Founder of Fancy Lab a premier digital agency specializing in e-commerce solutions, web development, and paid and organic digital marketing.
Over the past decade, the e-commerce industry has continued to grow. According to a recent court filing, Amazon now controls between 50% and 70% of all online sales in the U.S. That doesn’t mean, however, that there’s no room for entrepreneurs to make a go of new e-commerce ventures. Instead, they have to find a way to do it that doesn’t compete head-on with the mammoth e-commerce company. For many, the key to doing that was identifying a viable niche that Amazon either couldn’t or wouldn’t fill.
In fact, there’s a whole industry now centered on finding and developing such niches. You will find endless data and lists claiming to point the way forward for would-be niche e-commerce startups. However, many of them contain a fatal flaw: They revolve around products that are anything but exclusive. That means anyone with a similar idea might undercut you at any moment if you’re not careful.
It turns out that there’s a solution for that. It’s to target a niche within the burgeoning luxury goods market. It’s presently on the upswing again in reflection of a somewhat brightening global economic picture. However, there’s a way to go about doing this that increases your odds of success. Here’s what you need to do.
Go exclusive, but not expensive.
When most entrepreneurs hear the term luxury niche, they picture a product line aimed at the ultra-wealthy. For example, consider this article recommending that readers position themselves as micro-influencers to attract business from the top 1% of high-net-worth individuals.
Now, there’s nothing wrong with that. However, it means basing your business on a service with a very narrow pool of potential clients. This means your business will be in make-or-break mode from day one. If you score the right client early, you’ll likely succeed. If not, your business won’t last long.
To avoid that, it’s a better idea to choose a niche product that you can market not only to the wealthy but to those who aspire to wealth. In other words, you want something exclusive enough that it generates its own demand but remains accessible to all shoppers. Think about products that would appeal to the kinds of shoppers who would buy a brand-name item specifically because they want people to see them wearing it.
Choose a product you can produce.
It’s important to choose a luxury niche that contains goods you can produce. You don’t want to become a reseller for products someone’s already making. That will harm your business in two ways. First, it will put you at the mercy of the producer’s desire to increase their own margins. And second, it will mean your product isn’t exclusive—someone else could swoop in and begin selling your product, too.
Instead, you might consider building a luxe-quality alternative to name brands. It’s a perfect strategy because it involves a product that’s indistinguishable from a brand-name item when used by a consumer. And it also capitalizes on an existing weakness in the niche—namely, a wave of counterfeit products that still inundate Amazon’s listings. By building your own brand, you can provide aspiring consumers with a trustworthy alternative to low-quality products they’d find elsewhere.
Go big on customer service.
It’s also a good idea to flip the concept of the lean e-commerce startup on its head and invest heavily in customer service capabilities. A high level of customer service is the biggest thing that separates a luxury good from a midmarket one—not just quality. Customers accustomed to purchasing luxury goods expect them to come with a certain level of personal attention you can’t provide through automated chat and IVF systems.
Accomplishing this will mean absorbing some higher up-front startup costs. That’s because you can’t cut corners by using tactics like offshore outsourcing. You’ll need your customer support operations to be local and accountable, and that costs money. However, it’s an investment that should yield benefits in the form of customer loyalty and repeat business. That, in turn, will improve your growth rate and bottom-line stability. It’s a classic example of having to spend money to make money, except in this case, it’s no cliché.
Partner with relevant genu-influencers.
In recent years, marketers have noted with increasing concern that the once-booming influencer marketing industry was on the verge of collapse. It happened because an increasing segment of the population has correctly realized that influencers aren’t genuine.
However, the death of influencer marketing is quite exaggerated. It would be more appropriate to say that it’s evolving into what it should’ve been all along. Today, there’s a new type of influencer that luxury brands now depend on—the genu-influencer. These individuals don’t sell to followers but share genuine experiences and advice.
This means that if you can get your product into the hands of a few relevant genu-influencers, and if your product’s as good as you claim it is, your brand will grow a loyal following organically. Focus on giving these potential brand evangelists the best your new company has to offer. If you do, you’ll unlock a steady stream of sales and catapult your brand to greater name recognition faster than you could using any other method.
Your customer base is out there.
With the right niche and subset of products, the odds of success within the luxury goods market can be higher than you might think. It’s one of the few consumer product segments that is still growing, despite inflationary pressures and tightening household budgets providing ample headwinds. It’s also one of the few segments that companies like Amazon aren’t interested in, given its preference for high-volume products with mass-market appeal. Therefore, if you’re careful and build a luxury niche brand that strikes the right chord with today’s aspiring shoppers and luxury shoppers, there’s no limit to how far your new venture might go.
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