What Are the Most Lucrative Ecommerce Niches in 2020?

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More people are interested in starting online businesses than ever before, and ecommerce is one of the most obvious options. But if you’re considering setting up an online store, or changing your focus in response to the current climate, you might be wondering what you should sell.

In this article, we’ll look at the recent changes to the ecommerce landscape and what they mean for you as you start your online business journey or pivot into a new niche. I’ll start by providing you with a snapshot of the ecommerce sector.

The State of Ecommerce in 2020

The COVID-19 pandemic has had an enormous impact on the ways we live, work, socialize, and shop. If you’re anything like me, you’ve probably been avoiding going to the store in person as much as possible over the last few months.

Few industries have been entirely spared from the impact of the pandemic. Large-scale unemployment means many people are cutting back on their spending and as such, some industries have seen a sharp downturn in sales. Sectors such as travel and hospitality have been particularly impacted.

However, the new normal we’re all living in also represents an opportunity for ecommerce. More people are buying online than ever before, and industries that have traditionally struggled to break into ecommerce are seeing unprecedented growth. And this trend is set to continue, with ecommerce penetration rates set to rise from 15% in 2020 to 25% in 2025.

The writing on the wall is clear: ecommerce is the future. But before you get started, you need to decide what you’re going to sell. In other words, you need to define your niche.

Top Ecommerce Niches

A niche is simply a smaller and more specific subsection of a larger market. Choosing and understanding your niche is essential if you want to attract the right customers to your ecommerce store.

There are more than 24 million ecommerce stores in the world as of early 2020, according to Kommando Tech. The competition has never been fiercer. Most companies do not have the resources to fight for a market share in numerous different spaces. Therefore, choosing a niche means you can focus on a specific market group with less competition. Counterintuitive though it may seem, this can actually lead to higher revenue than trying to do too many things all at once.

Focusing on a niche market also gives you the opportunity to get to know your customer base on a deeper level. Knowing your target market inside and out is one of the most critical keys to ecommerce success.

When you’re choosing your niche, start by considering what you care about. You can’t sell a product you don’t believe in, so starting with your passions and interests is paramount. From there, consider market demand, potential profitability, availability of products, and your competition.

With all of this in mind, let’s have a look at some of the most lucrative niches for ecommerce store owners and aspiring online retailers in 2020.

Technology and Home Office Equipment

The last two decades saw a growing trend in working from home across many sectors of the economy. Yet this trend only impacted a fraction of the population. COVID-19 and accompanying stay-at-home orders have resulted in a huge shift in the way we work.

According to data released by Netskope, in March 2020 58% of people in the US operating in the knowledge economy were working from home. This figure is reflective of the shift in work culture many of us have experienced.

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Remote work doesn’t seem to be going anywhere any time soon. A recent survey by Gartner found that around 74% of companies intend to keep at least some of their workforce remote after the pandemic is over.

This is a great time to get into the home office equipment niche. You might choose to focus on technology such as laptops, keyboards, mice, and monitors. Another possibility is to concentrate on non-technological home office necessities such as ergonomic office chairs and standing desks.

Home Gym and Fitness Gear

Gyms are beginning to reopen in some cities across the United States and the world. But many remain closed, and some fitness enthusiasts still feel that attending the gym in person is too significant a health risk. Others are realizing that they do not need their expensive monthly gym membership to keep fit. With all of this in mind, working out at home has never been more popular.

Fitness is an evergreen ecommerce niche. If you’re passionate about health and exercise, focusing on the lucrative at-home fitness market could be the perfect way to start an online business.

You might focus on home gym equipment such as treadmills and ellipticals, on space-saving gear such as dumbbells, resistance bands, or pull-up bars, or even on nutritional supplements for those wanting to take their workout to the next level.

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It’s also worth considering where fitness is heading. Mirror, a company that sells a large LCD that looks like a mirror that people can use for training, is heading for a billion-dollar valuation. Fitness technology is going to be a booming niche for this century, and being ahead of the curve on what will trend will allow you to grab a slice of the pie.

Entertainment

Entertainment is a large industry covering a number of different niches. As COVID-19 shutdowns keep people in their homes, and live events from concerts to sporting fixtures are canceled, people are looking for ways to use their increased free time and keep themselves entertained.

According to Statista, 26% of American consumers reported spending more on home entertainment due to the pandemic in the first half of 2020.

