As a business model that allows entrepreneurs to find and sell products without ever having to worry about carrying any inventory, dropshipping is one of the most lucrative and easiest ways to enter ecommerce.
Unlike the traditional ecommerce model which requires one to source the products they sell in bulk, and then spend even more on storing them until a customer places an order, with a dropshipping store you only ever order products from your suppliers after you have actually secured an order from a customer.
Although the affordable startup costs of a dropshipping business mean that the barriers to entry are comfortably low for aspiring ecommerce entrepreneurs, they also mean that competition can be very stiff and margins really low. Starting a dropshipping business is easy, making it successful is difficult.
Tips to find Dropshipping Products for selling
Most dropshipping businessmen have issues that they don’t know what category of products to focus on. And this is understandable given the wide range of products available to sell online and how tempting it is to pick a product based on personal interest or passion rather than its business potential.
However, finding the right dropshipping products comes down to two core elements:
- Knowing the attributes to look out for in products
- Knowing how to assess how much demand a product has
What qualities to look out for in dropshipping products
Here are the top three qualities to look out for when picking dropshipping products in 2020:
1. Not too expensive
You need to sell as much product as you can with minimal effort in order to make your dropshipping business as profitable as possible. This is why it’s important to thoroughly consider how much pre-sale support you will need to offer on your ecommerce store to make potential customers comfortable enough to make a purchase.
The higher the price, the more likely the customer is to want to speak to a sales representative to make sure the product is exactly what they want and that the store is not a scam. Most people have no qualms ordering a $200 product online without talking to someone on the phone but with prices that have a coma in them ($1,000 and above), most of us will want to hear a reassuring human voice first.
If you plan to sell high-priced products, make sure you are able to offer high-quality pre-sale support (preferably via phone) and that your margins are wide enough to cover this cost.
2. Comes with a solid MAP policy
As mentioned earlier, due to the low barriers to entry, dropshipping is usually riddled with stiff, crazy competition that often breaks into price wars as retailers try to undercut each other out of the market.
In order to combat this, some dropshipping suppliers impose a minimum advertised price (MAP) policy for their products. This requires all retailers to resell their products at or above certain price points to guarantee a certain minimum markup and ensure that merchants can make a reasonable profit on their products.
You should seek out a niche where suppliers enforce MAP pricing (ideally 100% minimum markup) so that you are able to compete on factors beyond just price, such as added value and marketing strength.
3. Has room for you to add unique value
You should strongly consider choosing a product for your ecommerce store that you have actual experience in using and is known to have many confusing components, requires technical setup or installation or is highly customizable.
This provides an opportunity for you to leverage this information gap as a competitive advantage. You can set yourself apart from the competition and charge a premium price for your product by explaining the technical aspects of the product and how exactly prospective customers can make the most of it.
Remember, entrepreneurship is all about solving people’s problems, and that applies to the world of ecommerce as much as it does to the brick and mortar world. Providing expert advice, tips and guidance within your niche remains one of the most effective ways to build a successful dropshipping business.
For example, if you’re a professional photographer/videographer, you can sell various types of cameras online by teaching people how to shoot with them and help them choose the most appropriate camera for whatever it is they want to do. Your experience and expertise will be your products’ key selling point.
The top two forms of content for adding value to complex and confusing product categories are:
- In-depth comprehensive buyers’ guides packed with thorough product descriptions
- Well-detailed installation and setup guides, specifically covering common user mistakes
These can be delivered in either text or video format, or even using a combination of both.
How to measure demand for dropshipping products
Without enough demand, it doesn’t matter if your product has all the above attributes – it won’t sell. Here are the top three criteria to take into consideration in assessing the demand levels of a product:
Ranked among Amazon’s top 5,000
Remember, you need to choose a product that can generate year-round sales. Seasonal products are great for making extra income but they shouldn’t be the backbone of your dropshipping business. As the world’s ecommerce giant, Amazon’s sales data is a great resource for figuring out which products are in high demand all year. Aim to resell a product similar to items in Amazon’s top 5,000 Best Seller rank.
Searched for at least 100,000 times per month
Search engine traffic still remains one of the most reliable ways to measure how interested people are in a product. This is where common SEO tools like Google Adwords and Google Trends come in handy. You should use them to find out the total of the searches for the top three keywords for your product. The sweet spot you should be looking out for is 100,000 searches – below that, there’s simply not enough demand to make any meaningful profits and beyond that, there’s too much competition to survive.
Trending on social shopping sites
Another great way to assess demand for dropshipping products (albeit not as exact as the previous two) is searching social shopping platforms such as Pinterest, Wanelo, and Etsy. These sites have combined the power of both ecommerce and social media to create vibrant communities of online shoppers who are constantly reviewing, recommending and sharing products – word of mouth marketing on steroids.
You can therefore quickly identify products that people have started raving about and the orient your dropshipping business towards fulfilling that growing demand. Crowdfunding platform Kickstarter.com is also yet another great avenue for finding out which dropshipping products are likely to be popular in the future.
Overall, dropshipping offers great potential for success, especially when you choose the right products from the right dropshipping suppliers. It’s important to keep in mind that what works for others may not necessarily work for you so you should focus on figuring out which path is best for your particular ecommerce store even as you look to others for inspiration.