It’s time to update this list of our hottest online niches for 2021!
One of the most challenging parts of starting an online business in Canada is choosing a profitable niche. We have less competition within our borders than we would in large markets like the US. However, we still need to select products that are trending and in demand in Canada, while not being in a saturated niche or easily obtained locally. We also have to stay away from items easily obtained from the US (such as those that ship inexpensively in an envelope). Alternately, we can sell to Americans or in many other countries.
Reducing the Risk
Having a wide range of choices is one of the benefits of doing business online, but it can also make it harder to choose a promising niche. Nobody wants to bet heavily on products without a reasonable chance of success. Being stuck with stagnate inventory is a seller’s worst nightmare. Research and testing can help to mitigate that risk.
My Secret Weapon – Drop Shipping
Drop shipping is the perfect way to lower the risk of choosing the wrong niche or product. With no inventory to worry about, we can test-run virtually any product through a website or online marketplace. Drop shipping is a business model in itself. You may decide to continue with it, or bring in the best-selling products for resale and continue drop shipping other products.
Some of the most popular drop shipping suppliers among Canadians are accessed through Wholesale2B (for a complete solution) and World Wide Brands (directory of certified wholesale drop shippers). Ecommerce platforms like Shopify make it incredibly easy to add drop-shipped products through apps.
For more information about drop shipping in Canada, please read Drop Shipping / Wholesale for Canadian Sellers.
Testing the Waters with Affiliate Programs
You can also test product popularity through affiliate programs. Simply find a merchant selling the product (or something similar) and use direct linking options to see how it sells for you. Before joining the affiliate program, you’ll have to verify that they ship to Canada if they’re located elsewhere.
Your margins will be considerably lower than with drop shipping, but it’s a less intimidating option for some. An easy affiliate network to start with is Share-A-Sale. Check out The Best Affiliate Program Networks for Canadians for more options.
Learn more in our big guide, How to Start Affiliate Marketing in Canada.
Rolling with the Punches
Of course, everything changed in 2020. Online shopping soared and it isn’t expected to drop by any significant degree after the crisis has passed. Most Canadians were already enthusiastic online shoppers, but they placed more orders in 2020. Others started shopping online out of necessity, but will probably continue to do so now that they’re comfortable with it.
The biggest shakeup in 2020 wasn’t the increase in online shopping, but the mass movement of Canadian businesses into the digital market. For whatever reason, most small businesses in Canada had resisted digital adoption until the pandemic forced their hand. The movement will continue into 2021, as businesses scramble to recover from offline losses and realize how critical it is to be online. It’s a crucial part of today’s contingency plan.
New online businesses will pop up faster as Canadians look for their own backup plan, be it fulltime or a side hustle. There is a wealth of legitimate online opportunities beyond ecommerce, just waiting to be discovered.
My Hottest Online Niches in Canada
I’ve worked with a lot of products and merchants online in various capacities for more than 20 years. That gives me unique insights into the online Canadian market.
Reacting to current trends with new products can be a dangerous game and is best left to those qualified to hit a moving target. The trick is in predicting what will change and how permanent those changes will be.
We saw an uptick in all ecommerce and website traffic and thought it best not to introduce new products for most of the year. While many have profited from items directly related to the pandemic, we chose to focus on its impact on long-term consumer behaviour.
For example, working from home is expected to continue for many positions. What do people need to work from home? Electronics, office furniture & supplies, and maybe renovate a room for a quiet home office. Those are the obvious trends. When we apply it to our niches, all sorts of opportunities present themselves.
Our natural pet care niche has steadily grown in online sales because people are working from home. Now they can be home to care for a new pet and they’ll enjoy the company, so they get one. As new pet parents, or those with a growing family of them, they need everything from dog beds to premium food. If they’re new at it, they’ll be interested in pet care books and tutorials. That can be turned into another revenue stream, increase traffic or be used as a free download to grow our email list.
“Canadians spent more than $5.7 billion on their pets this year, an increase of about $300 million compared to 2019, according to German market data firm Statista,” writes Pete Evans for CBC. “And that figure is projected to grow by more than $100 million next year, too. More than a third of all Canadian households now have a dog, and 40 per cent now have a cat, Statista says. Both figures are up from last year.”
Our best-selling products within our niches naturally shifted to reflect the changing priorities of consumers trying to survive the crisis.
As always, we focus on what the market wants and how our product or service can benefit the people who want it. Trends are just another viewpoint to explore for longer-term opportunities. You’ll win some and you’ll lose some, but with practice you’ll get better at spotting the most profitable and lasting trends.
Turn to your ideal customer profiles and think about how this challenging year has impacted their life, and how your product or service can help. Head in that direction in 2021 for an increased chance at a profitable year.
Following (in no particular order) are the most consistently-lucrative product niches for me (and those I work with) this past year. Some have held steady from previous years and have proven to be solid, long-term earners. Others are newer online niches that appear to be winners right out of the gate.
