CRITERIA TO CHOOSE THE BEST DROPSHIPPING PRODUCTS
To have a successful eCommerce business, you have to find the right products to sell, but when it comes to dropshipping finding the right product is possibly the most important aspect of your business.
There is almost no way to ascertain which products are completely “perfect” for the dropshipping business model, however, have a shortlist of product ideas that you are sure will sell (based on hard facts, figures, and research) is a good way to start determining the products that you will end up selling.
Here are a set of criteria that can help decide whether a product is suitable for dropshipping:
- The Retail Price: When it comes to dropshipping, the retail price and the wholesale price are crucial. It’s all about hitting the sweet spot with the way you price your products: Low prices may encourage a larger number of sales but you’ll make a smaller profit margin per product, while higher-priced items might sell less but you’ll be able to make more profit per item. Find the balance that works for you and your customer’s expectations. As we mentioned earlier, profit margins for dropshipping can be between 15%-45% and that’s what you as the retailer should likely aim at. This typically means that pricing items between $50 to $100 are optimal, depending on the product.
- Size & Weight: Packaging and shipping costs vary between different products based on how much packaging material is required and the effort (manual effort or machine effort) required to ship the product. In that sense, having smaller and lighter items are the cheapest to drop ship and give you the largest profit margin. Larger products can be drop-shipped with a relatively large profit margin too, but starting out smaller is the best way to go.
- Cross-Selling Products: Selling sets of related products is a great way to give more value to your customers and encourage them to purchase more every time they make an order. Consider which products you can sell together that serve a related niche. For example, if you drop ship easels it may make sense for you to drop ship canvases, paintbrushes and other art supplies, too. If you choose to go this route, consider how you can strategically price your products to make the sale worth just as much value for you as well as your customer. You might choose to sell your main product at a lower profit margin (say, 10-15%) to encourage your customers to buy it, but then make up for lost profit by cross-selling other accessories and components for the main product at a larger markup (such as 100%).
- Durability: If the products and goods you sell are either disposable and/or renewable, there is a higher chance that your customers will place repeat orders, thus driving up your sales. Many retailers set up subscription options for their customers which ensures that there are always repeat purchases. You can make this an even more attractive offer for your customers by providing a discount for subscribers to your service.
- Turn-Over Rate: Consider the turnover rate of the products that you are selling (the rate at which the product is changed, updated, discounted, etc.). As a retailer with an online store, a lot of your business will come from the product photography and the copy/content that you publish about the products. These are time-consuming and will potentially cost you too. Therefore if you sell products that keep changing in short spans of time, you will have to keep switching up the content which would be a constant re-investment of time and money—with the added stress of actually updating everything physically. Learn more about how to take great product photos, create a beautiful product page, and how to write great product descriptions.
Common mistakes that should be avoided when picking a product for dropshipping:
- Do Not Base Your Choice of Product on What Your Likes & Dislikes Are: Always base your product decision on facts, research, due diligence and evaluating and validating the market’s demand.
- Do Not Sell Knock-Offs or “True Copies”: Not only is this a cheap gimmick that won’t necessarily get you anywhere with customers, but it is also illegal in most countries! Avoid these types of products so you can avoid the hassle or dropship products from reliable and official merchandisers such as MXED (MXED Review).
- Don’t Just Hop Onto the Bandwagon: “If everyone is selling it, I should too,” isn’t always the right reason to pick a product. The market for trending products is typically very saturated so there will be high levels of competition. If trending products are something you want to pursue then make sure to conduct thorough research into the rise and fall of the trend so you know what to expect from consumer interests. Check out a tool like Google Trends to help evaluate trends.
KNOW YOUR TARGET MARKET & NICHE
Ensuring that you do your market research well will set a solid foundation for your business. Here are some tips to help you know your target market and niche better:
- Step One: The first and foremost step is to measure the current demand for your product. Use the KWFinder tool to find out how your product’s keyword is ranking on a monthly basis—this will give you an idea of how many people are searching for your product in search engines like Google every month, and it will give you a general idea of what the demand is like for your product. Ideally, you want to find keywords with monthly searches in the thousands if you plan on building a business around it, but if your product serves an emerging market then there may not be any people searching for it yet. To learn more about keyword research and how it can help you build your business successfully, check our Ultimate Guide to Keyword Research and if you want to learn more about the KWFinder tool, check out our KWFinder Review.
- Step Two: The second step is to understand how seasonality may impact your customer’s purchasing patterns. Certain products are only seasonal commodities while others will do well year-round, but how do you figure out the difference between the two? Guesswork may be futile and unnecessary when you can just use Google Trends. This tool gives the user a graphical analysis of the peak search seasons for any given product (or keyword) over a vast amount of time. Forecasting trends can help you prepare for dips or spikes in sales throughout the year and ensure that you aren’t caught off guard.
