“How do I find the right Niche?” is a common question among drop shippers, and with good reason. Choosing the right niche can mean the difference between a successful retail business and wasted effort. As such, it is a vital consideration. In this post, you’ll learn how to identify profitable niches for your dropshipping business that get you high margins and stable, year-round demand.
The first step to identifying profitable dropshipping niches is to find ideas, and it’s not something you can quickly do over a cup of coffee. You must set aside a considerable amount of time aside for best results.
To find ideas, study yourself and those around you. Record the items you have recently bought over the internet and consult friends and family so you can know what they have purchased. Doing so should give you some ideas for items you can dropship.
Besides that, here are a few other things you can do:
- Ask yourself what do people like to do while they’re on vacation.
- Study your friends’ and family’s hobbies?
- What’s the priciest item closest to you?
- How about your family and friends? What are the most expensive items they have in their houses?
Take note of everything, even if it appears absurd. Then take that list and do the following to ensure the niches you’ve identified are stable and profitable.
Study your competitors
Study other dropshipping brands to identify products on your list that are over-saturated.
- You may use google search for your study.
- Just type the product name and hit enter. The results page will show competitors who offer the same product. You may also perform an image search by using your product’s image to evaluate how many dropshipping stores provide the same product.
- Look at the study the product’s demand on AliExpress. If it has more than 1000 orders, it is likely saturated.
- Type the product name into Facebook search, then view the video results. If you get more than 10 videos with large view counts, the product may be saturated.
Evaluate customer loyalty
Avoid products or niches that are monopolized by national brand(s). National brands often enjoy considerable customer loyalty, and their customers will purchase their products regardless of convenience and price. In most cases, the customers are not interested in trying other brands, so they won’t provide reliable demand for your product.
Target expensive items
The higher the cost of your dropshipping products, the greater your profit margins. The traditional approach to dropshipping requires selling vast quantities of low-priced items, and it achieves low-profit margins. While it can be useful, it comes with several disadvantages. On the other hand, selling only a few items of considerable value will grant you a bigger advertising budget. Furthermore, since you’ll be shipping high-quality, you will achieve higher customer lifetime value.
Expensive items also have more significant profit margins. For instance, if you sell a camping net at USD 300 and your net margin is 25%, you’ll make USD 75 off each sale. In contrast, if you’re selling low priced items, like phone jackets at an average price of USD 15 and 30% profit margin, you’ll only get USD 4.5 from each sale.
Consider product Weight
You’ll want to dropship items that are both expensive and light-weight. Heavy items cost more to ship, and this may affect your profits if you’re using shipping plans like flat rate shipping. Furthermore, even if you’re using a different technique, your shoppers need to have an accurate shipping cost estimate before they complete an order, and any inconsistencies at this point will cost you money.
Don’t dropship products with style and sizing preferences, as they have remarkably high return rates. Sizing and fit are one of the most common reasons customers return orders to e-commerce retailers.
Another problem with such items is the tendency for customers to “bracket their items.”
One of the strategies customers use to ensure they buy the right sizes for apparel is to purchase several sizes of the same item, try it on at home, keep what fits, and then return what doesn’t. In a recent study, nearly 50% of U.S. shoppers said they bracket their purchases. This is an increase from 2017 and 2018 when about 40% of consumers said they bracketed at least some of their online purchases.
Avoid seasonal products
Selling products with stable demand throughout the year helps ensure you have a steady sales volume.
Let’s take Bluetooth headphones, for example. The demand for this product will likely be constant throughout the year (with a probable peak in December due to the holidays). On the other hand, with items like air conditioners, likely, you won’t have any sales in the winter.
The idea is to avoid the types of products that don’t sell much at some points in the year. -the ideal product will ensure you attain stable turnover, which is crucial for anticipating stock changes.
The only seasonality you should accept is the peak sales that come with the end-of-year holiday period
Places to find in-demand products and profitable niches
eBay is one of the best tools you can use to check if items have sustainable demand. (just don’t copy eBay’s pricing plan -it’s too low). It may not be as popular as it once was, with the emergence of Alibaba and Amazon, but it is still an excellent place to find profitable market segments.
- On eBay, study products in niches you know are expensive.
- As you explore the different categories on eBay, change your search results to display completed listings.
- If a completed listing appears in red, the item did not sell. If its green, it means the item sold
Your focus should be on the products shown in green and look for completed listings only for that particular product.
Amazon is the world’s largest retailer, and they sell just about every product ever manufactured. This makes it one of the most ideal places to find in-demand products
Here’s how to find profitable niches using Amazon
- Click the “all” tab to the left of the main search bar. It will display a list of niches or categories
- Select a specific category, it could be a random choice or something that interests you
- Leave the search box blank and select go
- A fresh page will appear, and on the left, there will be a long list of subcategories or “sub-niches.”
- Choose a subcategory, and it will take you deeper into a specific sub-niche
- You have now found a specific sub-niche, but it’s still possible to go further if you wish.
- Amazon is particularly useful for finding ultra-specific niches and products that have high demand.
- An added benefit is that you can select the best sellers from the menu at the top of the page just below the search box to see which items are selling best.
With these strategies, you have all you need to find stable, profitable niches for your dropshipping brand. It may take some effort, but you’ll get there.
Furthermore, if you’re just starting a dropshipping business, or looking to simplify your current setup, Wholesale2b has integrated accounts that offer access to the best dropshipping suppliers through a single dashboard. With no credit card required, its risk-free solution will streamline your dropshipping operations and help you get the best products for your customers.