- Sustainable Fashion: The sale of pre-owned clothing and accessories has become a very profitable niche. Buying used clothing was always popular here, but the sector has grown as Canadians become more aware of the environmental impact of ‘fast fashion’. Luxury items will always fly off the shelves, but don’t miss the opportunities in children’s clothing, business attire and collectibles. Forbes recently reported that the resale of sneakers alone brings in USD $2 billion in annual sales. Consider anything that supports the distribution of sustainable fashion as well, including platforms, apps and information. Incidentally, recommerce (selling used or excess products) in general is growing 20x faster than the broader retail market and 5x faster than off-price retailers.
- Specialty Fashion: Attractive, trendy fashion in plus sizes, especially 2XL & up. Many Canadians are overweight, but that doesn’t mean they don’t want to dress fashionably. Professional attire for the office has been especially popular in this niche, but it has temporarily shifted to more casual, comfortable clothes in 2020.
- Entrepreneur: Home business items revolving around organization, space-saving and efficiency. Mobility is still huge across the business niche. Anything that helps people work and communicate on the fly has major potential, especially if you find a gap in what’s offered by the larger B2B (Business to Business) stores. As you’ve probably guessed, tools and services that facilitate online communication and working from home have exploded in popularity in 2020.
- Health & Fitness: Natural supplements, with a focus on more obscure or trending items. Offering solutions for specific health issues can give you an edge. However, you must have legitimate expertise or experience in the category to ensure you rank well in Google’s search results. Also lucrative is the sale of anything that may be embarrassing for some to buy in person, such as adult incontinence products. Medicinal uses for Cannabis and it’s derivatives are huge right now, as are proven ways to boost immunity.
- Subscription Boxes and Recurring Deliveries: Some things still surprise me and the popularity of subscription boxes in Canada is one of them. Eleven percent of Canadians have ordered an average of two subscription boxes in the past year. Twenty-three percent have over 41 subscriptions! Consumers love discovering new products, while businesses are finding success with the new channel for discovery and sales. Recurring deliveries, of course, facilitate customer loyalty and recurring revenue.
- Cannabis accessories have jumped as a niche since Canadian legalization and the pandemic has increased demand. There’s still tons of room for novelty items, whether they’re already available or something you invent yourself. Additionally, it’s the new wine and with that comes the opportunity to serve the equivalent of “wine snobs” at the high end. Many people are looking for information, leaving the door wide open for content marketing. The business opportunities for anything related to Cannabis in Canada are practically endless at this point, but make sure you’re following the law. You can stay on top of the Canadian cannabis sector by subscribing to the BNN Bloomberg newsletter, Cannabis Canada. North American Cannabis sales are expected to reach $47.3 billion USD by 2027.
- Pets: Natural everything, from food to toys. Note that Canada should reflect the American market per capita. The U.S. online pet food and supplies market is expected to reach USD 6.13 billion by 2025. Canadians spent more than $5.7 billion on their pets in 2020. Many people have added pets to their family during the pandemic, causing an uptick in sales of staples, necessities, novelties and premium products.
- Senior Citizens: Assisted living products and senior-friendly travel options have been growing steadily in recent years. Don’t underestimate or dismiss this segment of the Canadian market as too lacking in tech expertise to shop online. Seventy-one percent of Canadian seniors used the Internet in 2018 and like the rest of consumers, 2020 forced them to shop online more.
- Information Products & Online Education: The demand for ebooks, whitepapers and online courses skyrocketed in 2020, building on the already healthy market for digital learning products. They do well for us because we can find or create downloads on virtually any topic, allowing us to slip them into any niche. It can be a primary source of revenue or add another revenue stream to your small business.
- Reusable Shopping Bags & Utensils: It’s a little tougher to find suppliers, but shopping bags do really well if you stick to novelty bags with nice designs in large sizes. This is one product that saw a drop in 2020 because stores were concerned about hygiene. However, we know demand will pick up again when the crisis is over. Promoting them as practical gift bags over the holiday season brought in more sales. Reusable utensils are expected to be big as more cities ban single-use plastics. Anything that makes these items more environmentally friendly, including fast biodegration, has a lot of potential at the B2B level as well. This is a niche that requires testing though. For example, reusable utensils require further development to make them easy to clean and carry. Otherwise, people dismiss them as too inconvenient.
If you need a website with Canadian currency, shipping options, data centres, and other Canadian functionality & features, please read:
You can learn more about starting an online store with our Checklist: How to Start an Online Store (eCommerce Business) in Canada
E-commerce is the fastest-growing segment in Canada’s digital economy, going from $4.2 billion in 2010 to over $13.6 billion in 2017, according to Statistics Canada. Factor in the growth acceleration caused by the pandemic and the 2021 potential is breathtaking. Opportunities to generate revenue online in a wide variety of ways, will continue to be there for anyone who keeps their finger on the pulse of consumer demand.
??? Any questions about selling online in Canada? Please feel free to ask in the comments below or discuss this and other online business topics in the Online Business Canada Facebook group!
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