In e-business, niches can be very profitable.
Let me explain. Walking around New York city you will often find stores that are very specialized. There are stores that sell only knitting supplies, only chess boards and pieces, or only Japanese antiques. The reason why they have stayed in business (even before they started selling online) is because they are in a huge city with millions of people (and more visitors), guarantying a steady number of people who are interested in buying their products. Also, their specializations in specific products provide them with loyal return customers (enthusiasts) who know they’ll find even the most obscure items they need there along with professional knowledge from the staff.
Finding a narrow niche and building a business around it is also a very successful model online. All the benefits provided by specializing in a specific type of product still apply (loyal return customers, expert knowledge, etc.) and you can now sell to virtually everyone in the world who can go online.
The NY Times today has an article about two such websites: NaturallyCurly.com, for everything that has to do with curly hair, and Needled.com, for tattoo enthusiasts. I also like to use two other examples in my class: Cufflinks.com, a site that sells cufflinks, and The Yo Store, a site that sells yo yos.
Such niche sites often take advantage of their core customer base of enthusiasts and provide lots of online community-building features. That way, they promote word-of-mouth advertising which costs them virtually nothing and brings many more enthusiasts to their stores who are willing to buy their products.
And it’s those enthusiasts who will buy the premium products too, like the $100 yoyos or the $3,800 cufflinks.
