Ever since I began acquiring DTC e-commerce businesses, people have asked me which business categories are “the best.” But I’ve concluded there’s no such thing as a universally good or bad category.

I’ve heard the usual advice: look for categories with 60%+ gross margins, have a high average order value, minimize SKU complexity, feature lightweight products for cheaper shipping, etc. In my experience, though, these factors rarely—if ever—predict success.

Why? Because any advantage that makes a category appealing draws in more competitors, quickly eroding those advantages. Meanwhile, businesses in categories with difficult challenges often turn those challenges into competitive moats, creating a powerful point of differentiation for those who master them.

Some examples:

I often hear that apparel is a “bad” DTC category given SKU complexity. And it is true that apparel businesses constantly need to produce new styles, colors, sizes, and products. This is expensive and capital-intensive. But the businesses that get it right have incredible defensibility–think how difficult it is to replicate the thousands of SKUs required to compete with the best DTC apparel businesses like Bombas (socks), Vuori (athleisure), or True Classic (T-shirts). Their complexity is a moat.

Furniture is also supposedly a “bad” ecom category. Shipping a couch or bed frame can cost hundreds of dollars. True, but then consider how, for many consumers, having a 100-pound box shipped straight home is easier than lugging it themselves from a store. Wayfair, the ecom furniture company, is still worth nearly $6B.

Or consider categories which many merchants want to avoid because of onerous regulations. One category I know better than most is contact lenses, where the seller must validate every single customer’s contact lens prescription. This is burdensome and complicated but, once you establish proper compliance, serves as a meaningful barrier to entry for merchants who can’t figure it out. 1800 Contacts is a $1B+ defensible ecom business because they got it right.

Once you start thinking this way, you realize that it’s often the unloved “bad” categories that offer the best opportunities. For example, I remember a conversation in 2017 with the CEO of Dame—a brand specializing in women’s “adult” products—about marketing. Because of what it sold, Dame was banned from advertising on Facebook. No Facebook? Talk about a tough DTC category. But this forced Dame to figure out more creative, organic ways to acquire customers. As customer acquisition costs gradually rose on Facebook, eroding margins for brands in other, “good” categories, Dame thrived because its organic acquisition funnel insulated it from rising marketing costs.

The moral of the story is: the ecommerce market is more efficient than you think. There is no such thing as “good” or “bad” categories because the categories that are tougher for you to crack are also tougher for your competitors.