Branded Niche Store: Why It Works and Six Reasons To Start One
If you're new to dropshipping, you may be feeling overwhelmed about your choices. Should you start a one-product store, a general store, or a branded niche store? How does one differ from the next? What advantages does each offer? In this video, we'll answer these questions and explain why branded niche stores are the best way to go.
Video transcript: General store, niche store, or one-product store? It's one of the most popular questions that we get here at Oberlo, whether it's in live streams or down in the YouTube comments.
Today, I'm gonna settle this debate. Well, kind of. In today’s video, I'm going to explain the three different types of dropshipping store formats, the advantages and disadvantages of each, and finally, six reasons I think that branded niche stores are the way to go. Let’s not waste any more time and jump straight into it.
Hi, I’m Magda and I work at Oberlo. I’ve been here for a few years, and that means I've helped hundreds of merchants and seen hundreds of stores: the good, the bad, and the ugly. I mean the one-product, the general, and the niche stores.
So you might be thinking that if I've seen so many stores that I must know the answer to this one simple question: Should you start a niche store, a one-product store, or a general store?
Unfortunately, the answer is not as simple as the question, and that's why I'm making a video here today. I've actually seen all three types of store formats work out and turn everyday, ordinary people into six-figure ecommerce legends.
Just because I've seen all of these different store formats work doesn’t mean that each of them is right for you. If you're new or a little confused about what I mean by a general store, niche store, and one-product store, let me explain.
If you're dropshipping or starting an ecommerce business, once you pick a product that you'd like to sell, you need to build a store around it. Most dropshippers use one of three popular formats: one-product store, niche store, or general store. Let me explain each of them.
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One-Product, Niche, and General Stores Explained
What Is a One-Product Store?
A one-product store sells – you probably guessed it – only one product.
Let's say that you're browsing Oberlo one day and you see cat water fountains and you are determined to build an entire store around these. So you would import the cat water fountain as your only product and then build an entire storefront that would act as a funnel to this one product.
All the copy, all the content, and everything else on the storefront would be focused on this product. I chose this example because, in one of our past live streams, Jessica came up with a genius domain name of Cat-2-O for this cat water fountain.
Let's move on to niche stores.
What Is a Niche Store?
A niche store refers to a store that sells products from one particular category.
This can be as broad as pet products or as specific as Chihuahua costumes. A branded niche store simply means taking an extra step of building an entire brand for your business. And no, by branding, I do not mean just creating a custom logo, but more on this later.
What Is a General Store?
A general store is a store that sells products from a wide variety of categories.
Think about a big-box or a department store, for example. While general stores mostly focus on trending products, the actual product categories can vary from kitchen gadgets to pet supplies to even headphones.
Now that you have a brief idea of what each store type is like, let me go over some of the advantages and disadvantages of each. Let's start with the one-product store model.
Advantages and Disadvantages
If you watch a lot of successful dropshippers on YouTube or on TikTok, you may notice that a lot of them actually love one-product stores and that's often how they structure their businesses and succeed.
Only selling one product in your store has some huge benefits. The first is time. Let me just forewarn you: If you haven't started your business just yet, setting everything up and all the little details that are associated with setting up a store can take a lot of time. Trust me, when you start writing product descriptions, you'll see the benefits.
If you've always wanted to start your online business but are feeling overwhelmed by all those little things that I just mentioned, I would definitely suggest checking out Dropshipping 101. It's a free online course that takes you from start to finish when it comes to building your store.
Another huge advantage of one-product stores is that you are essentially building a funnel to a single product.
If you're new to the ecommerce game, let me explain. The paradox of choice as coined by Barry Schwartz is a very real thing. In a study done by a Columbia University professor, a tasting table with 24 different jam flavors was set up at a grocery store. A few hours later, they reduced those 24 jam flavors to just six. At the end of the day, they compared the sales of when they had 24 jam flavors out and when they had six.
You might be surprised to hear that when there were 24 different flavors of jam, the conversion rate was three percent. On the opposite end, when there were only six flavors, the conversion rate was 30 percent. Yes, you heard that right.
One-product stores have the advantage of helping customers focus on one product, not getting overwhelmed, and not leaving before they can decide if they should get a red, blue, or orange sweater.
So far, selling one product in a store seems amazing. If this is what pro-dropshippers on YouTube are doing, why shouldn’t you? Well, here’s the thing. Pro-dropshippers are exactly that: pros.
They have enough experience to successfully bet on products that they think will be winners. If you wanna have a successful dropshipping store, you need to find the winning product. If you're new to the dropshipping game, this can take two to five different rounds of testing.
If you're building a new one-product store for every single product that you're gonna be testing, there is a very good chance that you will burn out and quit. Trust me, it's a very real thing.
For this reason, I would only suggest one-product dropshipping stores for someone that is experienced in dropshipping.
Let's jump to the complete opposite end of the spectrum with general stores. General stores are not limited to selling one product or even one category of products. You can have kitchen gadgets, you can have lava lamps, and right beside it, you can also sell cat litter mats.
Many dropshippers who have successful general stores usually like to focus the products around one type. So for example, you may see successful general stores that are focused on gadgets.
General stores can be extremely powerful.
Actually, Chris Wane, a seven-figure dropshipper who we interviewed on this channel before, likes to stick to this format. By not limiting your store to a product or a niche, you have the opportunity to reach multiple audiences as well as test multiple products.
