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Retailer’s Perspective: Leveraging Niche Markets For Online Success
Wai Hong Fong from OzHut offers his insights on how to deliver a personalised and engaging customer experience by tapping into niche markets.
When we first stepped onto the online retail scene in 2007, the industry was flooded with copies of online departmental stores, particularly DealsDirect wannabes. The idea of leveraging eBay to acquire customers and eventually break away once you got a large enough database was a fairly common one.
We thought about venturing down this path ourselves. But a flurry of questions confronted us.
- How will we get hold of enough stock?
- How will we be able to cover enough categories to appeal to a generalist shopper?
- Even if we could, how would we compete against the 10 plus other sites that were already doing this?
We eventually came to the conclusion that we were too small and it was too late to adopt this model. That was when we stumbled (quite by accident) over the idea of setting up a store dedicated to the niche market of telescopes.
Setting Up A Niche Model
We had suffered lots of frustration trying to sell expensive telescopes on eBay but failing because of the perception that the auction site was merely a place for cheap, second-hand goods. This gave birth to the niche retail model, which is a large part of our online identity today.
I don’t think we could have done it any other way. We started during the midst of the GFC and copious financial investment was not available to us to invest into our online business.
However, we found that taking the niche approach, didn’t require any major financial investment and that the site was beginning to work really well in its own right. It worked so well in fact, we’ve since build 12 different sites.
Adding weight to our case, Paul Greenberg, Co-Founder of DealsDirect, has also been quoted as saying that “if he were to start from scratch today, he would focus on a niche opportunity!”
Dedicated Expertise Increases Trust
When a customer visits a site dedicated to a particular niche or interest group, the level of trust is typically a lot higher. An example would be the different shopping experience when buying a steak from Woolworths compared to buying from your local butcher. Knowing that you’re buying meat from someone who deals with meat and only meat everyday is a very reassuring feeling – most people perceive the local butcher as a ‘meat expert’. While this may not always be true, the common tendency is to associate greater trust towards dedicated experts and specialty stores.
Promoting Expert Product Knowledge
People tend to rely on others for guidance. Unless you are an expert yourself, it’s very likely that you’d need some help choosing the best product when you go shopping. This is especially true for products like washing machines or digital cameras.
While physical retail sales spiral downwards, many retail outlets struggle to keep knowledgeable staff in store. Focusing on a niche market however, means your depth of knowledge will add tremendously to the richness of the customer experience. Imagine being able to interact with people that are not just experts on the range of products you’re looking at but also passionate about making sure you are getting something that will perfectly suit your needs. You can do this online quite easily through product selection guides, a live-chat service and passionate customer service personnel.
Allowing a Wider Product Range
Focusing on a niche market also allows you to provide a wide range of products customers can choose from. Generalist stores prefer stocking deeper levels of a few items because that’s far easier to manage than carrying a wide range of items across every category. This gives an advantage to the niche player because people love choice. The ability to choose from a wide range means that customers don’t have to feel like they’re being forced into a corner and will also have a more personalised and engaged shopping experience.
Creating A Loyal Community Following
The foundations of a great community are common interests and shared values. We’ve found that engaging our customers within a community, such as Facebook (which makes this amazingly easy), creates a real sense of connectedness.
The OZScopes Facebook page for example, is not just a string of posts talking about our products or even promoting sales, but is filled with interesting news on astronomy, photographs people have taken and experts helping out beginners on a day-to-day basis.
When people engage with each other, share stargazing adventures and tell stories of their childhood dreams of owning a telescope, it creates a sense of belonging. This in turn is a surefire way to generate return customers and brand evangelists; it’s customer loyalty at its best.
Online Marketing Loves Niche
Being niche also has a very big advantage from a search marketing perspective. For one, it really helps when it comes to building links from relevant and related sites. It’s a lot easier to get astronomy clubs to see the value of linking to an optics site than it is to get them to link to a category page in an online mega-mall.
Generating rapport with bloggers (typically backyard astronomers) works a lot better as well, because of the relevance that your entire range of products may have to their readers.
Pay-per-click advertising copy can emphasise your expertise in the field, allow you to more effectively target a broader range of relevant keywords and combined with a wider range of related products, help create better converting landing pages. In short, being a niche player means you already get a step forward in many respects whether it’s conversion rate optimisation, SEO or paid search.
Taking on the Big Players
Perhaps the highlight is that, with enough dedication and focus even a small player can become the dominant player within a niche market. The number of stories of businesses defining and subsequently becoming leaders in their own niche markets continue to abound – Custom shoes, wholesale wine and even telescopes!
Finally, the best thing about the niche model is that it instills a customer experience that closely resembles the kind of businesses reminiscent of the ‘good ol’ days’, built upon a foundation of serving people, cultivating trust and engaging with communities. Today, businesses have the opportunity to break down the walls and barriers of a mass market retail model and re-engage customers through a niche approach.