Each month we bring you e-commerce trends, analysis, and resources so you can pilot your business to success. Check out our June edition here to stay up to date.
This month we are revealing the niches that are most successful during economic downturns.
Successful Niches in a Recession
As accountants specializing in e-commerce, we have seen hundreds of successful and unsuccessful e-commerce brands. The brands that are the most successful during market downturns target pain and insecurity. Examples of niches that target pain and insecurity are:
- Skincare
- Diet and Fitness
- Hair Loss
- Insurance
Reminder: Do not worry about saturated markets. Saturated markets mean there is high demand. If you are ever worried about entering a saturated market, remember all of the coffee shops, bars, fast food, and gas stations you see on a daily basis.
Skincare
You want to target people worried about their fading looks. Even in a recession, people are looking for the latest cream or lotion that will keep them looking youthful and healthy. It is also worth mentioning that botox, lip injections, and fillers remain in high demand by wealthier individuals during recessions.
Diet and Fitness
Supplements that provide a “quick and easy” solution to your fat loss have always been popular with the masses. You may have seen the spammy ads at the bottom of click-bait articles. The key to the diet and fitness niche is targeting a person’s insecurity and making them act fast. It is a sad truth that most people are lazy, which is why there is such a massive market for diet pills. Offering a discount on a monthly subscription is an easy way to guarantee some recurring revenue for your brand.
Insurance
The fear of loss is incredibly profitable. Insurance companies make a killing in recessions as people rush to insure whatever they still have. For an insight into where this niche is heading, google “pet insurance.” As people have fewer children, there has been a move to insure their beloved pets.
Hair Loss
Similar to skincare, you want to target people worried about losing their hair. As most men don’t want to go bald, this is a HUGE market. Recently, there has been a surge in the number of creams, pills, and lights that promise to regrow your hair. However, don’t assume the market is oversaturated. If it were, these companies would not exist.
What Market Should You Target?
Now that you know the most profitable niches, it is time to learn which market you should target. Generally speaking, there are two markets you can target.
- The Rich
- The Masses
After choosing your niche and product, you must ensure your product aligns with your target market, or your product will not sell.
The Rich
The rich are who you sell your high-margin products to. Think of vanity products like expensive watches, clothes, and skin creams. Brands like Rolex and Gucci have higher profit margins than any other brand in their industry.
The rich express their insecurity by purchasing expensive items they can show off. They will also probably not buy your diet pills or hair-loss supplements as they can afford expensive surgeries to remedy these insecurities.
The Masses
The masses are to who you sell in volume. Your margins won’t be high, but you have an opportunity to make more money since you will be selling much higher quantities of your products.
Who do you think makes more money? Lamborghini or Honda? The answer should be obvious since Honda sells millions of cars every year, while Lamborghini only sells a couple of thousand.
Where Should You Advertise?
If you’re spending money on ads, you need to be on TikTok. This is especially true if you plan on targeting the masses. TikTok continues to be the fastest-growing social media platform in the world, and the ads seem to convert at a higher rate than other social media platforms.
Conclusion
For your e-commerce brand to succeed during a downturn, you must target pain and insecurity. Niches that target pain and insecurity include but are not limited to: skincare, diet, fitness, and hair loss. If you can successfully target one of these niches, you will not have to worry about making money during recessions or wars.
At Windstone Financial, we have experience helping e-commerce brands in all niches navigate uncertainty and achieve success. If you need help reaching your business goals, click the button below to speak with a CPA today!
