Many people focus on finding the best looking site for their dropshipping enterprise. And while this does make an impact, it’s more important to find the right products that customers are looking for. It’s often where new entrepreneurs fall flat.
Finding the right products for your store is an art – don’t fall into the trap of having too many products. It’s usually better to be very focused and selective, so you can master your specific niche.
Specialization works – selling lots of different products is a lot tricker and reserved for bigger companies who can leverage economies of scale. So the first step is to define your niche.
Why You Need a Niche
You can start off vague, in the sense that you may simply want to sell products online using the dropshipping model. But you have to get more and more focused, so that your results (and profits) are more efficient.
The first step is to find your specific niche. What do you want to sell? The difference in being selective about this stage is that you will believe in what you are selling. This makes a lot of difference down the line, as you will have more interest, passion, and motivation. After all, what’s the point of selling products that you don’t believe in?
Your niche should still be wide enough to allow you the room to find winning products. You do need some level of flexibility, and have to be able to find winning products within your niche.
There are many other technical metrics that you need to pay attention to in terms of selling the ideal product range. But it all starts with your interest in a particular area.
Going General or Specific?
Within your niche, you can go general or specific. You might open a yoga store for yoga products, or a yoga store that sells yoga mats only. You might open an online store for beauty products, or specialize in anti-aging moisturizing creams.
It’s probably best to start a little more general, within a niche, and then specialize when you get more information on what’s selling. The more you specialize, the more you can differentiate yourself and compete. So keep drilling down as you get more and more efficient.
It’s worth bearing in mind that the most successful tech businesses tend to adapt and change their business models (known as ‘pivoting’) as they get more information – they don’t stick to previous plans.
You gain knowledge only as you create your business, and you adapt when you spot opportunities. Only so much can be learned theoretically, despite the best intentions.
If you find something your customers really want, give it to them.
It’s also possible to open a complete generalist store. But you will need to differentiate yourself in some major way, typically branding and marketing. The more general you are, the more competition you will have, and the more you need to differentiate to stand out.
How to Choose The Right Products
So, you know what you’re interested in – now it’s time to find the right products. If you are at a loose end, the best way is to simply select trending products. These are products that customers are already looking for. Ideally, you want to find trending products before other dropshippers find out and supply them on mass.
This is when you can make most of the products – before others find out, not after. ‘Catching the wave before it breaks’ is a common analogy. Speed and insight can be hugely profitable, provided you can identify trends and jump on them quickly. The best tools to look for trending products include:
This strategy works and is useful when you are starting out. The problem is that usually, when you find a trend, the product is sold by numerous other competitors. You need to either:
- Find a way to differentiate your product (based on price, shipping, discounts, etc).
- Make it unique to your store with branding and marketing.
- Find a trend before other dropshippers catch on.
Trending products can often be highly sought after in a given time period and then they peter out. An example would be fashion, where trending products are ‘in’ and there is a craze to get them, until a few months later when they are ‘out’ and have little retail value.
You might build a store on fashion products (a competitive niche), but would have to regularly spot what is trending and frequently shift products. A lot depends on the niche you are in. Finding trending products is a little safer than going very niche, but only in the beginning.
As time goes by, you can specialize more and more, which will bring in more profits. An alternative would be to specialize in evergreen products and build a brand around being an authority in a given area.
How to Choose Winning Dropshipping Products – The Technicals
Finding a niche is only step one. There are many technical details that you need to iron out before adding a product and launching a real campaign. Some of the more ‘technical’ steps include:
- Search Volume – How many people are looking for this product, and what is the competition? Do some basic research into competitors and see where you can add value or differentiate. Finding a good level of search volume is a key element of selling products, and the number one starting point regardless of the product in question. Without it, you’re selling in the dark.
- Site Traffic – Oberlo offers a free tool so you can calculate how much traffic you need on your website to earn a specific amount in a particular time frame. Read the assumptions on the bottom when using it, as they may not apply to your business model. This can let you know if the search volume for your product is enough to justify adding it.
- Profit Margin – As a general rule of thumb, it’s best to select items that have at least a 30% profit margin. The more popular the products, the tougher it will be to maintain a higher profit margin (usually). You also want to sell for at least $10 more than you source the product for. Otherwise, turning a decent profit could be problematic. A 30% profit margin on a $2 toothbrush means you have to sell an awful lot of inventory. The lower the price of the product, the higher the profit margin will need to be to stay afloat.
