Find out the best dropshipping niches for 2020. And, learn the right way to pick a winning niche for your dropshipping store to build a sustainable dropshipping business.
Btw, if you are a beginner to dropshipping, it would be better to start by learning from the basics. So, before reading this guide, have a look at this dropshipping startup guide.
What happens if you don’t choose a niche for dropshipping?
Well, let us say that you are going to sell cheap watches and stuff, which is not actually a “niche market”. I mean, cheap watches are great, but no one is really passionate about them. That means, no one is willing to make a payment to an unknown eCommerce site and wait for two or three weeks to receive them (the average delivery time is more than a week in dropshipping).
So, when you sell a generic product like “cheap watches”, apparently you will be getting a ton of clicks on your ads, but once they see how long it would take to receive the product, they will leave without making a purchase!
However, if you start selling specific products, like dog toys,
- It gives your eCommerce site a kind of an authority, which builds trust to get “Buy Now” clicks
- People would identify your site as a great place to buy stuff they really care about
- They will keep your dropshipping site saved in their browsers for future purchases
- Usually, they will start promoting your products on specific niche-networks (BAM, Free marketing)
- If you give a good service, 8 out of 10 times, they will come back for a second purchase or leave a positive testimonial.
- You can build a super targeted ad campaign on Facebook, without having to waste you money on dumb clicks.
That is why you must have to target a niche market in dropshipping!
Hi, welcome to EcommerceBuff. Let us learn how to select the best niche for dropshipping.
Selecting the best dropshipping niches
Selecting the best dropshipping niches is one of the biggest and hardest hurdles that you will come across in this journey. Even after the years of experience doing dropshipping, still selecting the best niche for a new dropshipping store is an overwhelming task for me.
As you can understand, if you select the wrong niche for your new dropshipping store, you won’t be able to make any sales and all your investments (money and time) will be wasted. Therefore, there is nothing wrong with spending more time to do research and select the best niche for your new dropshipping store.
Over the past 8 years, I have developed my own formula to find the best niches for dropshipping. It is a step by step process. Before we get started with our process of finding a niche for dropshipping, let us discuss a bit about this thing called “niche.”
What is a dropshipping niche?
Hmm, a niche is a very specific market segment. For example, selling pet toys is not a niche! There are many different types of pets, and I think it is too broad to consider as a niche.
So, it should be specific. Hmm, what about selling hamster toys? It is specific for sure. But, it could be too small to build a business. Of course, if it is a very small niche, you can easily build some authority in that segment. However, you don’t need to run a business that makes just one or two sales per day, do you?
Then, a niche should be specific and large enough. Alright, forget about pets, what if you start selling adult toys for women? It is specific, and it will be large enough for sure. However, there is a drawback. Usually, such products have a ton of advertising limitations. So, it might be hard for you to sell products through ads.
Alright, a dropshipping niche should be specific, large enough, and should not have marketing limitations. So, what about selling dog toys? Oh, it fits into our criteria. It is so specific, that you can do proper targeting. It is large enough; duh! And, there are no known ad limitations to sell dog toys.
Here is a little activity for you… Now, brainstorm around 5 such dropshipping niches
Here is my list so far.
- Dog toys/cat toys
- Handbags and wallets
- Women’s Jewellery
- Mobile phone cases
- Kitchen utensils
Now what? Should you go and start a dropshipping store with one of the above niches? Man, hold your horses. We are not done yet. There a few more things to learn.
BTW, what about selling mother and baby products or cosmetics? Well, some might think of them as best dropshipping niches. But, I personally try to avoid such sensitive niches. When you do dropshipping, you don’t usually see or touch the product that you sell. So, product quality control is a bit out of your hand. And, if something went wrong, the consequences will get worsen for such sensitive niches. Therefore, I don’t usually recommend them as the best dropshipping niches.
Up next! How to select the best dropshipping products in those best dropshipping niches?
How to select winning products in the best dropshipping niches?
Now you have a bit of an idea about selecting the best dropshipping niches. However, the task doesn’t end right there. So, now let us learn how to select winning products in those best dropshipping niches. As I told in the very beginning, I have a specific formula to decide which products would do well in dropshipping (did I tell that?). NVM, here is my step by step process of selecting winning dropshipping niche products.
