In an Uncertain Climate, Succeeding with a New Ecommerce Venture Will Require Niche Exploration

In the wake of the pandemic, people have shifted even more of their lives online. We were already keeping in touch through social media; now, it’s become the only way for many of us to stay in touch. In the same way, while some people were already able to telecommute in previous years, the events of 2020 have fast-forwarded the trend towards remote work.

Spending more time at home and in the virtual realm has also led to a substantial increase in online shopping activity. And as we emerge from the shadow of COVID-19 and the recession that followed, you may be looking for new opportunities. Starting an e-commerce business has never looked so attractive to the would-be entrepreneur.

However, things can also change quickly. Before you get in touch with potential backers or consult your lawyer to set up a business structure, you still have to determine feasibility. Do you have the right e-commerce business plan given the current situation? Here are some factors to consider.

Uneven effects on consumer behavior

Customer payingIt’s not surprising that consumer behavior has changed after the pandemic struck. In fact, studies of previous recessions have made it possible to predict general shifts in our spending patterns during a downturn in the economy.

However, there are many layers to these effects, and not all people are equally affected. While most people will tighten up on their overall spending, they may actually spend more on essential purchases and medical supplies. In fact, panic buying was commonly observed in the early days of the pandemic as stores ran out of items such as tissue or disinfectant. Should supply chains be disrupted again, this phenomenon could recur.

Income levels and demographics also play a part in how consumers shift their behavior. Younger people from the millennial and Gen Z cohorts are less likely to have stable, high-paying jobs that made it through the recession. They will have less to spend and are more likely to cut down on discretionary purchases.

Finally, although consumers with higher incomes may continue to spend the same amount overall, within that spending, their patterns might have changed. They could be actively hunting bargains, as companies offer great deals in an effort to stay afloat. Or they might be willing to pay full price, but only for brands they already follow and trust.

Finding your niche

The opportunities in e-commerce are real, but you can’t simply dive in and expect to succeed just because more people are shopping online. Like any other business venture, you still have to analyze the market, find your ideal audience, and connect with them.

More than ever, it’s crucial to find your niche. The competition in e-commerce is incredibly stiff. The raw numbers will tell you that e-commerce grew in the U.S. by a whopping 30.1% year-on-year in the second quarter of 2020. But how much of that growth was driven by Amazon alone? Their reported Q2 growth was an even more impressive 40%.

Consumer online spending is a big pie, but the major players in e-commerce are taking up an increasingly massive slice of that pie. If you want to start a successful business in this realm, you have to work extra hard on your marketing efforts and develop distinct core competencies.

Do something no one else is doing. Serve a segment of the market whose needs aren’t being met by the giants. Make sure your business lands on the first page of relevant search results. Otherwise, why wouldn’t consumers just order the products from Amazon?

Solving business needs

Remember that businesses succeed by addressing needs with their solutions. And while the effects of COVID-19 have deservedly highlighted the challenges and needs of individual human beings, our organizations themselves are also struggling. From that perspective, you may want to pivot a promising business idea in an even better B2B direction.

Make it your target to solve business needs. How can local restaurants change in order to stay in business while operating safely? How do small businesses solve issues with global supply chains and on-demand sourcing that have been disrupted by the pandemic? And for every company that can’t shift completely to remote work, how do they create a better, safer office environment? Address those needs by selling disinfecting robots, automated UV lamps, or thermal sensors, and you’ll have better odds of success.

As second waves of infection emerge and the search for a vaccine continues, it’s becoming clear that we haven’t fully escaped the danger of further disruption. The road to recovery for businesses and individuals alike is likely to be bumpy. By using your e-commerce business to help fellow entrepreneurs overcome these challenges in some way, you can be an effective partner in that journey to success.

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