Discovering Your Niche: How to Choose the Best Dropshipping Products

April 27, 2019 AJ Morris

WordPress opens a lot of doors, one of which enters the diverse world of eCommerce. Maybe you’ve been considering starting a WooCommerce store of your own, but you’re not sure where to start. Have you considered making your eCommerce store a dropshipping business?

Dropshipping makes eCommerce extremely accessible, and with Liquid Web’s Managed WooCommerce Hosting, you can get a dropshipping business up and running in no time. But before you start taking orders, you need to find a niche. In other words, what kinds of products will you be selling from your store?
This is an important question because not all products are dropshipping products. In fact, some of the best dropshipping products are ones you may not expect.

Since choosing the best dropshipping products is essential to building a successful dropshipping business, we’re going to guide you through the process of discovering your niche. Just follow these simple steps to choose the best dropshipping products for your eCommerce store.

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The Benefits of Dropshipping Products

Though it started as a subset of retail, eCommerce has grown into a burgeoning industry in its own right, and (as big as it is now), eCommerce will only continue to grow. In fact, eCommerce is expected to overtake physical retail sometime in the next few years.

But eCommerce hasn’t been easy to get into. This has largely been due to the significant starting capital needed to establish an inventory and build infrastructure. As if on cue, dropshipping emerged, and offered a practical shortcut to eCommerce success.

Dropshipping lets you focus on the customer-facing aspects of the online retail experience by deferring the more difficult aspects — like inventory management and order fulfillment — to your partners.

Dropshipping lets you focus on the customer-facing aspects of the online retail experience by deferring the difficult aspects of inventory, fulfillment and shipping to your partners.

Because there is little upfront investment required, dropshipping has become very competitive. In fact, many have been discouraged from dropshipping by the fear of getting overshadowed by so many competitors. When there are so many dropshipping companies, how can you be more competitive?

Choosing a niche, which involves picking the right products to dropship, is the key to being competitive as a dropshipping company. Here’s how to do it.

How to Find a Product Niche for Your Business

When starting your own dropshipping business and WooCommerce store, you shouldn’t just pick the products you like the most. For your dropshipping business to succeed, you need to be strategic when it comes to product selection.

Finding the best dropshipping products for your new eCommerce store can be broken into three broad steps: considering your options, creating a strategy, and selecting the right products.

Consider the Options

Products are the backbone of any online store and are vital to the success of your dropshipping store. For that reason, consider your options carefully. Spend time researching products you may want to offer, which product niches are ideal for dropshipping, how you can be more competitive, and what the identity of your store should be.

Find Ideas and Inspiration

Before searching for the best products to dropship, put on your market researcher hat and see what’s selling right now.

  • What are others doing?
  • What concepts do they have for their stores?

Take inspiration from what’s been done already to develop your own unique ideas.

Maybe your research leads to an idea for a theme for your eCommerce store. Or perhaps you discover an intriguing concept and realize there’s an even better way to do it. You want to get some idea of what your storefront will be to guide the rest of your research.

Good for Dropshipping vs. Bad for Dropshipping

Not all products are right for a dropshipping store. In fact, there are certain types of products that are quite bad for dropshipping. Examples of products that are bad for dropshipping include:

  • Products that are dangerous are bad for dropshipping (e.g. cutlery, kitchen knives, products that are flammable or combustible).
  • Products that are fragile. You have no control over how they’re packaged or handled during transit, and fragile products could be broken upon delivery.
  • Products with copyrighted imagery (e.g., branded clothing, devices with manufacturers names on them). Besides trademark concerns, branded items build loyalty for the brands instead of your store.
  • Products that are extremely heavy. Heavy products are more expensive to ship, especially for international shipments.
  • Products that are electronic or have moving parts (e.g. drones, smartphones, game consoles). You can’t personally verify their working condition prior to shipping, nor can you provide support if they aren’t functional upon delivery.
  • Certain types of clothing (e.g. fitted clothing, couture garments, high-end fashion). When there’s an increased chance of an item not fitting, you’re likely to see more returns.

It may seem like we’ve ruled out a lot of options, but there are still many products viable for dropshipping.

Although you should avoid high-fashion clothing, most other clothing is ideal for dropshipping. Focus on unique items that don’t feature trademarked branding or logos. For instance, if you do a quick Google image search for “unique sweater,” most of the results would make great dropshipping products.

Unique sweaters is a viable dropshipping niche.

The best products for dropshipping are ones that can be delivered quickly without incurring additional costs. In other words, mass-produced products that are inexpensive to ship.

Which Dropshipping Products Sell?

If you’re still unsure, a current top-selling product might give you some ideas.

PopSockets originated from a 2012 Kickstarter campaign, but it wasn’t until around 2018 that they became popular. All of a sudden, they were a sensation. These plastic collapsible cones provided a grip or kickstand for your mobile device and were sold in nearly every brick-and-mortar and digital store. Just about everyone who started a drop shipping business in 2018 considered selling PopSockets.

