They could totally carve their niche if they focused in making their store better.

Could it surpass Steam? Probably not. But you don't need to surpass Steam to have a viable, profitable store. GoG is the alternative that proves the rule - it is smaller, but they have their niche offering.

EGS is shit, and relied on exclusives (which everyone typically hates, especially on PC).

IIRC GoG has a pretty poor history in actually turning a profit with the exception of when CD Projekt release on of their own games, and even then they do the vast majority of their business on steam or the console stores. If GoG was a decent money-spinner then CP projekt wouldn't have split if off. Even a niche has a cost to operate, and that's with GoG being a pretty plain service on top of game downloads.