- Absolute Price – It’s probably a better idea to sell products in the range of $15 – $150. These products are more affordable for people. Above this and your order volume will decrease significantly. And refunds for products above $150 can hurt. Below a $15 minimum means you have to sell a lot of stock in order to turn a profit. One scenario where you can consider selling above $150 is when there is a Minimum Retail Price (‘MRP’). This means no retailers can undercut the minimum price, and you will be competing on the value provided.
- Supplier Reliability – If you find a great product from an unheard-of supplier, it could be more hassle than it’s worth. A supplier that does not deliver can really hurt your business, as you are not in charge of the manufacturing or delivery process. But you are in charge of the refunds and customer support.
- Size and Weight – It’s accepted in the world of dropshipping that the product should be able to fit comfortably into a shoebox. The smaller and more lightweight an item is, the easier it will be to ship. ePacket Express, a popular dropshipping service from China to the USA, has a weight limit of 2 KG and a maximum length of 60 centimeters.
Additional Considerations When Selecting Dropshipping Products
There are many facets to finding the right products for your enterprise, aside from whether or not they are trending and reliable. Below are some of the major considerations in terms of deciding whether or not to add a particular product.
- Accessories – If you are selling smartphones, then you also need to think about selling cases and headphones. The markup on a smartphone might be 5%. But the markup on headphones and cases can run to 200% and beyond. Customers tend to buy these items as a package from the same store, and don’t hesitate on minor purchases after making a buy one. Selling a product with multiple accessories is an amazing way to improve profit margins.
- Marketing Costs – You have found a killer product. But you also have to consider marketing. Can you acquire customers for this product at a reasonable cost? Even if the profit margin is huge and there are repeat customers for this product with huge volume, you must consider the Cost of Acquisition (‘CAC’). It might be very hard to acquire customers in this niche, or the product may not be a fit for your store and branding.
- Trending or Evergreen – When starting off, it’s also best to consider a mix of evergreen with trending products. With evergreen products, you can sell the same products for a long time, with constant traffic and interest. But you need to differentiate yourself in some way to attract customers. With trending products, there is a huge interest for a particular time interval, but then interest fades. Trending products can entail more work, as the store needs to be frequently updated.
- Delivery Costs – Smaller is better in terms of delivery costs, as they will be cheaper and easier to manage. Larger, more expensive items will need insurance and can get damaged if not correctly handled. This is similar to the ‘Size and Weight’ section above. Smaller and lighter is optimal for delivery.
- Product Reliability – It’s best to stick with products that are strong and simple, without annoying extra parts that can get lost or just be a pain to ship. This is especially relevant when dealing with electronic items. Lost or damaged items will result in returns and negative feedback.
There are a lot of things to consider when choosing the right product! While it seems like a bit much, you don’t have to tick all the boxes. You are always going to be dealing with a tradeoff of some sort, and you can’t be the best of everything. You will learn more as you go and the process will get more efficient. In the words of Steve Jobs:
You can’t connect the dots looking forward; you can only connect them looking backward. So you have to trust that the dots will somehow connect in your future.
Trending Products & Keyword Research
While it’s useful to look for trending products, you might be wondering what exactly dictates whether a product is trending or not. For the sake of simplicity, let’s look at one of the most common, useful, and basic tools – Google Keyword Planner. There are many similar alternatives to this product.
With the Google Keyword Planner, you are using keyword volume to see what customers are searching for. Select your keyword and see how many searches it has per month. You will want to see increased search volume in the past few months. It works using paid search data to generate insights.
You will almost certainly need to use longer keywords to find more profitable search terms relating to products. You can see the location of the majority of search volume, which can help you to identify a target market.
A keyword is ‘trending’ if it has seen major increases in search volume in recent months, such as a 10% increase 2 months ago, and a 25% increase in the past month. This is indicative of a trend. As all trading professionals know, the early you get in on a trend, the higher your profits will be.
Google Trends is another excellent tool for identifying trends. It’s what it was designed for. It shows the top and rising terms and outlines the seasonal nature of certain terms – what months the trends tend to be most popular.
Delving Further Into Keyword Research
At a minimum, you will need at least 1,500 searches a month, and that’s for a targeted long-tail keyword (though if you are selling high-value products, you can often afford a lesser search volume). Remember to search using Incognito Mode – Google generates personalized results based on your location and history.