PopSockets are a great example because they’re easy and inexpensive to produce, have a low retail cost that’s great for impulse purchases, and their small size means shipping costs are low. In other words, PopSockets are basically the perfect product for dropshipping.

If you want to find out what people are buying, Google Trends and Wish are great places to start. In particular, Google Trends shows products that people are searching for and Wish shows products that people are actually buying or adding to shopping lists.

Wish shows products that people are actually buying or adding to shopping lists.

Google Trends is especially valuable for comparing interest in different products among the general public. Using Google Trends, you can compare search volume for up to five different queries. This offers you an indication of whether interest in a product is growing or waning.

Google Trends data indicates whether interest in a product is growing or waning.

In the example above, there were times when more people searched for boots (orange) than for shoes (red). This can probably be attributed to seasonal fluctuations. If your niche was going to be footwear, this data suggests that offering a variety of shoes would yield more consistent sales even though sales of boots might increase substantially in short intervals.

Create a Strategy

Now that you have a basic idea of the kinds of products you’d like to sell, you can start strategizing. We’re getting deeper into the process of filling your store, turning vague ideas into calculated decisions. At this point, the goal is to figure out which customers you’re targeting, whether to focus on trending or niche products, how your competitors are succeeding, and which dropshipping products will give you the best margins.

Who Is Your Customer?

Many retailers and eCommerce stores create buyer personas to guide their product selection. Each buyer persona reflects certain purchasing habits, tendencies, and preferences. When you identify your buyer persona(s), you get a better understanding of what your customers are thinking, feeling, hoping, expecting, believing, planning, and even what their concerns. Then you leverage this information to offer products that are perfectly matched to who shops at your store.

The most successful retailers cater their retail experiences to their buyer personas. If you don’t yet have an online storefront, that almost gives you an advantage. After all, you can decide upfront which customers to target, and build your eCommerce store accordingly.

Three personas - Annie the artist, Veronica the 20-something, and Andrew the techie

For a dropshipping store, the best customers are the ones who make frequent purchases. So the question is: Which customers are more likely to make repeat purchases?

Hobbyists are a type of customer that are more likely to return for purchases. Additionally, most hobbyists must continue funneling resources into their leisure and recreational activities. For this reason, targeting hobbyists could inform which products to focus on for your dropshipping business.

Another type of customer that’s more likely to make repeat purchases is business customers. Establishing trust with small business owners, for example, would encourage loyalty. In turn, loyal business customers will continue to buy from you, often in large quantities.

Trending Products vs. Niche Products

Trending products may have wide appeal, but you face more competition for those transactions. Many retailers follow product trends closely and make every attempt to capitalize on those trends. For this reason, it’s harder to attract purchases for trending products. However, if you have a niche, the pool of customers is smaller, but you face less competition for those customers. For this reason, finding a niche is the safest route for dropshipping businesses.

With some creativity, there are ways to have the best of both worlds. Maybe your niche actually revolves around past or current product trends. The niche would indicate the target audience, and whether it’s people who are nostalgic for past trends or trend-chasers looking for the next big thing.

Google Trends data indicates that boots are trendy, and sneakers are niche.

If we return to the footwear example, boots could be considered the trending product. Meanwhile, sneakers — indicated by the blue line on the graph — represent a niche. Although interest in sneakers was less than both boots and shoes, interest in sneakers was consistent. In other words, the number of people interested in sneakers stays the same.

You might also expect sneaker-loving customers to be underserved by stores focused only on current footwear trends. This would make sneakers a potentially valuable niche.

Ideally, you want to land somewhere between trending and niche by picking a “trending niche.” This refers to a product category experiencing a surge in popularity while also having a strong base of core customers.

Examples of trending niches include things like smartphone cases and accessories, pet products, hair and skin care products, novelty jewelry, hats and scarves, and fashion accessories.

What Are Your Competitors Selling?

Seeing what your competitors are doing is a great primer for setting up your own eCommerce store. Of course, we don’t condone copying and pasting a competitor’s catalog. There’s value, however, in finding out what works and what doesn’t work for the competition. Start by looking at their top-selling products and customer reviews. It’s even a good idea to see what customers are saying on social media.

Pricing and Opportunities for Markups

As you narrow down potential niches, don’t forget about pricing. With dropshipping, your margins will typically be lower than with a conventional eCommerce store; pricing is something to keep in mind because the ultimate goal is to make a profit.

Keep your eyes peeled for products where the manufacturing costs are substantially lower than the retail prices attached to them. These products offer the best opportunities for markups, which are the source of virtually all your profits.

On the other hand, including a few recognizable products with lower margins in your store is a smart strategy. The idea is that products with low margins draw people in while add-on products with higher margins increase your profits. This is why electronics stores encourage you to buy accessories for the devices you buy. They make most of their profits on the accessories rather than the actual devices.

