If you’re looking to expand to new ecommerce channels, you’re likely debating whether niche marketplaces are worth your time or not—because truth be told, mass marketplaces like Amazon get all the glory these days. Sellers flock to these channels because of the sheer volume of traffic on them, whereas niche marketplaces offer a different type of value.
The key to understanding the value of niche marketplaces is evaluating product-channel fit and understanding their long-term advantages. In a live chat with Newegg, we dive deeper into this topic and address frequently asked questions about selling on smaller channels. Catch the full recording below or keep reading for key highlights of the conversation.
Why Sellers Hesitate to Go Niche
Simply speaking, most sellers are tied up with their “cash cows.” The common thought: if you're already making steady profits from big guys like Amazon, Walmart and others, then why bother selling on alternative channels?
"The way we see it is that's really an improper approach," says Newegg Senior Marketing Manager Gregory Rice. "What you want to do is have a sustainable and scalable growth pattern where you can kind of weather the storm if the tides from one marketplace decide to shift or if competition nudges you out of a platform."
In another sense, you may be worried about spending the extra time and effort relearning a new channel when you’ve already got your hands full. It may also be challenging to commit to a new initiative without the upfront guarantee that it would be worth it.
"[But] when it comes to the time element," Rice adds, "If you're willing to do the legwork and put in the time in the beginning to build a new channel, then that's not a waste of time—that's an investment."
The reassurance of having a diversified portfolio and safety net is worth consideration, as are the additional benefits outlined below.
Benefits of Selling on a Niche Marketplace: Why Go Niche?
1. More Sales and Brand Expansion Opportunities
To state the obvious, a new sales channel serves to bring more eyes to your brand and open a new revenue stream for your business. The advantage of a niche channel is having a more focused audience and, as a result, an easier time building brand stickiness that translates to higher conversion rates.
Research already shows that niche marketplaces are growing in popularity year-over-year, both from a seller and consumer perspective.
"[On the subject of global scale,] the Internet Retailer 2020 report [on] marketplaces had the top 47 niche marketplaces collectively pulling in 38 billion dollars and with 24% year-over-year growth," Rice says. "That's 2019, not even factoring in 2020. So, if you're looking at the opportunity—there's opportunity there."
2. More Targeted Audiences
Customers of niche marketplaces tend to return to these platforms for a variety of reasons like:
- Being able to find a specific product type
- Better price points
- Better quality and/or reputation
- Overall more reliable sellers, listings and/or service (i.e., less counterfeits or noise)
- Loyalty programs and other incentives
The platforms themselves tend to target specific buyer personas, making them prime platforms for testing new products or messaging.
"Because it is a targeted demographic, you have the ability to segment your focus, and that's something that should be taken into account. Mass merchants aren't the whole pie," Rice points out. "For Newegg, that's going to skew male about 72%, the average age is 18-44 years old, over $75,000 annual income, and the one key thing is our demographic is what we classify as a progressive pioneer."
3. Niche Customer Loyalty
Alongside a targeted audience, “you have these customers in these targeted demographics that have this loyalty and this trust that they've built up with the platform...and oftentimes those customers are willing to expand their purchase outside of that core competency," says Rice. “We're seeing [this] on Newegg when we talk about those growths outside of the core categories that we traditionally see."
When referring to Newegg's experience, Rice mentions that while Newegg is primarily known for its tech goods, they have started to expand into new categories like automotive, apparel, home improvement, sporting goods and office supplies. Those categories are already gaining some traction among customers who frequent the site for their tech needs.
4. Channel Diversification
One of the greatest benefits of selling on niche marketplaces is preventing over-reliance on one sales channel and improving your long-term sustainability. As Rice said, branching out allows you to "weather the storm" when something big or unexpected happens and your business is restricted from moving forward with daily tasks due to setbacks from that one source.
"If you're really focusing all your eggs on that one basket, then that's a dangerous standpoint," Rice explains. "That diversification of your overall channel strategy really helps to build that long-term growth and those dividends that you can earn and bring in."
The importance of reducing concentration risk was especially evident in 2020. With all the uncertainty, challenges and halts in production due to the COVID-19 pandemic, sellers learned quickly that having alternatives to lean on is crucial to maintaining a successful business.
"[In 2020, with] FBA, the bottom fell out, and all the sellers just kind of freaked out," Zentail Marketing Director Pauline Shiu recalls. "I think that's really when multichannel had its moment to expand businesses that they know that there are other 'legs of the table' for them to support the business. Various marketplaces have seen awesome growth for that reason."
5. Less Seller Competition
The ratio of customers to sellers on smaller channels is often significantly better for your business than on mass marketplaces on Amazon, where there are millions of other sellers competing for attention.
As an example, Newegg has around 14,000 sellers and over 40 million customers. That translates to nearly 3,000 customers per seller, whereas on Amazon, the ratio comes out to be around 80 customers per seller (based on 2021 Prime membership numbers and the number of active marketplace sellers).
While Amazon dwarfs other channels in terms of monthly traffic, the reduced competition and product saturation are bound to work in your favor.
6. More Personal, Brand-Friendly Services
Channels like Newegg offer more personal, brand-friendly services as opposed to automation, foreign call centers and other tactics that mass channels use to manage a large seller base. For ecommerce giants, losing a multimillion-dollar merchant hardly doesn’t leave a dent in their wallets, incentivizing them to side with the customer when issues arise.
On the other hand, niche marketplaces tend to be less transactional (or strictly sales-based) and more accommodating to your needs and concerns. Rice explains why this is the case, using his company as a frame of reference.
"[With Newegg,] we're here for the sellers because, without the sellers, the platform doesn't have as much value,” he says. “[Without happy sellers,] we can't bring that product assortment to the customers that they've come to expect."
How to Maximize Your ROI: Top Expert Tips
Once you’ve onboarded to a new channel, there are steps you can take to accelerate your success. Below are key soundbites from the experts.
Details Matter (A+ Content)
"We did a study and found that products with high-quality content see well over 750% more PDP views and 100%+ more cart additions compared to those without," Rice recalls. "With our audience being so detail-oriented and so focused on finding out the information about a product and so articulate—that level of detail matters."
Know Your Audience
"Know your audience and understand the landscape of where you are," Rice advises. “You want to understand the audience on the specific platform and any situation that plays into that. On Newegg, for example, [customers tend to be very detail-oriented and scrutinize content before making a purchase.”
Prioritize Listing Quality
“70% of consumers don’t go past page one, so it really needs to be your focus to get there,” says Shiu. “We find that that’s possible [when you provide more attributes about your product]. A lot of sellers will just push out the minimum required attributes...but the more robust you can make your listing, the more keywords that you will [win and the better your ranking on appropriate categories].”
"We talk about leveraging your human contacts and your account manager, but I would really be remiss if I were to talk about optimization of your performance, and we didn't talk about the software that Zentail offers," Rice says. "Because without a doubt that ability to scale across multiple channels is invaluable when you're talking about not just reducing the overall effort but finding new opportunities."
He adds, "The more nimble you can be with your operations and the more opportunity you can take on, the better you can do overall to grow that brand."
So, Is the Juice Worth the Squeeze?
The final verdict: yes. The benefits far outweigh the risks of selling on a niche marketplace, especially if you have a software partner like Zentail that protects you from slow onboarding, overselling, listing errors and other common setbacks that are inherent to multichannel selling.