exclusivity usually enables higher sales prices to be set and thus better profit margins.
  • The retailer gains expert knowledge of the products and services in their niche. This makes the task of communication considerably easier: the retailer concentrates on a more precise target group with a more persuasive message.
  • There are also benefits in terms of digital marketing, particularly SEO/SEA, in that they can be better referenced in search machines. Online advertising also becomes cheaper since there is less competition for the search terms.
  • If the retailer gains recognition in their niche, this contributes to customer retention.

Ongoing studies looking at the Swiss e-commerce market, such as the annual online retailer survey conducted by ZHAW and Swiss Post, or the annual VSV study, demonstrate that some sectors are already saturated. Consumer electronics and the fashion sector are now dominated by large online retailers.

A niche strategy does not mean retailers need to reinvent the wheel or have a revolutionary idea. Most successful niche retailers differentiate themselves through a product or service. They create added value that meets the current needs of consumers. The company Kettlebell Kings in the USA is a good example and has been producing weight-lifting equipment since 2013 and selling it online. The product has in fact been around since the 18th century and the fitness industry has a great deal of competition. The success of Kettlebell Kings is based on satisfying a new need (the new trend for high-intensity training), offering a customizable product and building a community of loyal and dedicated customers through strong communication on social media (especially Instagram).

Finding a niche in 2019

Finding a niche in online retail is akin to gazing into a crystal ball: it’s very difficult to predict future market trends. But let me outline a few of my own ideas.
The e-commerce market in Switzerland doesn’t count amongst the most advanced in terms of consumer habits. I always advise retailers looking for future niches to inform themselves about successful start-ups in more advanced markets such as Great Britain, northern European countries, the USA and Asia.

In light of what we have learned from the latest statistics concerning the Swiss online retail market, the food market segment still has plenty of online potential. Demand is rising for short transport routes, regional or local production and respect for the environment. The Danish start-up Too Good To Go enables retailers to sell their unsold foods using an app. A milestone of ten million orders has recently been achieved.

Another segment which is still neglected in Switzerland is products and services for senior citizens. Demographic change means “silver surfers” (those aged above 55 years) are becoming ever more numerous and online savvy. In India, the online marketplace, Seniority, offers a wide selection of products for older customers ranging from bathroom aids to foodstuffs. Founded in 2016, the start-up announced growth of 500 percent in 2018.

Alexis Chappatte, Digital Commerce Consultant, Post CH Ltd

Alexis Chappatte has long-standing experience in consulting and implementing digital transformation projects for all types of customers from SMEs to public administration. He helps them develop sustainable digital strategies, taking new consumer habits and end customer expectations into account.

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