We hear stories all the time about “eBay millionaires” - entrepreneurs who have struck it rich with a successful online business, often working at home using the popular eBay online auction system.  How do they do it?  Well, one thing a lot of successful eBay businesses share in common is the fact that they’re targeting a specialized niche. 

What is a Niche?

In business, a niche is a very narrow and specific segment of a company’s target market.  For example, while a company might have a basic target market of promoting their products to small business owners, a more specialized niche would be to market their products to online-only small business owners based in the UK.

Why Do You Need to Pick a Niche?

Quite simply, eBay business owners should focus on small niche markets, because they have a better chance of gaining attention and reaching their target audience than they do if they try to compete with large corporations who are already well-known for selling more general products.  For example, if you tried to start an eBay business to simply market pet products, you would be competing with large international online retailers who are able to offer a greater selection at a smaller cost to consumers, because they can order stock in larger bulk quantities than you can.  But if you focused on something like hand-made pet clothes, custom made collars and harnesses, or herbal pet care products, those would be niches where you might be able to compete, because products would be much rarer. You could even narrow it down further, such as hand-made pet clothes only for lap dogs, or custom monogrammed collars, or herbal bath products for dogs.

How Do You Choose a Niche for Your eBay Store?

• Make a list of everything you enjoy and are knowledgeable about.  You’ll have a much easier time starting an eBay business, or any business for that matter, if you know that you’ll enjoy your work. You also need a basic understanding of the industry (although some people have proven to be exceptions) if you’re going to be able to answer questions from your customers.
• Find out if there’s a need in the market for the products you think you’d like to sell.  If there are hundreds of eBay stores already selling old videotapes of cartoons from the 80s, for example, then there likely isn’t a need for another one, unless of course you can narrow down your niche even further and cover titles that you can’t find elsewhere.  You can get a basic clue as to whether or not there’s a need for your proposed eBay business by simply searching eBay for the kinds of products you’d like to sell.  If you can’t compete with those stores with better quality, better prices, more features, or all of those things, then you should probably consider another niche to focus your own eBay business on.
• Are sites off of eBay already saturating the market? While searching for other eBay stores that are already competing in your desired niche market is a great start, discovering that there aren’t many competitors running auctions doesn’t necessarily mean the niche isn’t saturated.  It’s quite possible that the reason there aren’t many eBay stores in a niche is because other eBay store owners did their research previously, and realized other sites on the Web were already covering the market’s need for the products more than adequately.  Do a quick Google search for keywords that would be related to the products you would like to sell, and get a rough idea of how many small retailers already exist online in your chosen niche.
• Find out if you can get reliable suppliers in your chosen niche, or decide if you can create your own custom products quickly enough for the expected demand, and within the cost the market will bear (which you can tell by finding a few competitors and viewing their prices).  Even if the niche is otherwise perfect, if you can’t provide the products to fulfill the orders, it’s not going to work.

By following the steps above, you should be able to narrow down a good niche for your eBay store. As a matter of fact, you may find several.  If that’s the case, you can even consider setting up multiple eBay stores in the various niches of interest to you.  The benefit of that is that if one niche tends to slow down during certain times of the year, or simply has a dry spell, income from your other specialty niche eBay stores will help to pick up some of the slack.