August 1, 2013, 3:17 PM

'Tis the season for niche sellers

That horrid light-up reindeer sweater Aunt Joyce dons each holiday season is now a hot commodity.

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That horrid light-up reindeer sweater Aunt Joyce dons each holiday season is now a hot commodity. Selling niche products like ugly Christmas jumpers online can be lucrative. In fact, niche retailers are among the fastest-growing retailers in Internet Retailer's 2013 Second 500 Guide.

TipsyElves.com (No. 987 in the Second 500) is a web-only merchant of "ugly" Christmas sweaters and accessories. The retailer launched in 2011 and targets festive shoppers looking for a perfectly tacky ensemble to sport at holiday gatherings. In its first year, TipsyElves LLC's sales totaled about $370,000 and grew by more than 140% in 2012 to almost $900,000, with nearly 80% of those yearly web sales coming in December alone.

Co-founders Evan Mendelsohn and Nick Morton identified the niche market firsthand as they made the circuit each December attending themed "ugly Christmas sweater" parties during and after college. Mendelsohn says that the company plans to expand its product offerings with the just-as-kitschy fashion e-commerce brands Extreme80s.com and FannyPackAttack.com.

Ugly sweaters are just one example of niche products selling well for retailers in the Second 500 Guide. Others successfully exploiting very specific categories include lightbulb retailer BulbAmerica.com (No. 604), TV replacement parts merchant ShopJimmy.com (No. 509), hybrid car parts and accessories seller JuicedHybrid.com (No. 834), all-terrain vehicle parts and accessories dealer GearUp2Go.com (No. 918), and Bluetooth headphones retailer JayBird.com (No. 954). All of these merchants grew their sales by at least 89% in 2012.

Several of these retailers launched without major funding support, a large staff or any intention of serving a broad e-commerce market. Instead, they identified a small, underserved market segment and started an e-commerce site to fill the need. Now they're growing quickly. So that next wincingly tacky holiday getup at the neighborhood holiday party may not only represent a source of evening entertainment but also another sale for two entrepreneurs who took a demand for holiday attire so bad it's good and turned it into a business.

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