- See what is trending on Amazon or Trendhunter.
- Make sure it can trigger impulse buyers.
- Check the trend of demand.
- Verify the size (envelop to shoebox packing) and price ($25-$50).
- Calculate the potential profit margin.
- Find the average CPC (cost per click) and SEO difficulty.
- Check reviews to find customer’s pain points.
- Research for marketing opportunities.
- Check for the room for value addition
- Ensure the availability of suppliers
That looks easy! Isn’t it? Well, not so much 🙁
Don’t worry, let’s go through these steps one by one. BTW, do you really need to go through all these troubles to find best dropshipping niches and winning products? Yeah, only if you want to build a sustainable business with a steady income for the years to come.
Select the best dropshipping niche and products by seeing what is trending in the market
I know some people search for fresh niches without any sort of competition for dropshipping. Earlier I did the same. But, later I realized, there is no point of searching for the niches without any competition.
No competition = No demand
No demand = No (or, less) sales
So, rather than wasting your time looking for the niches without any competition, it is better to surf the trend. In dropshipping, the big players are the usual trend-setters. They spend a lot of money on marketing and promotions, making some niches and products popular from time to time.
Then, as the micro players, we can select the same niches/products and easily piggyback the popularity of such trends and sell our dropshipping products. That is why we need to search for what is trending in the market.
How to find the trending niches in the market
I usually start by looking at Amazon best sellers or Amazon most wished for lists to find popular niches. Then again, recently, I have started using the Trendhunter tool. It uses some AI magic to find popular products. Also, you can keep an eye on the trending projects on Kickstarter to see what niches and products will get some good traction shortly.
Make sure that these products can trigger impulse buyers
What does it mean? Well, you need to understand a little concept about running a successful online store.
Let’s say that I want to buy a light bulb. So, the first thing that comes into my mind is checking that on Amazon, Target, on any other local hardware shop. This is more or less same for anyone. So, what would happen if you select such a niche or product for your online dropshipping store? Yes, you won’t be able to make any sales.
That means, it is ineffective and hard to sell day-to-day necessities online. It is hard because you cannot compete with big eCommerce players.
Why is it better to target impulse buyers?
Let’s say that you are scrolling through your Facebook feed. Suddenly, you saw a video of some cute dog playing with a toy (If the owner of that video has done a proper targeting for this video, you must be a dog owner). So, you would stop right there and watch that video. Then, at the end of the video, it gives a link to purchase this toy for $20 from some unknown online dropshipping store.
Then, there is a higher chance for you to go to that online store and buy that product or check what else you could buy from that store. In such cases, people don’t normally check that product in different stores to see the lowest price. If they feel that $20 is reasonable, and if this unknown store looks authentic, they will hit that buy now button.
This is how the impulse buyers work!
So, when you select a niche for an online dropshipping store, make sure that your products can be sold to the impulse buyers. That is the most effective way to overcome the competitive market.
Select the best dropshipping niche and products by checking the trend and turnover
It takes time to create a dropshipping listing and to market the product. So, what would happen when the popularity of your niche is not consistent. What if the demand of that niche is seasonal or just a pulse, which diminishes quickly.
So, it is better to check the trend of people’s interest in your niche over time. To test the trend of interest, you can use Google trends. Google trend is a free tool, where you can see the google search statistics. There you can select the country of your interest and period of data to see the search trends.
Which types of trends that you should avoid
It is better to avoid seasonal or pulse trends as niches, as the usage of your store or listings is going to limited to a minor period.
Also, you may have noticed some products get new versions or updates frequently. So, the value of previous versions depreciates quickly. If you select such products as your niche, then you might have to keep updating your listings more frequently.
Select the best niche for dropshipping by selecting the optimum product size and price
Selling smaller products can be profitable in many different ways. With smaller products, you can usually get free shipping options, and you can do the same for your customers. And, even if you have to pay for shipping, it would cost you much less than shipping a large package.
Also, if you offer “Seller pays for returns” policy, then with smaller packages you don’t have to pay much with returns. As a rule of thumb, I always select products that can be packed in an envelope or a shoebox.