- Step Three: The third step is to scope out your competition and observe how they engage with the market. Search out your competitor’s websites, social media platforms or their presence on marketplaces like Amazon and eBay and pay close attention to the number of ratings, reviews, comments and overall engagement that they receive and what their customers are saying. See if you can find any opportunities where your competitors aren’t meeting the market’s expectations so you can go ahead and close that gap.
FACTS TO CONSIDER ABOUT YOUR TARGET MARKET
Factors that you should look at when analyzing your target market, include:
- Demographics: The demographics such as the physical/geographic location, income bracket, etc. of your audience is important to understand in order to know how big your audience is, where the majority of them are and how you can cater to your dropshipping products to them.
- Gender: Statistically, men and women shop differently and have different spending and purchasing patterns when it comes to dropshipped goods or just products in general. While the gender of your potential target market may not be the most important aspect to know, it still may be worth looking into. The kind of device they use to shop, the kind of content that works for them (testimonials, product descriptions, etc.), the kind of language that would prompt customer conversion—all these are factors that may be influenced by gender, too.
- Age Range: Being able to understand the spending patterns and purchasing patterns of different age groups can be incredibly useful. Millennials (individuals born between 1980-2000) are proven to fall in a lower income bracket and statistically spend less, thus drop shipping expensive products that specifically target the age range of young adults may not be completely advisable. The same goes for the 60+ bracket as they typically aren’t comfortable with purchasing products, dropshipped or not, over the internet.
- Type of Institution: Are you selling your products directly to customers, other businesses or government organizations? Whether you’re selling your drop shipped goods Business-to-Consumers (B2C), Business-to-Business (B2B) or Business-to-Government (B2G) will impact many aspects of your business such as who exactly your customers are, what quantity of products they purchase from you, their main goal for purchasing your products, how you market your products to them and more. Typically when you’re dropshipping the most common market you’ll be selling to is directly to consumers, so consider how that will impact your business overall.
KNOWING YOUR COMPETITION
In order to beat the competition, you need to know the competition. If the product you want to sell has established sellers already, it’s actually a good sign. However, if there are too many sellers in that space, it could pose a problem for your business to stand out amongst all the other businesses.
In order to scope out the competition, you could use these tactics:
- Use Online Tools to Scope Out Your Competition’s Website: Online site explorers such as SEMrush allow you to check the ranking and domain authority of any website of your choice using only a URL. This helps you paint a good picture of how much of their traffic is directed from keywords and other links, and where exactly it’s coming from. This, along with scoping out their website personally, should give you a well-rounded insight into the workings of their website which you can base on facts and figures. Learn more about SEMrush here in our SEMrush Review.
- Order Products from the Competition to Get an Idea of How their Process Works: The way something appears online can pretty obviously be different in real life. Ordering from the competition can give you an idea of the quirks that set them apart, negative aspects about their brand experience and perhaps even ideas and tips for your own business. That being said, don’t necessarily copy some or the whole of their shopping and shipping process, simply observe any of their flaws so that you can work to improve them for your own customer experience.
- Analyze their Social Media Channels: Your competitor’s social media channels are an amazing way to get direct customer feedback about their business and also gives you a good base to analyze their marketing strategy. Check the kind of engagement their brand has and the flaws that you could possibly work on for your brand. Pitting your own content against theirs can also become easier when you know what kind of content and at which scale they produce it at.
FINDING THE RIGHT PRODUCTS TO DROPSHIP
Once you know what product you’re interested in dropshipping, you have to find out where to actually source that product from.
Start this process by creating a list, preferably a spreadsheet (use Google Sheets or AirTable) with names and sources so that you aren’t losing track of where you found a product. This spreadsheet/list can also serve as a database for reference in the future.
Do not underestimate the power of a simple Google search. Search for your potential product in Google and watch autocomplete do its magic. Most autocomplete suggestions are popular keywords that are based on what other search engine users (such as your potential customers or suppliers) are looking for. You can even hone into these autocomplete results to give direction to your brand strategy as you can find correlating terms, etc. Furthermore, the Google search results will also yield a list of “related searches,” which are essentially similar keywords that are high-volume search phrases.
Another unique way of basing your product choice on consumer demand is to check out product forums and review sites. Look for comments that are looking for certain types of products or are raving about it—then supply them. The review sites can also act as a ranking parameter as the more popular products will rank higher which means a better chance at making more sales on that particular good. Check out these product-related Reddit threads to get a better understanding of consumer thoughts and demand, and check out popular product review blogs such as Uncrate, AcquireMag and Bless This Stuff or trend publications such as PSFK, Cool Hunting and The Cool Hunter. Find a more complete list of these resources in our definitive guide to selling trending products online.
