Each month we bring you e-commerce trends, analysis, and resources so you can pilot your business to success. Check out our October edition here to stay up to date.
This month, we will look at seven recession-proof niches.
Fortunes are made in economic downturns. This applies not only to investing, but to your business as well. Surviving a recession can lead to tremendous growth and stability for your company. Just look at how Microsoft and Apple turned out during the 1973-1975 downturn or how Amazon survived the dot com bubble.
To help you capitalize on this tremendous opportunity, we are providing you with seven recession-proof niches you should consider in your e-commerce business.
Recession-Proof Niches
1. Necessities
Necessities are products you need, no matter how good or bad the market is. Think of classic consumer staples like soap and canned goods. These are all the personal and household products you need to use in your everyday life.
The need for these products will not fluctuate in a downturn. However, suppose you sell higher-end consumer staples like artisanal soap. In that case, you may expect to see a drop in sales as consumers look to save money.
2. Pet Care
Both Millenials and Gen Z are adopting pets rather than having children. Do you think young people are just going to give up their little fur babies during a recession? They won’t. Pet-care spending grew 29% during the 2001 recession and 17% during the 2008-09 recession.
Pet owners will keep buying things like treats, toys, bowls, beds, and even apparel for their pets in a downturn. To hammer this point in further, Dolly Parton just launched a company selling pet wigs.
3. Repair Kits
During a recession, people stop calling the handyman to fix their appliances and stop taking their cars to the mechanic. Instead, they go to YouTube and learn how to fix it themselves. However, they still have to order parts from somewhere to repair their car or appliance.
An example of an opportunity right now is in car care. People are going to stop spending hundreds of dollars getting their cars detailed. Instead, they will look for products that help them do it themselves. Specifically, they will look for auto-specific sponges, towels, wipes, and air fresheners.
4. Food Storage
You can expect to see many people buying groceries in bulk and limiting eating out to save as much money as possible on food. So what are they going to need? A way to store all of their food at home. Tupperware saw strong sales during the last recession.
5. Candy
People tend to eat comfort foods in times of stress. That includes candy. Candy sales performed well during the 2008-09 recession and the COVID shutdown. The big brands already know this fact, as they recently warned consumers about a potential candy shortage for Halloween.
Making homemade candy is high-margin and could be very effective with the holiday season right around the corner.
6. Cosmetics
The famous lipstick effect. Beauty products tend to see an uptick in sales during recessions. Many market analysts believe that this sales increase will apply to fragrances and hair care this time around.
We’ve argued before about the benefits of starting an e-commerce brand that targets insecurity. The looming recession is another excellent opportunity to capitalize on beauty products.
7. Baby Products
Even though we mentioned that Millenials and Gen Z are less likely to have children than previous generations, you should expect to see baby-care product sales hold steady. This is because the dramatic change in lifestyle coupled with the rapid growth rate babies leads to A LOT of consumption in a short period of time.
As the baby grows, parents are continuously buying new clothes, shoes, cribs, toys, accessories, and sanitation products. As a result, the possibilities in the baby product space are almost endless.
Conclusion
If you can invest in one of these niches, you will create a very stable cash-flowing asset. Not only are these niches profitable in downturns, but they are also profitable while the economy is booming. So pick one of these niches, put your head down, and you will enjoy the fruits of your labor in no time.
At Windstone Financial, we specialize in helping e-commerce brands grow their revenue and lower their taxes. If you need help reaching your business goals, click the button below to speak with a CPA today!