Selecting the price range
I don’t sell anything over $50. The reason is, when the price goes up, the customers usually expect extraordinary customer service from your dropshipping store. This doesn’t mean that you can have a crappy customer service. But, it is much relaxing to work with the customers in this way.
Also, I don’t go below $25. Otherwise, your time won’t worth a single sale.
Select the best niche for dropshipping by checking the potential profit margin
Pricing the dropshipping product is a complex process, and we have to talk that in another post. But, at this stage, you can quickly have a rough calculation based on the below points
- Shipping Cost
- Marketing Costs (Typically around 30% of the price, for the Facebook ads)
- Platform charges (if you sell on Amazon or eBay)
- Transaction fees
- Currency exchanges margins
- Allocation for refunds (Typically 5%)
- Running costs for any other tools or apps in use
- Your profit margin (40% – 50%)
So, with your new niche, if you cannot keep a margin of 40-50% for the profits, maybe that is not the best niche for dropshipping.
Related: How to price dropshipping products
Select the best niche for dropshipping by checking the average CPC and SEO difficulty
You can use the CPC (Cost-per-click for the ads) for the keywords of your niche as a confirmation of the popularity. If the CPC is high, you have a competitive niche.
While it is better to have competitive niches for dropshipping if your CPC gets higher, your ad costs will get higher too. Therefore, you need to find the right balance for your CPC and competition. As a rule of thumb, I target a CPC of around $2-$3 for a $25-$50 product.
Also, if you are planning to run a content marketing strategy (mainly a blog) to promote your products, it is essential to evaluate the SEO difficulty too. By having a blog on your dropshipping store, you can maintain good traffic to your store.
Select the best niche for dropshipping by checking the customer pain points
Do you know the best way to sell a product? The best way to sell a product is by not selling the product. Yes, you heard that right. That is one of the best marketing lessons that I have learned over the past years. Instead of trying to sell the product, try to sell the solution that your product can solve.
Do you remember that “1000 songs in your pocket” ads for the iPods? If they tried to sell the product, it should be written as “1GB storage for MP3s”.
So, you can leverage the same tactic and find the best niche for dropshipping by selecting a solution for customer pain points. But, where can you find the customer pain points? You can use the Amazon review section to find the customer pain points.
Select the best niche for dropshipping by checking marketing possibilities
When you select the best niche for dropshipping, make sure to check the opportunities for creating effective marketing strategies.
For example, check for the possibilities for cross-selling and up-selling. And check if you can create super-effective customer retention strategies based on the niche of your dropshipping store.
- Master the art of Cross-selling and up-selling
- Customer retention strategies to maximize your profits
Select the best niche for dropshipping by checking the room for value addition
If you go through some of the dropshipping online stores, you will notice that they are just “buying” and “selling” these products. This basic buying and selling strategy will not work for long. If you need a sustainable shop with long-term profitability, you need your customers to remember your store. You need a method which makes your store special. These methods can be your unique selling prepositions.
How to add value to a dropshipping product
Now, the question is, how you can add value to a product in dropshipping? You don’t even get to touch the product. But, you can add some value to your products by providing some additional services. You can make an instructional manual, user guides, or troubleshooting guides for your products. Or, you can provide over-the-phone customer support to teach them how to use it. People love to have excellent customer support; and in this way, you can easily compete with other sellers in your niche, even pricing your products higher than they do.
Select the best niche for dropshipping by checking the availability of suppliers
When it comes to dropshipping niches, it is not much hard to find suppliers. However, you have to know a few things to avoid low-quality suppliers and fake Dropshipping suppliers. So, when you select a niche, it is always beneficial to have multiple suppliers for the same product. We will discuss this more in our next guide of How to find Dropshipping suppliers.
Selecting the best dropshipping niches
Yeah, it is not that easy! But, if you really need to build a sustainable dropshipping business, it is worth investing a bit of time to research the best dropshipping niche. Otherwise, you will have to abandon your store with frustration and loses! 🙁 Don’t let that happen, follow this guide to learn how to select the best dropshipping niches and start building your eCommerce empire.