Ethan McAfee was an investment analyst in the tech sector for more than 10 years. He researched Internet trends, interviewed startup founders and figured out where retail was headed. In 2010, he discovered pickleball in Florida. Ethan (then 34) visited his parents there in a community of retirees. He saw the sport boom and decided to do something with it.
Pickle-what?
You can compare pickleball somewhat to a low-impact version of tennis. Two to four players hit a wiffle ball over a net with wooden boards. Ethan saw that it was popular. And he figured a whole bunch of other baby boomers would play the sport, too. What would they need? You got it: pickleball stuff.
Meanwhile, online marketplaces like Amazon.com became more accessible to third parties. As a result, anyone could suddenly reach millions of customers with a few clicks. In addition, consumers found their way to e-commerce and online shopping more and more quickly. Even those who were the age of his parents! That trend was even more pronounced for rare, specialized niche products - like pickleball stuff. McAfee took a chance and said to himself, "Let's do this."
He invested a few thousand dollars in some shelves and accessories, bought the domain pickleballdirect.com and he was in business. Four and a half years later, his company had grown 3,248 percent, to $9.7 million in sales by the end of 2014. That was immediately enough to catapult his company to No. 105 on the 2015 Inc. 5000.
As a result, McAfee joins a whole slew of Inc. 5000 entrepreneurs who selected a niche product (from horse accessories to essential oils), sold it online and saw their sales explode.
Unlike mega-retailers who want to sell everyone everything, these businesses manage to connect with small, dispersed consumer groups with special interests. A brick-and-mortar business on an ordinary shopping street would never make enough sales. But if you can reach the niche market online, you do fish in a sizable pond.
"If you ride on a trend, you can really succeed," says Sucharita Mulpuru, Internet retail analyst at Forrester Research (Cambridge, USA). Because you can outsource so many aspects of Internet retail, it is one of the best channels where entrepreneurs with expert knowledge can get ahead. Especially in an underserved market. "All you need is a good sense of what's selling right now," Mulpuru says.
While some entrepreneurs (like McAfee) scored in their niche by seizing a good opportunity, other 5,000 founders simply went after their passions, hobbies or interests. Alexander Lans, the founder of One Stop Equine Shop (138 on the list; $3.4 million in sales), was a passionate horse lover. Scott Harper, in turn, founded Side by Side Stuff (314 on the list; $6.8 million in sales) and was a mechanic and a big fan of off road baby carriages.
Digital marketing as a common factor
It doesn't matter how these entrepreneurs got into their niche. They build the connection they have with their niche market by investing in digital marketing. On top of offering more types of aftermarket parts and accessories than his competitors, Harper of Sidy By Side Stuff spends several hundred thousand dollars a year on videos, interviews and other content he shares via YouTube, Instagram and Facebook. His business page has more than 124,000 likes and 2,000-5,000 interactions per week.
"We travel all over the country, capturing the fun of the sport on camera and that 's why people are interested in it," Harper says. Baby carriage fans come to his site not only when looking for new material, but also out of interest in the activity and share it with friends. This content makes them the "cool & credible guys. And according to Harper, this boosts their search results when they do shop.
Similarly, Chris Jones with Plant Therapy Essential Oils (31 on the list; $8.1 million annual sales) sells vials of lavender, lime and fennel oils. It's all about building credibility. "Every time I'm out of town, I spend every hour of every day looking for new ideas, plants and aromatherapy products," he wrote in an e-mail. During a three-day workshop on the distillation of essential oils - so he could learn about how these things are made. Both the good ways and the bad ways. He says it allows him to be more critical of his suppliers. It also allows him to know better what to look for and what questions to ask.
For this part, then, Lans is putting SEO at the forefront of his marketing strategy. "It's like a giant puzzle game," says the One Stop Equine Shop founder. He also continues to optimize his Google Ads campaigns and looks for the right pricing for his more than 100,000 horse-related SKUs (of which he keeps between 10,000-12,000 in stock). He also emphasizes customer service. The company receives 200 to 250 customer inquiries via e-mail and phone. "We try very hard to research everything in depth," Lans says. "And we help horse riders figure out what they need for dressage or any event, for example."
Although these companies grew rapidly, their success may remain limited says Mulpuru (the Forrester analyst). Many specialized entrepreneurs, he says, would have already reached their full niche market. And if a trend disappears, sales may leave again as quickly as they came. "The trade-off is that there is no scalability," Mulpuru says. The entrepreneurs who enjoy rapid growth in their specialized businesses don't seem much concerned about any slowdown. Some, like Harper, go even further. He is developing a Side by Side app called "Side by Side Guru." Others, like McAfee, are hedging. He is now selling other racquet sports accessories and expanding into other sports. "I thought this was going to be a nice little side project, but now I'm quitting my job and getting into pickleball full-time," McAfee says.
The 4 takeaways
- Small niches can provide a lot of online sales. Offline, such a specialized niche retailer can hardly survive, while the aggregated online market is a big fish pond.
- Many aspects of an Internet business can be outsourced. From logo design to website and web shop development. From digital marketing to the logistics of your sales. Whether (and how) you do this depends on your budgets, priorities and success. But if you keep doing everything yourself, you end up shooting yourself in your own foot. You could read about that in our previous post.
- Without investing heavily in the marketing of their business, Harper and Jones were guaranteed NOT to be where they are today. Yet all too often we at BME find that there are companies that just put a webshop online without providing a marketing budget. Waiting for a wave of shoppers to miraculously land on your site is pure madness. I understand that some people initially want to rely on their existing network. But why limit yourself to that? One of the biggest advantages of doing business online is that you expand your geographical scope enormously. At a very low marginal cost.
- Lance (of the horse shop) emphasizes customer service. Standing out from your competition online is very important. You can also do that by providing great service. Coolblue, for example, is known for this. People love coming back there. And this in turn leads to new purchases and positive referrals.
Do you have a cool (concrete) idea for a niche? Or are you already successful and would like to get rid of your logistics hassles? Then contact us and we'll think with you!
This article originally appeared on Inc.com. To keep it readable (and enjoyable), the text was freely translated, paraphrased and supplemented.