A typical conversion ratio for a dropshipping store is very low, between 0.5% – 1.5%. So out of 100 people, only 1 might make a purchase. With cart abandonment tools and sales optimizations, you should be able to bring this up to between 2% – 3%.
As you get more specialized in your niche, you will start to build up a list of negative keywords. These are search terms that customers are looking for, but not the products on your store. The keywords need to be unique, focused, and targeted. General keywords will generate general results – meaning lower profit margins. Key terms in keyword research include based on the Google Keyword Tool include:
- Search Volume – The volume for the search term per month. Take note of the different regions when analyzing search volume. Google.com is for the USA.
- Cost Per Click (‘CPC’) – The average cost advertisers are paying for the keyword.
- Competition – The level of competition for the search term in the context of paid advertising. However, this has a strong correlation to SEO difficulty. The more they are willing to pay, the more profitable it will be, and the stronger the associated websites will be.
- Value – The rough value this traffic is worth per month. This is calculated by multiplying the average monthly search volume by the average cost per click.
- SEO Difficulty – This is a logarithmic measure of how difficult it will be to rank in the organic results for the search term. 0 is the easiest, 100 is the most difficult.
- CTR Scope – The higher the scope, the more traffic you receive from organic rankings.
- Keyword Power – This is based on a combination of SEO Difficulty, CTR Scope, Search Volume, and CPC that indicates the potential the keyword has for your website. The higher the better.
- Trend – Used to assess if a keyword’s popularity is trending up or down. Based on the past 12 months.
Performing Competitor Research
A lot could be said about competitor research. But let’s keep it as simple as possible. If you are setting up a dropshipping business, then your main source of traffic is going to be organic searches, unless you understand the paid model intimately.
So your products and their keywords are going to have to be able to rank on Google, the dominant search engine. The quickest way to see how strong the competition is will be to look at the total number of unique links to the site of your competitor. You need to make it to the top 5 results on page one of Google to stand any real chance of gaining organic traffic.
A tool such as Link Explorer can help with this. Here is a shortcut to seeing the competition in terms of unique linking domains, arguably the most powerful metric of competitor strength:
- 0 to 50 unique linking domains – Within a year, you should be able to manage more than 50 unique linking domains to your site, with some effort. This is manageable.
- 50 to 250 unique linking domains – These sites are a little more competitive. However, the rewards for this can be profitable if you want to make it work.
- 250+ unique linking domains – Don’t be prepared to go to battle against these sites unless you are really committed and/or a seasoned SEO veteran. Can take a number of years to see results.
Obviously, there are many other forms of competitor research. But this is just a quick way of understanding the competition and what you are getting into in terms of selling a particular product. A dropshipping product might appear to be selling like crazy, but the rival sites might have a stranglehold on the market.
Other metrics that you can use in terms of competitor research can include:
- Authority – A page rank above 4 and above can be difficult to beat and will take some time. A page rank/authority of 1 or 2 is easily beatable with some effort. You can check page authority using an extension or a site such as checkpagerank.net. Pagerank is not the be-all and end-all, but Google certainly takes it into account.
- Site quality – You need to find an area to differentiate yourself. Offering excellent packaging and shipping loses its effectiveness (somewhat) if all of your competitors are also offering it. Check out competing sites to see how effective they are in terms of navigation, content, customer service, design, etc.
- Site reputations – See what the customer reviews are your competitors on sites such as Trustpilot and Sitejabber. Also, take a look at the site itself and see where it’s blindspots are. If a lot of customers are unhappy with a particular aspect of the business, they will likely launch a complaint with the Better Business Bureau (‘BBB’).
Don’t spend too much time on competitor research. Just have an idea of how difficult it will be to rank for certain keywords, as it will let you know how long it will take to be successful with your campaign.
Even if a keyword is tough to rank for, this is quite likely because it is more profitable to rank for it. At some stage, you will need to take a position and rank for certain terms. You can decide to take on a difficult competitor and beat them out over a longer time horizon. The victory could be all the sweeter, and the profits invariably higher.
Hyper Specialize To Find The Best products
As opposed to finding general trends, you can also find products that are not trending but have a demand from specific people. There might be a small group of people in the market for luxury watches that are willing to pay for them – and huge profits can be made.
