If you are considering setting up a business online selling products the first thing that you must do is to find your niche. What's a niche? According to the definition it is a shallow recess, especially one in a wall, to display a statue or other ornament. However, as an adjective, which is what we are looking for, it is "denoting or relating to products, services, or interests that appeal to a small, specialized section of the population."

Now you might think that restricting yourself to a small section of the population is not good for business, but if you go the other way and try and sell all things to all people you are going to be in direct competition with the big players like Amazon and so on, and that would not be good for business even if you had a million in the bank to start with.

The point is that eCommerce has an audience of many, many millions, if not billions, of people who go online to shop. Twenty-five years ago, virtually nobody did, but just look at how fast things have changed around. If you are starting from scratch and trying to compete with Amazon, good luck with that!

Equally, a niche may be a small section of the population, but even so will have plenty of potential customers for you to sell to. Don't worry that there won't be enough customers. Unless you are trying to sell lamb chops to a niche of vegans, there will still be plenty of potential. Vegans are actually quite a good example of a niche that you could enter if you were supplying food products free of any animal input: in relation to the rest of the population they are a very small percentage, but there are still an awful lot of them out there, as you have no doubt been reading in the press for the last year or two.

All right, if you chose veganism as a niche there wouldn't be nearly as many customers as there are for pizza, but then you won't be competing against Papa John's. Furthermore, another advantage of operating in a niche is that prices tend to be higher than mass market products. OK, we are all familiar with the "buy one, get one free" pizza deal. Just about everybody selling pizzas does that, and even though we know they are still making a great profit, many people like the idea. However, just by doing that, the pizza parlours are restricting their market to some extent, because anybody living alone doesn't want two pizzas. What are they going to do with the other one? Feed it to the cat? But the pizza parlour isn't going to sell you one pizza for half the price!

Another advantage of entering a niche market is choice. Some people place great emphasis on price, but if that was the only consideration, we would all shop at Poundland. People are prepared to pay more for quality and when you enter a niche market you can provide that.

By entering a niche market, you can also start a business with reduced start-up costs. In fact, you can start an eCommerce store with virtually no start-up costs at all if you go for drop-shipping. This is where you advertise a product for sale that you don't have in stock, or even own. You locate a manufacturer or wholesaler online who does have the product and you advertise it in your eCommerce store. Your customer pays you the money and you then send the manufacturer the cost price that he charges, keeping the profit for yourself. The manufacturer ships the product to your customer, and everyone is happy.

You can even sell items locally for free on some websites. This applies whether you own the goods or are drop-shipping. There are some websites that let you advertise your products for sale, yet don't charge you a fee when you sell them. Now that has to be a powerful way to run a business. Twenty-five years ago, you would have had to pay for advertising, and perhaps run a salesforce to sell products, but now you can sell them at no cost. That's a big advantage, because if you have a product that doesn't sell, it has cost you nothing!a