Select the Best Products to Dropship

Pat yourself on the back: You’ve done your homework and are now ready to pick the products for your store.

These final steps are about selecting the best of the best from the options you’ve collected. Presumably, any of the options would be viable contenders, however, this final stage will help you focus on dropshipping products that will sell and encourage repeat business.

Leverage Social Shopping Sites

Americans spend an average of 142 minutes, or just under 2.4 hours, on social media sites every single day. Meanwhile, retailers have started leveraging social media for data with which to strengthen their businesses. In fact, social shopping sites let retailers keep their fingers on the pulse of current customer interests.

Social shopping sites are a valuable product research tool

Use social shopping sites as a reference while discovering your niche and building a catalog for your store. Sites like Pinterest, Fancy, Wanelo, and Etsy show products that get people excited. More specifically, they show the products that customers want to share with others, which are the kind of products you want for your store.

Monitor Online Shopping Communities

Online shopping communities are another way to get a read on your target audience. On Facebook alone, there are hundreds of shopping communities. Typically, these communities revolve around certain demographics (e.g., women veterans) or around certain sites or brands (e.g., Amazon and LuLaRoe). These shopping communities can show which products resonate with customers who are interested in your niche.

On a side note, we’re starting to see smaller online stores creating their own social media communities. This lets these businesses offer a more personal, interactive shopping experience. If want to set yourself apart, creating a Facebook group for your customers might be worth considering.

Consider the Customer Experience

Customer experience has a major influence on customer loyalty. However, you have almost complete control over the experience your customers have while shopping your WooCommerce store.

Things like site design and customer support contribute to a customer’s overall experience, and you can ensure a positive experience simply by choosing the right dropshipping products.

For example, make sure you’re not offering lots of products with long delivery times. When a customer has to wait too long for delivery, he or she is much less likely to buy from your store again. Focus on products in your niche that are readily available and can be shipped quickly.

Sell Products That Encourage Repeat Business

Make sure the niche products you’re selling are ones that your customers will need to buy again in the future. Consumable goods like skin care products are ideal for repeat business because they need to be replenished over time. It’s similar to why hobbyists are an ideal type of customer. If you provide customers with a source to meet their needs and hobbies, they’ll continue returning to your store again and again.

Final Tips for Excelling in Your Niche

As you fill your digital store with products, we offer some final words of advice. Specifically, there are three things you want to keep in mind, especially where pricing and value are concerned.

Offer the Lowest Prices

If you’re tempted to try to maximize your margins for every product, resist that urge.

Online shopping has made everyone a bargain hunter. So if your markups are too high, customers will look for a cheaper source for the product, which isn’t hard to find. However, when you offer lower prices, you earn customer loyalty, and loyalty leads to more purchases in the future.

Ultimately, it’s a question of whether to squeeze a little more from a single transaction or earn a lot more profit across many transactions. Clearly, the latter is the better scenario.

Add Unique Value

Dropshipping is competitive because it’s easier to get started than conventional online retail. But it has resulted in the same products being sold by many dropshipping businesses. Even the products that you sell (or will be selling) will surely be offered by a number of other dropshipping stores. So how do you encourage a customer to choose one store over another?

You need to provide unique value. In other words, you need a unique value proposition. This means you offer something that better meets your customers’ needs, and gives you an edge over your competitors. There are many ways to offer unique value, so don’t be afraid to get creative. Come up with added value that’s original and unique to your store.

Many retailers use complementary content to offer additional value. For instance, you could offer setup guides, breakdowns of key features, tutorials, and videos for your products. The idea is to help your customers get the most benefit from the products they’re buying.

Similarly, you could curate lists of products (e.g., “10 products to help you get the most from your new X”) that complement what they’ve already purchased. This broadens the functionality of a customer’s previous purchase and could also net you additional sales.

Provide a Memorable Shopping Experience

Finally, give your customers a great shopping experience, especially when it comes to the design of your web store. Customers shouldn’t have trouble navigating your store, searching and filtering products, adding things to their cart, or checking out. If customers experience even slight frustration with any of these things, it’s costing you sales.

When you put time and effort into your storefront, customers will have positive experiences. They’ll remember those positive experiences — and you can bet they’ll come back again and again.

Build a High-Performing WooCommerce Store

Create a store that converts traffic with Liquid Web’s Managed WooCommerce Hosting solution. It comes standard with Jilt to help you recover more abandoned carts, performance tests whenever you need them, and the platform reduces query loads by 95%, leading to a faster store and more conversions.

The post Discovering Your Niche: How to Choose the Best Dropshipping Products appeared first on Liquid Web.

About the Author

AJ Morris

AJ Morris is the Product Innovation and Marketing Manager at iThemes. He’s been involved in the WordPress community for over a decade focusing on building, designing and launching WordPress websites and businesses.

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