Strict restrictions and lockdowns in place amid the pandemic have drained revenue for many retail stores and businesses worldwide. According to the Digital Commerce 360 report, as many as 17 North American retailers filed for bankruptcy during the COVID19 outbreak.
The pandemic, if anything, has put eCommerce at the forefront and made one thing very clear that the future for all retail stores is online. But, even after being aware of all this, most retailers or entrepreneurs still find themselves stuck at the planning stage partially due to the inability to settle on a niche market.
Niche markets are essentially more focused markets where you narrow down your customer group. For instance, a grocery store that sells just raw meat is more niche than a store chain that sells all organic food. Although, niche stores may have fewer customers than the likes of Walmart and Amazon but that’s precisely what’s required. Niche stores can create more accurate sales strategies for better customer retention and eCommerce growth.
Five trending eCommerce industries with potential growth
From Uber to Airbnb, online niche-specific marketplaces have grown considerably over the years. Initially, these were innovative business ideas focusing on a specific niche industry that grew quickly with time. And, now mid-way through 2020 coping with the coronavirus crisis, there are a number of eCommerce niches showing considerable promise. To illustrate further, let’s discuss the top 5 eCommerce niches that are expected to grow in the near future.
Recording nearly $200 billion in global market size in 2019, eLearning was estimated to reach over $370 billion in 2026, as per a Statista report last year.
This year, with the closures of educational institutes and organizations during the pandemic, the dynamics have changed a bit. eLearning has emerged as the only viable alternative for schools and educational institutes to continue teachings in a safe environment. COVID19 has boosted the demand for online learning, paving more opportunities for growth in the segment.
From Verbling to Lessonface, many popular eLearning platforms are showcasing considerable promise for growth. Lessonface, for instance, an online platform for live music lessons has expanded to include renowned musicians from around the world for its exciting new classes. These brands have realized their true potential and are keenly investing for the future of ecommerce growth.
Amid the crisis when traditional learning is no longer feasible, teachers worldwide are looking for a safe and sustainable income source. And the eLearning marketplace offers just that. With a Compound annual growth rate (CAGR) of 14% in the next five years, the eLearning marketplace is our popular pick for businesses to invest.
Currently, teachers are on the lookout for platforms like Verbling (now acquired by Busuu) to register and start earning. Online learning, once dubbed as an impractical alternative, is now a reliable medium for professionals to teach and earn a sustainable revenue. With a huge market base (currently expanding), eLearning makes our premier pick among the top 5 eCommerce industries to invest.
The online retail market has always been a considerable part of the eCommerce space and more so during the pandemic. Consider this, according to a survey by Statista, global retail eCommerce sales are projected to almost double at $6.54 trillion in 2023 up from $3.53 trillion last year.
These numbers assert the massive market scale of online retail that has grown rapidly this year. As the pandemic fueled online shopping , Amazon generated a revenue of nearly $76 billion and $89 billion in the first and second quarters respectively. Unperturbed by the current crisis, the retail giant soared to new heights. Similarly, eBay also recorded a massive 34.6% growth in the second quarter – its highest in 15 years.
As physical retail stores were shut amid lockdowns, the retailers moved to sell online to revive their revenue stream. Digital transformation – a process that usually takes years for an ecommerce business happens in weeks. And now, as restrictions are being lifted, consumers are still hesitant to go outside. They are more likely to continue ordering online since it is relatively safe and more convenient. E-Commerce retail has often been a go-to business idea for many entrepreneurs and businesses. And, now amid the chaos, starting an online retail marketplace makes more sense.
E-Commerce grocery sales registered a 22% growth rate last year in the US. Amid nationwide lockdowns and strict restrictions in place due to COVID19, the growth rate is expected to almost double this year. This rapid surge is a by-product of high consumer demand fulfilled by retail giants like Amazon, Target, and Walmart. As consumers increasingly opt for online channels to shop for essential grocery items, investing in an online grocery marketplace isn’t a bad idea.