But you still need to do research to find out these niches and how to attract such customers to your store. There are multiple ways to do this. Perhaps you want to start dropshipping products in an area that is specialized and that you have expertise in. This is a great strategy for many reasons.
If you have professional experience in a certain area, then you might be able to sell associated products with the core product. For instance, you might want to sell solar panels or home security systems. Most people have no idea how this works or how to install them. These products can have multiple components and are often confusing.
This is an ideal situation to add value with a blog, free pdfs, or associated product upsells. If customers are buying on your site, they will likely stick with the same site for associated services. You can also easily blend in your professional experience /personal story with the site, which will generate an emotional rapport with your customers.
Audiences like nothing more than authentic stories from real people. It fosters a sense of trust and reliability. The core product still needs to be something that people are looking for, of course. But professional expertise and a back story is a superb way to differentiate yourself from other dropshipping stores that are simply looking to capitalize on a trend. Be sure to highlight your personal experience as much as possible if you are in this kind of position.
Get Creative – Keep Experimenting
At the end of the day, you need to experiment with a number of different products. Despite all of the qualitative and quantitative factors, sometimes a product might just work. You can only find out what works with time and experience.
It’s still best to stick to best practices and to be focused as much as possible. But keep an eye on the metrics and see what is selling. You will gain insights that other people don’t see, and you can broaden your horizons the more that you experiment. You might easily find out things that are not known by anybody else.
There are also many ways to scale and expand your store. And there are countless ways to add value to customers. With enough experimentation, you will find gaps in the market and certain products that sell like crazy. You could also leverage some outside help to find the best products. For example:
- Hiring an affordable product research freelancer to get ideal products.
- Hiring an affordable SEO technician to rank pages.
- Get a business partner to work with you on your store.
- Use paid advertising models for more information.
- Create a YouTube channel and cross-market your store.
You can even launch 3 or 4 stores simultaneously to see which ones work and what products are really selling. This might seem a little ambitious. But with complete stores available for a one-time fee of $17, it is not cost-prohibitive to do so. This is a little ambitious, but if you are truly serious it’s certainly a viable option.
Finding The Right Platform
The platform you choose to host your dropshipping store can have a major impact on what products are available, and from what suppliers. While there is a great deal of overlap, you might find that a special product you are looking for is not available. The major dropshipping stores such as Shopify and BigCommerce are integrated with reliable suppliers. But these platforms come with other caveats – they are pricey, with too much choice for beginner entrepreneurs.
Other platforms, such as the DashNex Instant eCommerce Store, offer a different approach to dropshipping. The platform is streamlined for sales and efficiency, so you can focus on a few select items that sell well instead of adding a huge number of items and getting lost in a sea of plugins and add-ons. With DashNex, the technical details are taken care of so all that you have to do is find the products.
This is where your focus needs to be, so you don’t get a headache from endless SEO optimization and external site enhancement tools. All that you need is built into the architecture so you can focus on the selling of products to customers. It makes finding the right products a whole lot easier.
The ‘Right’ Products For Your Business Model
You can’t really separate a ‘winning’ product out from your wider business model. You might find the best product in the world, but if your customer service is lousy or you don’t have a reliable supplier, then it’s not really the ‘right’ product at all!
You need to evaluate what differentiates you from competitors so that your product sells. Do you:
- Have outstanding customer service?
- Have a great marketing, packaging, and branding system?
- Spot trends/products more quickly than your competitors?
- Offer products at a lower cost than competitors?
- Specialize in low traffic, high-profit products?
- Place a strong emphasis on repeat business?
- Have a unique personal story surrounding the product?
It is obviously important to find products that customers are looking for and are willing to pay for. You need to do your research. Without traffic and interest, your store is dead. But this is just the start.
You also need to add value in other ways and differentiate yourself from the competition. In other words:
Winning Products + Alternative Ways To Add Value & Differentiate + Thorough Analysis Of Costs And Logistics = A Profitable Dropshipping Model.
Clearly, there are a number of considerations when finding the best dropshipping products. The question of finding a good product cannot really be answered in a vacuum.
You need to find the sweet spot between finding products that customers are looking for and differentiating your store from others in a meaningful way. You’ll also need to consistently look for ways to improve your store and add value to customers.
There are many ways to find winning products and tonnes of ways to market successfully. It just takes some consistency and practice. And it’s never been easier with the tools available, which can make dropshipping a breeze.