Spending on video games and associated hardware in the US hit a record high in June of this year. But some people prefer more old-fashioned forms of entertainment. Board games have exploded in popularity in the last few years, and COVID-19 quarantines have boosted sales in this niche even more. In the UK alone, the first week of the lockdown in March saw sales of popular games such as Monopoly and Cluedo soar by 240%.

Interestingly enough, one of the biggest selling board games during this period is Pandemic.

As BazaarVoice reported, the toys and games niche saw a 79% increase in order count in June 2020. As schools and extracurricular activities closed and parents sought to keep their children entertained at home, sales of toys, games, and activities for children have risen.

Jigsaw puzzles have proven popular, with manufacturer Ravensburger enjoying a 370% increase in sales in March 2020 against the same period the previous year. Outdoor swings and play sets, building and construction toys such as Lego, and educational toys are also doing well.

Many people, adults and children alike, have been using the lockdown period to get creative. According to an NMPI Digital report, the Michaels Companies – North America’s largest supplier of arts and crafts materials – saw an $8 million increase in revenue this year so far compared to last year.

Arts and crafts are not only popular pastimes but proven to aid in stress reduction. They are always popular and never more so than during the pandemic.

DIY and Home Improvement

At the end of June, Bank of America polled over 1,000 Americans and found that 70% of respondents had either started or planned home improvement projects during the COVID-19 shutdown, and that many planned to continue with these projects into 2021. The analysts predict a “multi-year tailwind” as younger buyers move out of cities, buying and renovating the older homes they can more readily afford.

Gardening is another pastime linked to home improvement that has steeply risen in popularity this year. US-based seed supplier W. Atlee Burpee & Co reported the highest sales in its 144-year history in March of this year, while an ACI Worldwide analysis found that online sales of gardening essentials saw a 163% increase.

Food, Drink, and Cooking

Among many of the other changes it has wrought, the pandemic has changed the way many people eat. Restaurants and eateries around the world were closed for extended periods, many are yet to reopen, and some will sadly not survive the shutdown.

Similarly, mass remote working means that the days of grabbing a sandwich for lunch from the local deli are over. School closures mean that children are no longer enjoying school meals, leaving parents to arrange breakfast, lunch, and dinner seven days per week.

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As a result, our relationship to food has changed. Here are some of the lucrative ecommerce niches in the food and drink space:

Kitchen Equipment and Ingredients

Research by Bain & Company suggests that online grocery shopping in the US has risen from 3-4% before the pandemic to 10-15% currently.

Increased time at home, restaurant closures, and concerns over family budgets have led to a boom for home cooking. Whether you focus on specialist kitchen appliances such as pasta makers and bread machines, hard-to-find ingredients, store cupboard staples, or supplies for home bakers, your ecommerce business can benefit.

Meal Subscriptions

The increase in home cooking, coupled with many consumers’ desire to avoid going to the grocery store as much as possible, has resulted in a surge in the popularity of meal kit delivery services. After faltering and even fearing for its survival for several years, meal kit company Blue Apron enjoyed a 400% surge in its stock value from March to mid-April 2020:

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There is tough competition in the meal delivery space, but if you have the food knowledge and the marketing know-how to succeed, there has never been a better time to launch this type of business. It is one way that restaurant owners and food production companies can pivot into the ecommerce space at a time when their businesses may be struggling.

Alcohol

With pubs and bars closed across the world, and many consumers feeling unsafe going to those that are open, consumption of alcohol at home has increased. Many pubs, bars, distilleries, and breweries have set up ecommerce arms for the first time during COVID-19, while sales of at-home cocktail making equipment and ingredients have boomed.

According to Drizly’s 2020 consumer report, 30% of consumers have said they will continue to drink more at home through the end of 2020 and beyond. There’s also room for growth, as Beverage Daily reports that alcohol accounts for less than 1% of online grocery spending (against 5-6% of in-store spending). Just make sure you obtain the correct licenses and abide by any alcohol retailing laws in your city, state, or country if you decide to move into the alcohol ecommerce space.

Choosing the Right Ecommerce Niche in 2020

No one knows what the new normal will look like when we emerge from the other side of the COVID-19 pandemic. Therefore, it is essential for retailers and business owners to be flexible, adaptable, and prepared to pivot as necessary to ensure their current and future success.

Despite worrying reports about unemployment levels and the challenges facing the retail sector, there are substantial opportunities in the ecommerce industry in 2020 and beyond.

This list is not intended to be exhaustive. However, I hope it gives you some inspiration as you launch your business or adapt to the changing realities of the world today. Whatever niche you ultimately choose, take your time to study the market and understand your target audience before you dive in. For more guidance on starting your own business, check out this post.

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