There are many articles written about why it is important to segment your company and find your niche. However, the focus tends to be solely on finding that niche and how it will affect your company, without regard to how it will affect your partnered services. We’ve seen that niche segmentation can both benefit your company’s bottom line, customer satisfaction, and drive overall growth in a measured and sustainable way. It can also affect other attached services, such as company’s 3PL partner, and the resources you allot towards those services. There are countless reasons and benefits to refining your niche market, but it’s dependent on your particular business plan and long term strategy.
Here is a list of 9 potential outcomes to more focus:
1. Provides value
Value to both yourself, your employees, and especially to your buying market, will be amplified. Being in a specified niche allows you to explore, innovate, and generate content without spreading yourself too thin. It is difficult to generate unique and quality products, content, and engagement when you are using “shot gun” approach.
2. Limits competition
Being in a niche market makes the competitive pool much smaller. This allows you to have easier connectivity with those working or looking for help within that niche. However be cautious, if your competition is already a commodity or monopoly, aim yourself toward emerging and growing markets.
3. Slow yet steady growth
Like small-scale logistics companies, growth is often slow, but steady. This may seem like a negative at first, but in the long term, it will allow your company to adjust, strategize, and grow stronger. Companies that try to grow too quickly often find themselves bloated and consequently thin on expertise and unable to be agile when something changes. The results can be devastating.
4. Develop and capture tribe markets
Tribes are small groups of people, often filled with influencers that can help boost your company’s success. They share their experiences, promote your business and can give you quality feedback. Having a segmented tribe that loves what you sell or do can keep sales steady and growing with little effort on your part.
5. Lower warehousing costs and space
Think about it. Fewer products and potentially less inventory could mean lower warehousing costs. If you are just starting your business, or if you want to cut back, reducing your product variety is a common-sense approach. Not using a 3PL provider yet? No worries, choosing a strong 3PL will give you the flexibility to adjust as your market segment changes and even lower your initial overhead costs.
6. Lower excess inventory
There is nothing worse than having too much of a product, especially when it isn’t selling. That’s the equivalent of throwing money out the window. Narrowing your selling market will allow you to buy in bulk, but only with the product you know is selling.
7. Potential to be an industry leader
Who doesn’t want to be one of those? Since competition is low, being in a niche can allow you the potential to be at the top of the hill. It’s all about seeing an opportunity and running with it. This is how major companies like Google and Skype have become so big. They saw an opening and became the best within it.
8. Smarter and more efficient business purchases
Similar to lowering excess inventory, as a business owner, you can make more thoughtful decisions when it comes to selecting your 3PL providers or in assessing your fulfillment and shipping needs. If you choose the 3PL route, it will allow you the flexibility to define your specific needs. However, if you decide to maintain shipping and fulfillment in-house, the choice to focus on a niche will lessen the specialized packing and shipping that will be required. You can buy packaging and shipping materials in bulk and reduce your overall costs.
9. More efficient supply-chain
The most important benefit to niching your business is that it will streamline your supply chain. Having more than a handful of products can make your supply chain complex and complicated, which can hurt business. From manufacturing to shipping and distribution, all methods vary and can create a very expensive supply chain and a massive headache.
From this list, we hope to have shared the benefits of maximizing your business by finding your target and product markets within a niche. It may be uncomfortable to put yourself into one specific market, yet in terms of resources, generating value, customer service, and efficiency, it can be a great step toward making your company a lasting and legendary success.