Here are a few products that have been extremely popular in the past and have been specifically trending this year:
- Notebook, Planner & Journals
- Customized Phone Cases
- Customized T-Shirts
- Phone Accessories
- Camping Gear
- Healthy/Super Foods
- Gym and Fitness Equipment
- Baby Products
- Skincare Products
- Customized Mugs
A lot of these products can be related to pop culture and trends in the media which influence buyers, so this is not a definitive list of what works and what doesn’t—just the most popular selling items over the past year. Once you can understand trends in the media, it may benefit you as a business owner to forecast product trends, too.
Finding the Right Dropshipping Supplier
The entire drop shipping model is based on the supplier doing their job well and fulfilling orders punctually and efficiently. Therefore it goes without saying that choosing the right supplier is one of, if not the most important step towards setting up a successful brand. If your supplier/vendor messes up an order, you and your business are responsible, so the key is to find someone who sticks to the plan and is open with communicating any issues.
Here are a few factors to keep in mind when choosing a dropship supplier:
- Find an Experienced Dropshipper with Helpful Sales Representatives: Nothing beats experience. A drop shipper who knows the pitfalls of drop shipping and how to handle them efficiently, coupled with a sales rep who can answer any queries to put your mind at ease, will make a good team and definitely reflect positively on your business.
- Find a Dropshipper who Provides Top-Notch, High-Quality Products: High-quality products yield a higher level of customer satisfaction which means a lower rate of returned items and dissatisfied customers. Product reviews and testimonials can go a long way to boost business, therefore having a good quality product is imperative.
- Find a Dropshipper who has Technological Abilities: When choosing your drop shipper, make sure that they have the technological capabilities to keep up with the times. If you need to scale your business, it would be a shame if you had to break a great business partnership with your drop shipper just because they wouldn’t be able to keep up with your growth.
- Find a Dropshipper who is Punctual & Efficient with the Shipping Process: Drop shippers who ship products within a 24-48 hour period are a great way to ensure happy customers. Due to the competitiveness of the market, long shipping times can be unattractive to your customers. It would be advisable to place test orders with your supplier to see how the process works and get a better idea before you make an informed decision.
As simple as it may sound, Google is your best bet when looking for dropship suppliers. Several startup incubators and websites dedicated to eCommerce, that pop up as search results, will have complete directories of drop shippers and their contact information. Once you’ve obtained contact details for dropshipping suppliers who provide the products you’re interested in selling, send them a short but polite email asking some relevant questions. This way you’ll be able to gauge how quickly they respond and how helpful their sales reps are.
It’s not always possible to know whether you and your suppliers will be a great fit right off the bat, however, it is possible to ask specific questions that will make the vetting process more efficient.
A few of the questions you ask in your first email could include some, but not all, of the following (try to stick to 3 questions in the first email so it’s not too overwhelming for the supplier):
- Do you manufacture customized items if required?
- What are your pricing terms and are they negotiable?
- Are there any other additional costs besides the direct costs? (Always make sure there are no other hidden costs)
- Do you have a return policy?
- Are you also a retailer/direct seller?
- What kind of profit margin can I expect?
- Will the prices ever fluctuate?
- Do the products come with a warranty or guarantee?
- Do you have a dedicated rep that will answer any of my questions that may arise?
- Do you have and use a data feed?
The point is to make sure that the supplier doesn’t take advantage of you because these questions prove that you have done your homework. The last thing you want is to not be taken seriously because you are considered a newbie. The retailer-supplier relation is a long term one, thus needs a certain amount of commitment to it.
That being said, there are many dropshipping scams out there, too. In order to safeguard yourself and your business from them, you need to keep an eye out for any red flags. For instance, if a dropshipper does not accept checks or credit and asks for only bank transfers, it may be a warning sign.
Scammers will also avoid using an address on their business correspondence, website, etc. Any supplier that is working legally is required to display an address. Furthermore, many scams also involve the age-old “membership fees” and while this may not always be a scam, it’s advisable to conduct thorough research and do your own due diligence!
You can obviously take some measures to avoid being the victim of such scams and frauds:
- Use online tools to check the age of a domain: This will help you cross-check the facts with what the supplier claims. A newer domain could indicate a scam, especially if it doesn’t match their answers. Besides, as discussed before, checking the domain age can also help establish how experienced the supplier is online.
- Check reviews about the particular supplier online: Chances are if someone has been scammed by the supplier before the victim might have put out a warning message/negative review.
- The supplier’s business should be registered and the address of their warehouse/office should ideally be listed as a place of business or commercial space. Getting “residential” space results online may be a bad indicator.
- If you are still unsure, you could always contact the manufacturer directly to cross-check any facts. Just be wary about the fact that if it’s a big scam, the supposed “manufacturer” might be in on it too.
Asking the right questions, taking the required precautions and doing your research should help you find the right supplier that fits your business! One such major aspects are dealt with, you can focus on setting up a system for running your day to day operations as smoothly as possible.