Starting a business in a vertical market allows you to focus on a specific customer group. Let’s take a look at the concept of vertical markets and how to use them in your business. Starting a new business is an exciting thing. However, turning your idea into reality requires careful thought and developing an effective marketing strategy. Deciding what to sell and who to sell to is a very important part of this process. Some retailers sell a variety of products and services to a broad market, while others focus on a more specific category or business segment. One of these focus strategies is to focus on a vertical market.

In this article, we will define what a vertical market is and look at some examples of ecommerce brands that are successfully operating in a vertical market.

What is a vertical market?

A vertical market is a narrow group of industries with common characteristics. Typically, this is a niche market of customers or similar products and services. Companies operating in a vertical market may sell a single product or offer a variety of services to a specific customer base. In either case, a vertical market targets a clearly defined customer group and has a strong appeal.

Examples of vertical markets

Here are some common examples of vertical markets:

• Health & Wellness
• Beauty & Skin Care
• Fitness and Sports
• Consumer Electronics
• Fashion & Luxury
• Household Goods and Appliances
• Baby products
• Toys & Children's Products

A business vertical can also target a narrower audience than the categories mentioned above. A real-world example is the e-commerce brand beelove , which sells honey-related products and is a very specific vertical. Another example is Satya , which sells plant-based skin care products and is a slightly broader vertical than beelove.

Vertical Markets vs. Horizon Markets

Vertical markets and horizon markets differ in their approach and focus.

Vertical markets focus on selling specific products and services in a specific niche. Companies operating in these markets often sell a single product or offer a variety of services tailored to a specific customer base. The advantage of vertical markets is less competition, but the disadvantage is that they can be vulnerable to fluctuations in demand for specialized products.

On the other hand, horizon markets cover a wide range of products and niches. Companies operating in this market sell a variety of products or target a wide range of consumers. Companies in horizon markets are less sensitive to changes in demand in a particular niche, but competition can be fierce.

For example,ChocoSol is a vertical market brand that sells chocolate-based products. The grocery store operates as part of a horizontal market that sells chocolate and chocolate-based products. While large retailers like Target sell a variety of products in addition to chocolate, ChocoSol sells only chocolate-based products.

From a shopper's perspective, Target may offer a more convenient and affordable option for chocolate, but if you want the best chocolate made with high-quality ingredients, you're more likely to choose ChocoSol than Target.

Advantages of Vertical Markets

Brands operating in vertical markets can gain credibility and expertise in their markets. Let's go back to the example of Target and ChocoSol. When a customer asks about chocolate, they are more likely to ask about Target than ChocoSol. You will most likely turn to ChocoSol, the chocolate experts, as they believe that ChocoSol has a deep expertise in chocolate.

This perception allows brands in vertical markets to charge premium prices for their products.

Additionally, vertical market business marketing is relatively easy, because you have a clear target audience, so you can create messages and promotions that are directly tailored to them.

Examples of vertical marketing strategies

If you are thinking about starting a business using a vertical market strategy, there are a few approaches you can consider. One way is to choose a specific vertical market and market a single product first. With your first product, you can learn more about the specific industry and potential customers, and then expand your product line based on market demand and other insights.

LastObject is a great example of a vertical brand that has successfully implemented this approach. LastObject is a company that makes and sells zero-waste products, and it started out with just one product: reusable “cotton swabs.” The company has since expanded its vertical by adding similar products, including reusable tissues, cotton pads, and other personal care products.

You may also consider a product line extension, which is basically a reimagining of your existing products. Product line extensions can include:

• New taste
• Various forms of products
• New colors
• Other materials
• Various sizes
• New packaging type

One of the advantages of product line extension is that you can work from what you already have. You can move faster because you are reimagining an existing product rather than having to start from scratch.

Additionally, product line extensions allow you to appeal to a wider customer base beyond your initial niche. While vertical market strategies target specific customer segments, product line extensions can help you expand your potential customer base.

For example, if you offer both a premium and basic version of a particular product, consumers with more money to spend will likely choose the premium product, while consumers with a smaller budget will likely choose the basic version.

Like LastObject, skincare brand Bushbalm also targets a specific vertical market. The brand’s product line has expanded over time. It started out with products to prevent ingrown hairs, but has since expanded to include products to address other skin concerns, such as skin irritation and dark spots.

While LastObject offers only one product per “category,” Bushbalm has expanded its product line a bit. Bushbalm offers a variety of price points within the same category, and has a strategy of offering both premium and basic products. Bushbalm also offers product bundles to provide additional options within the vertical market.

Launching in a vertical marketplace with Shopify

Whether you’re running a vertical or horizontal ecommerce business, Shopify offers tools and apps to help you manage every aspect of your business. Shopify’s templates let you customize the look and feel of your website to fit your brand and ecommerce strategy, and you can even hire Shopify experts to help you when you need it.

Shopify offers both new and growing merchants a one-stop solution to run all aspects of their business from a centralized command center.

Vertical Market FAQ