This is an extremely effective and fast way of finding a winning product. Like I mentioned, if you want a successful dropshipping business, you need to find a winning product. And sometimes, the best way to do that is to test everything all at once.
Some, I think Chris included, would argue that general stores are actually great for beginners because it allows you to test multiple products, unlike one-product stores.
Here is the small little catch. Testing multiple products in multiple categories to different audiences on Facebook can get very expensive. Not only is every product new to you, but so are the audiences. Also, if someone comes to your store because they saw that you were advertising a cat water fountain, they may not stick around to shop for kitchen gadgets.
Overall, if you have a big budget and really wanna dive into Facebook ads, then general stores might definitely be a good way to go. However, my favorite store format and the one that I suggest for beginners and even experienced ecommerce business owners is a branded niche store.
1. Test Multiple Products
As I mentioned, a niche store sells multiple products that fit under one category. For example, if I wanted to sell cat water fountains, but I didn't want to be limited to just that product, I may start a store called perfectpets.com. Aside from cat water fountains, I could also sell cat leashes, cat litter mats, anything for your perfect pet at home.
There are multiple advantages to starting a branded niche store like this. The first huge advantage of selling in a niche store is that you can test multiple different products without having to change audiences or change stores.
If you're just getting started, finding a winning product can be super frustrating because there's not really any way to know without testing it.
If you're running Facebook ads or working with affiliates on TikTok or even Instagram, it will be a lot easier to swap different types of cat products, for example, than having to find completely new influencers or audiences to target.
The second reason I suggest starting a branded niche store is because of upsells. If you're new to the ecommerce game, you may have heard the term upsells floating around here and there, but you may not understand the real power of them.
Upselling is a technique where you invite a customer to add another product to their order to increase their average order value. This is an extremely effective technique and can make you a lot of money because that customer already has the intent to purchase.
With a niche store, there might be multiple products that the customer is interested in. So for example, if your customer is here to purchase a cat water fountain, you may invite them to add on a super beautiful transparent cat food bowl.
If you were running a one-product store, you wouldn't be able to do this. And if you were running a general store, it would be a lot harder to suggest to someone to add on to their order if their intent is to purchase cat water fountains but the only other products you have available are kitchen gadgets.
3. Increased Customer Lifetime Value
The third reason I suggest a branded niche store is that it is much more effective at increasing customer lifetime value. Customer lifetime value is how much money your customer will bring to your brand throughout their entire time of being a paying customer.
Once a customer makes a purchase through your store, they're automatically going to be added to your email list. That means that you can start emailing them every week, every month, or whenever you like with new promotions and new products.
If your customer purchases a cat water fountain, there's a very good chance that they might be interested in another product for their furry friend. Of course, they were interested in cat products once, so they might be interested in cat products again.
But also, something that's very important to remember is that acquiring a new customer costs five times as much as retaining an old one.
If you're always focused on acquiring new customers, you'll see that you have a very high ad cost. However, if you work on building a relationship with your existing customers and selling to them, then you'll see that you'll end up with a much larger profit in the long run.
4. Lower Costs of Advertising
The fourth reason I suggest a branded niche store is because it can cost you less when it comes to advertising. If you're running Facebook ads, a niche store will help your Facebook Pixel only focus on one audience. While you may need to swap different types of products and different types of creatives, your Pixel will still know who your target audience is.
Also, any website traffic that you send to your store will have a higher chance of sticking around and browsing other related products. Plus, on top of that, as I mentioned earlier: emails. Sending them emails to your customers is literally free advertising. Let me say that again. Sending emails to your customers is literally free advertising. So don't forget to take advantage of that.
5. Branding Possibility
The fifth reason I suggest starting a niche store is that it gives you the biggest opportunity to brand your business and grow it on social media. Now, when I say brand, I don't just mean getting a custom-made logo. I mean creating a voice and a mission for your entire business.
Branding your business is the underlying foundation of all these advantages that I've been talking about so far. Branding makes your business memorable and it allows you to build a relationship with your customer that keeps them coming back, trusting you, and overall, purchasing more products.
Also, branding your business makes it a lot easier to start social media accounts. If you're someone that's just getting started and does not have a big budget, then this is the best way to drive organic traffic to your store. Whether it be on TikTok, Instagram, or Pinterest, having a branded niche store won't tie you down to one product, and it will also help you focus on a specific audience.
6. Growth Foundation
The sixth and final reason is that having a branded niche store is setting a very good foundation for you to grow and explode your business in the future. It gives you a lot of flexibility. It allows you to build a relationship with your customer so that they trust you, but it gives you the flexibility to test different products, different creatives, and different types of angles.
While it might take slightly longer to start than a one-product store, this is building a strong foundation for the future success of your business.
Overall, while one-product stores and general stores do work, I think branded niche stores are the best way to go for both beginners and experienced dropshippers alike.
What have your experiences been with these different types of store formats? I would love to know. Let me know if you’ve started a one-product, general, or niche store. And has it been successful for you? Did you switch it up? I would love to know. And until next time, happy hustling.
Want to Learn More?
- How To Choose a Niche for Your Dropshipping Store
- What Should You Sell Online?
- Dropshipping Niches That Are Steady, Not Trendy
- 16 Years of Dropshipping: The Unlikely Niche That Made This Entrepreneur a Seven-Figure Success