Dropshipping is an incredible business model for any entrepreneur trying to start their first business and don’t want to invest tens of thousands of dollars.

Why? Because

You don’t have to invest upfront in inventory, thus leading to low risk and high returns. (A.K.A. dream investment)

Being in this space for three years now I have seen stores go from 0$ to 6, 7, or even 8 figure businesses, and I have also seen store spending thousands of dollars with no sales.

Quitting within a year. Why is that so?

What do these stores know that others who fail don’t

After reading this article, you will be able to understand why it is crucial to select a right niche.

So Keep Reading. . .

If you want to read in-depth about what is drop shipping and is it even worth starting to please check out this blog.

Here are some step you must take care off before starting a dropshipping store to make sure you succeed every time

Selecting a Niche

Selecting a niche with a big market is all you need. That’s what gurus in this space will teach you

It’s not 100% true

Yes, niche with a moderate competition is essential but starting with huge niche as a beginner is now a good option. Why?

Because, with more significant niche, comes bigger responsibilities ( Yes, I copied from Spiderman )

Let’s take an example of fitness; it is a vast niche, correct?

So, as a beginner should you go with this niche.

The answer is No if you are a beginner. Why? Because you are not the only one advertising on Facebook (The primary marketing method for drop shippers)

There are billion-dollar brands out there marketing in the same niche as well. Facebook works on an auction basis, the more the marketer in the same niche, the more the cost of advertising.

So what should you do?

The niche you choose should be like a sniper, not a shotgun ( metaphor ALERT! ). Also, know as the famous blue ocean strategy<link>

Focus on sub niches

Let’s come back to fitness example; you should target sub-niche in fitness like office going people who are trying to be fit or homemakers who don’t like going to the gym but want to be fit working out at home

You got the gist of it . . . 

One more important thing don’t just dive into a niche you don’t know anything about Why?

Because when it gets tough, you need to hold on to something you are passionate about. Not something you choose to make quick money.

And if you are passionate about something, you know a lot more to it than anyone else. You know your audience very well.

Thus you know their problems, hopes, desires, etc.

You need this when writing product description and ad copy (More on this later)

How to select a Niche

You might be wondering how would I know which niche to select. Is it profitable or not? Is it big enough? Are there advertisers already in this niche?

I have you covered

These are the few points to consider when selecting a niche.

Profit Margins

Because in drop shipping you have to mock up your product 2x to 4x the product in that niche should have a higher perceived value.

So, you have higher margins to work with.

For example, a pair of the sock has less perceived value as compared to gold plated jewelry.

The more margins you have, the more chances you have to be successful.

Impulse buying

Make sure your product appeals to impulse buyers. As the visitor comes to your store, your product should be presented in such a way that customer can’t say no to buying it

Why?

Because most of the visitors that come to you store will never come back. You have 8 sec to capture their attention.

So, every element from product to store to niche should be focused on buyers who have the money to purchase it then and there.

Not easily available

This is crucial as well; you need to sell something that Is not locally available. Let me explain,

As mentioned in previous point drop shipping business of impulse buy

Here is an exercise for you. Tell me which one of these products is suitable for dropshipping?

Import image

The right one, why?

Let’s be honest how many times have we seen <product> in the local grocery store. Its always there and can easily be bought from there.

But on the other hand <product> is not readily available in a local store you don’t see these type of products laying around in the store

do you?

Yes, you get it now to summarize we don’t have to dropship random products which can be easily found in the store.

But

we should sell those which people are passionate about and can not be found in the store

Low Shipping Cost

Because we are selling physical goods the shipping cost matters a lot

It will be a lot more expensive to ship a kayak as compared to a sky-mask. And if you are planning to dropship from AliExpress.

This will be very important for you . . .

Most of the products from AliExpress should and must be sent through e-packet because it’s the fastest and the cheapest option.

But there are some limitations to it we can’t ship a product which is above 4lbs from e-packet

So, keep a note of it as well before listing the product find something which is not expensive to ship so you can even offer free shipping on the product.

Refunds

These are the ugly truth no guru talks about.

A product in electronics has a higher return rate than a product in other niches.

And because you are dropshipping the cost of refunds have to be covered by you.

So it is essential to choose a niche which has low refund rates.

Demand

Don’t forget you will compete with thousands of drop shippers and big giants like Walmart and Amazon

So you need to be prepared. . .

Many drop shippers look for products with little to no competition is that good? No, it’s not

Because

If there is little to no competition in that niche, there are more chances that the product has low to no demand… That means no one is buying.

So its good to enter a market with moderate competition, which also implies that the product has high demand.

Research

That’s why research is the most critical aspect,

your decision to select a niche should always be backed up by facts and figures.

99% of the drop shippers don’t do this, doing this will kick you ahead of them.

Think of it like this you are standing in front of investors, and you have to answer them why did you choose this niche.

How to do niche research?

These are the few ways most of the successful entrepreneurs approach it. I do it myself, and it works.

Amazon

 Yes, that’s correct amazon. It’s the world’s biggest general store, so why not reverse engineer the ones who are already successful.

To start like this

Go to amazon.com. And on the above search click on “all.” Here you will find all the niches

Select the ones which interest you the most, click on search. ( In my case its health and households) 

On the left hand, you will see a bunch of sub-niches that popup click on the one you like

Again you will se bunch of sub-sub niche click on the one you want

On the above-left hand corner, click on sort by – and then avg. Customer review/bestsellers.

Ba.a.m ! You just found a gold mine

Amazon is very good at finding you the products that sell.

From here, you can dig deeper and know which type of products are selling in the market.

This is a freeway, there is a tool called Jungle scout which is paid, and it has a google extension that tells you precisely what is the sale volume of a particular product.

Before digging any further these are the key things you need to keep in mind.

What sells on amazon is not guaranteed to sell on your store. Why? 

Because dropshipping is a business of impulse buy as mentioned earlier

There are many more methods to do market research such as google trends, AliExpress dropshipping center, reddit and many more

I will add a link to a blog which will tell you about all of these explainings in details what and how to use them to do market research.

Conclusion 

So you now have the power to find a profitable niche, Congratulations! You are far ahead of 80% of the drop shippers out there.

So, now it is your turn, start with selecting a niche and when you find one come back to read the next chapter.

Coming Next – I will talk about which platform to use while building a dropshipping store and how to make your store a money-making machine and stand out from the crowd.

Stay tuned. . .