Small and Steady Could Win the E-Commerce Race

In January, amid some of the heaviest shaking out to date in the e-commerce world, a Web site by the name of JustBalls.com quietly landed a US$13 million round of venture funding.

The e-tail site has since shed the dot-com part of its name, as is the latest trend for attracting capital investment. However, the good news for JustBalls came as many big-name e-tail sites were struggling with a changing economic environment. eToys was rapidly approaching shutdown, while Amazon was preparing to announce its first large-scale layoffs.

If there is a lesson in the way that JustBalls bounced, it might be that it is good to be small and specialized on the Internet these days, especially because the all-things-to-everyone sites are dropping off the map one after another.

While being a niche player is not for every type of online businesses, focusing on a niche can keep a business running long term.

Flying Low

There are hundreds of niche sites plying e-commerce in their own ways. By definition, these sites are not bound for initial public offerings (IPOs) any time soon.

But many of them are making money -- or at least have the real prospect of doing so fairly quickly.

The key, say these specialty e-tailers, is that they recognize their place in the e-commerce Web of life. While it once might have been tempting to think that explosive overnight growth would be a possibility, realistic expectations have since set in.

Many do not even have their page views or revenue counted toward the totals that online analysts regularly report on.

Know Your Place

However, unlike many e-tailers, which were forced to cancel ambitious expansions and then pare down to a more suitable size, niche e-tailers were the right size all along.

"We are not attempting to be all things to all people," said Michael Harp, the president of CookSource.com. CookSource, which now has a presence on the Yahoo! Shopping site, specializes in high-quality cookware.

Other niche e-tailers echo CookSource.com's strategy of focused and sound business practices. In some cases, the niche e-tailers actually benefited from being passed over during the e-commerce boom.

Stretching it Out

That's certainly true for Raymonde Lemire, the founder of FlyingNoodle.com, which is now approaching its sixth year as an Internet business.

Being in a niche does not necessarily mean having a limited customer base or a small playing field. FlyingNoodle sells to customers in 24 countries, from Israel to Sweden. And, unlike many other niche e-tailers, Lemire has benefited from some national publicity. An appearance on NBC's "The Today Show" prompted scores of orders within hours for the site.

In fact, Lemire said free publicity is a key part of his strategy. Because he's a small e-tailer targeting a niche, he believes that widespread advertising is not the right path for his company. Instead, he relies primarily on customer service and word of mouth.

"Free is good," Lemire told the E-Commerce Times. "Someone else telling a potential customer that we're cool is even better."

Trampled Underfoot

There remains a risk of niche sites being trampled, especially if they are competing for customers with the powerhouse e-tailers.

However, many niche sites have carved out markets so narrowly defined that they are likely to be the dominant -- if not the only -- players in their space.

JustBalls might seem specific, but it is downright general in scope compared to a Canadian site called JustGolfBalls.net. Another Yahoo! shopping partner, FootCandy.com, deals only in toe rings and pedicure products.

No Market Too Narrow?

Watches are probably not a niche themselves, but Watchbands.com has found a way around that problem. It sells only replacement bands, both brand-name and generic.

Not all of the niche sites will succeed, of course, indeed, many smaller sites have let it be known they are for sale if the price is right.

Yet the bottom line is that niche sites are more than just a lucky find for shoppers searching for speciality items. They are a thriving part of the e-commerce ecosystem.