Whether you are starting a business in a distinctive industry or saturated market, it’s important to differentiate yourself from other resellers in some way. There are many ways to do this, such as branding and styling to help your listings stand out, but before you get to that point, you have a big decision to make which can help to differentiate you over time. Should you select a niche to sell in?
What is a Niche?
A niche business is specialized or has a specific focus area in the marketplace. In our world of reselling, the most common way to do this is with item categories. For example, you may choose to sell only used books, or used clothing, or vintage record players. Some niches are much more specialized than others (hats off to the sneaker sellers!), but all niches require knowledge and experience over time in order to do it right.
Some niches have huge customer bases, such as clothing, or video games. Others will target a small set of specific customers, such as 80s rock concert t-shirts. Based on the target audience, item availability (or scarcity), and specific item characteristics such as size, and weight, a reseller targeting one niche for their business will have an entirely different business model and strategy than resellers in other niches.
Benefits of Choosing a Niche
So what are some of the reasons that you would consider narrowing in on a specific niche (or a handful of niches)?
- You are more likely to grow your business faster, due to all of the benefits associated with specialization. You will learn quickly by focusing all of your attention on one niche, and you will quickly spot the opportunities. In general, scaling will be easier.
- You will be more connected with your prospective consumers. As a result, you will understand marketing and sales in greater detail, and over time you will know exactly how to approach a sales pitch for your items. ‘Speaking the language’ can be critical in some item categories, such as sneaker selling, book selling, art selling, and many others.
- Sourcing inventory will become easier as you build relationships and learn ‘the language’ of an item category, as well as learn the best sources for your product.
- It will be easier to connect and network with other sellers within your niche as you become more esteemed. This can open all sorts of doors to new opportunities and partnerships.
- You will naturally begin to differentiate yourself from other sellers as your knowledge grows. Buyers know the difference between a seller with experience in a given item category and one without.
- Over time you will learn how to improve your profit margins quicker than someone with less experience within that item category. This will come from a variety of improvements that you make as you grow within an item category, such as learning how to sell higher priced items, learning how to package and ship items cheaply, and learning how to source product at lower prices.
Through specialization, you can gain a competitive edge. While targeting a niche, you will be automatically focused on mastering the nuances of your item category and figuring out your potential customers in great detail. If you achieve success early on, it’s up to you to evolve with your consumers to new products and item categories over time as a means of scaling.
Cons of Choosing a Niche
Despite all of the clear benefits, there are also some drawbacks you need to keep in mind when choosing whether or not you want to narrow your focus.
- If you don’t choose the right niche, you may be swimming against the tide. If you select an item category that doesn’t have enough demand, your hard work may not pay off. If you choose something that is complicated, it may take a lot more work to make the same amount of money that you would have by having a broader approach.
- You can miss opportunity. If you are too laser focused on one niche, you may miss sudden surges in demand or sudden buying opportunities that you come across in other item categories.
- Your business can plateau. If you don’t fully understand how to scale in your niche and understand where the return on your investment starts to plateau, then your business may suffer in the long term. The way to combat this is to be ready to adopt new streams of income and new item categories if you hit blockers in scaling within your niche.
Should you ‘niche down’ your reselling business?
Yes, we think that it is worth bringing some niche focus into your reselling business, but with some caveats. Choosing a niche can be powerful because it helps you to become a master of your business model. Reselling can be highly specialized and varied depending on the item type that you are selling, so it is difficult to become a master of everything. By narrowing in on specific types of items to build your business around, you will learn how to focus your full attention on scaling within those areas, and economies of scale will likely lead to a more profitable business over time.
However, it’s important to avoid the major cons outlined in this article. If you focus too intently on one area, you can stem your potential growth and miss other opportunities. Therefore it may be best to use your chosen niche as a guide, but to also be open to selling in other item categories. Alternatively you could focus entirely on a handful of niches that are related. For example, if you choose to sell books, you could scale quickly into other media items such as CDs or DVDs. If you choose to sell clothing, you can expand into Accessories or Shoes. This would bring some diversification and avoid some of the issues with being too focused.
The key is to always analyze where you are, and try to keep an open mind and be ready to jump to other opportunities that may arise. Keep an entrepreneurial mindset.
We hope you found this valuable. Check us out on Instagram (@resellingtips) for frequent quick tips to help you with your reselling business.
Do you think it’s important to select a niche or a handful of niches in your reselling business? Comment below to let us know.
