Yes – you can still make good money dropshipping in 2021. The trick is to know how to find a profitable dropshipping niche. But that’s almost like searching for a needle in a haystack, right?
Wrong. Keep reading this article, and you’ll learn how to spot and pick winning products from a mile away. With your eyes closed (and your hands tied behind your back).
We’ll cover evergreen top-down and bottom-up market research approaches. Then we’ll finish strong with a seven-step dropshipping launch validation checklist. Steal it to zone in on the biggest opportunities with the least waste possible.
The 3 Components of a Foolproof Dropshipping Business
Let’s start with the basics. Dropshipping is not a business model. It’s a fulfillment model. This means having a solid product may make cash, but it won’t be enough to run a lucrative and sellable business.
So, before finding a profitable dropshipping niche, we must review the prerequisites of running a long-term viable dropshipping business. I call these the 3 components of foolproof dropshipping.
First is strong customer support. Dropshipping is volatile, which may cause shipping delays and other complications. When we start to scale sales, we need an expert, proactive support team in place. An omnichannel support approach – including live chat, email, voice, and social media – works best.
Secondly, we need a reliable supply chain. I love AliExpress as much as anyone, but we’re living in the same timeline as Amazon Prime. We can’t expect 20, 30, or even 40 days of shipping time to cut it. Don’t fall for that trap. There are better alternatives. Such as one-stop dropshipping platforms, like HyperSKU, that ship globally in 7 days.
Thirdly, we need to sell high-quality products, to a starving crowd, for a price that makes sense. If the products are of lesser quality, we will encounter customer feedback issues. We’ll miss out on the possibility of repeat sales, and possibly get our advertising accounts banned. If our price is unreasonable, people won’t buy.
Finding the starving crowd and the profitable dropshipping niche is what the rest of this article is about.
How Do You Find the Best Dropshipping Niches?
Fundamentally, there are two approaches to finding a winning dropshipping niche.
First is the top-down approach. We zoom out and get a helicopter view of the e-commerce landscape. This means we check research websites like statista.com to spot overarching trends.
For example, take a look at this snippet from Statista’s free report for COVID’s impact on the fastest-growing categories in US e-commerce.
In just a few moments, we found several potential product ideas we could look into.
Or take a look at the following report, which describes the products and services people spend more than usual in the United States, United Kingdom, and Germany (as of May 31, 2020).
What’s great about these kinds of studies is that they can help us filter out categories and point us in the right direction quickly. For example, we can see that health and hygiene-related products are performing well.
But top-down market research won’t tell us what health and hygiene products to sell. This is when bottom-up research kicks in.
HOW TO DRILL DEEPER INTO FAST-GROWING CATEGORIES
Google trends: Trends can help you validate (or disprove) a niche’s potential by evaluating search interest over time. You can also spot how seasonal the niche may be, by reviewing how the demand for the products changes at different points in the year.
Google keyword planner: Google’s free keyword planner is a great dropshipping research tool because search volume is a great way to estimate demand for a product niche. Long-tail variations (e.g hiking pants waterproof hunting) can often give valuable context.
Facebook audience-insights: Using this free research tool by Facebook, you can get great insights about the audiences interested in your categories. Just plug your product niche keywords and get incredible insights about your audiences age, gender, relationship status, income level, and more.
How to Know the Exact Dropshipping Products You Should Sell
Now that we have an idea for the types of products we’re looking for, say, health and hygiene and DIY, it’s time to get our hands dirty.
Let’s get into bottom-up research. The best way to get started is the OPP Method. OPP stands for “Other People’s Products.” What we want is to find the products of our chosen categories that others have sold the most.
Depending on where we plan to sell, we should use different tools. For example, if we plan to sell via Facebook and Instagram ads, we should use social advertising spy tools to find the best performing products.
If we plan to sell on Amazon (or SEO), a simple “[category keyword]” + “Amazon best seller” Google search might be enough.
Here’s an example product I found using this method. As of this article, the product has 26060 reviews. If we go by an optimistic 2% review rate, this means this product has sold an approximate 1.303.000 units. This adds up to a fantastic 50.803.970$ in revenue.
Of course, these numbers are approximations. And reviews can be (and often are) “touched up” by Amazon Sellers. But this simple exercise shows how simple it is to find high sales-potential products.
So the question is, how do you know which of these high-potential products to sell?
NICHING DOWN IS NOT JUST ABOUT WHAT YOU SELL
Because before you know it, others will start selling it too. It’s also about how you sell it. Here are a few simple ways to refine your niche:
When making the choice of how you’ll niche down, consider three things. Whether your total addressable audience is big enough to make money (assuming you’ll only get a small part of it). Whether you can reach your audience easily online. And whether they’re willing and able to pay.
How to Zone in on the Biggest Dropshipping Opportunities and Filter out the Noise
How do you know if you’re dealing with a one-trick pony product or a viable product niche? The best way is to look for evidence of related, passionate communities.
If you can’t find any related communities that’s a red flag. The easier it is to find communities and the more active they are, the better. We are looking for passionate groups of people. Passion means there’s a hungry market that’s willing to (re)buy your products when you launch.
The point of finding these niche communities? To understand the “Unseen Who” that buys our niche products.
When we understand the buyer, we can serve them better. Finding new products to add to our store and sell to them is easy.
By extension, we’re able to gauge whether a specific dropshipping product niche has a lot of potential or not. This brings us to the next and most important point.
How to Validate a Product Niche Before You Launch Anything
Yes, there’s an easy way to validate whether a product makes sense before you launch anything. Want to reduce risk and cut wasted resources?
Run your dropshipping product or dropshipping product niche through the following checklist:
✅ There are communities directly or indirectly related to the products.
✅ The products have worked for others.
✅ We can visually demonstrate the product benefits (and quickly source or create good product creatives). This will come in handy when you advertise.
✅ Seasonality is with us (e.g., not selling winter coats in summer).
✅ We have a good margin while setting our desired prices. A quick pricing heuristic is to sell at x4 times your cost of goods sold (COGS).
✅ Our desired prices are reasonable for the consumer compared to local prices.
✅ We can reliably ship a product of good quality in less than 14 days.
The more boxes you tick, the higher probability of success. For veteran dropshippers that have already launched many products, there’s an extra step of validation.
✅ We have data for a similar buying audience to those who would buy this product niche.
This is important because it allows us to use paid media algorithms to their full potential. Such as by creating similar (lookalike) or custom audiences.
If I Follow These Steps, Won’t My Dropshipping Niche Be Saturated?
Competing on who finds the next product trend is a bit like gambling. And being the first to sell something is financially risky. How about deciding to avoid risk?
Rather, how about deciding (from this point forward) that you are building, nourishing, and nurturing a long-term business?
How about competing on being a strong marketer, having proven partners like LTVplus, making your own creatives, and building an ever-growing, constantly fortified, and enduring brand?
This article gave you the tools you need. Use them to get high-potential dropshipping niche ideas in hours, not months. As a quick recap:
- Use top-down research to spot quickly-growing and shrinking product categories.
- Use bottom-up research to discover pre-proven, seven-figure products in growing categories. Others took the risk, but you’ll reap the benefits.
- Search for related niche communities to see if there’s a clear buying persona, pain, need, or use case. This step filters out product fads.
- Finally – use the included seven-step validation checklist. Zone in on the biggest dropshipping opportunities and cut waste.
Try it out. It works.
I know because I’ve been involved in over 200 e-commerce launches. A surprising number of which were multi-million winners. To learn more about me, my e-commerce marketing services, and how we could work together, visit georgekapernaros.com or contact me on LinkedIn.