According to Coresight Research, nearly 50% of surveyed US shoppers agreed they have started buying groceries online or made more purchases due to the pandemic.
In the pre-COVID era, the majority of customers picked out groceries themselves purely because they prefer to physically see groceries before buying and partly because the delivery fee was too expensive. COVID19 has altered consumer habits and changed priorities as grocery retailers face the new eCommerce reality. In a bid to survive amid this crisis, grocery stores are finding ways to get online and keep the business running. Buy online, pick up in-store – another popular practice is being widely followed among retailers.
E-Commerce sales are on the rise, ecommerce trends that are likely to continue even after the pandemic. And grocers that fulfill most customer demands and retain their consumers throughout the crisis will likely lead the industry. The online grocery niche is showing great signs of growth and will continue to prosper even after the pandemic subsides. In such a scenario, starting a hyperlocal grocery marketplace can be a great business idea.
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4. Food delivery
For decades, food ordering and delivery has been a popular service among consumers. Initially, the restaurants took orders on call, and now we have internet marketplaces with instant delivery operations. Food delivery giants like Grubhub, DoorDash, Uber Eats, and Zomato with their established network have dominated the online space for years. The utter convenience of ordering your favorite food online and receiving it within minutes has changed the industry dynamics completely.
Projected to reach an astonishing $200 billion in revenue by 2025, the online food delivery market still has many surprises in store. Since the industry is rapidly scaling, it would be naive to not count food delivery in the top 5 eCommerce niches. Even amid the chaos due to COVID, food delivery continued to thrive simply because the service is fundamentally essential and the ecommerce model was already well-established. The only major change was the adoption of contactless payment and delivery options.
Amid strict restrictions and closure of dine-in operations, online food delivery was the sole revenue source for many eateries and restaurant chains. Now, as restrictions begin to ease and restaurants start to offer dine-in operations, customers are still hesitant to visit a restaurant. They are more likely to order the same from their favorite restaurant online.
The booming food delivery business has meant industry giants acquiring their rivals to maximize growth and expansion. In a recent move, Uber Eats is all set to acquire Postmates – another popular food delivery marketplace for a massive amount. As big players move to expansion, starting a food delivery marketplace is a robust business idea with immediate returns.
Last on our list is an online rental marketplace – a booming business idea with huge potential. The niche market offers tangible business opportunities with a substantial revenue stream for entrepreneurs and businesses. A recent survey by Statista forecasts that the US equipment rental market alone growing at a 6.1% CAGR is expected to reach $59.4 billion in 2021.
Similarly, the global ride-sharing market or clothing rental market led by Uber and Rent the Runway respectively are showing great signs of growth. For instance, the global ride-sharing industry is forecasted to grow by over 50% and reach $117 billion by 2021. Another reason for the continued growth of the online rental market is the emergence of new rental services like:
- Gym equipment rentals
- Video game rentals
- Furniture rental marketplace and more
People confined to their homes hesitant to go outside are more likely to rent products or equipment (like the treadmill). The pandemic has paved the way for new rental marketplaces businesses to cash-in. And, considering the current crisis with an unstable global economy, renting is actually a smart choice with many associated benefits.
In reality, there are several online niche-based rental ideas either unexplored or without a dominant leader. So, businesses that are quick to identify their niche rental business may gain fruitful results with their online marketplace.
The pandemic will end and new normalcy will restore but the altered consumer habits are likely to remain even after the pandemic. And, if you are an entrepreneur or an enterprise with an idea to start a niche eCommerce marketplace, then choose ecommerce platforms with ready-to-launch marketplace solutions and mobile apps. This will help you save time and cash-in on the fueled online shopping activities.
Ankush works as a Marketing Manager at FATbit Technologies. FATbit is a renowned software development and turnkey ecommerce solutions company. Ankush expertise lies in branding and formulating eCommerce marketing strategies for startups and brands. He has been active in online marketing services for the past 8+ years. Follow him on Twitter: @ankushmahajann