Ultimate Dropshipping Guide
Chapter 3: What to Sell Online
“What should I sell online?” – It is one of the most common questions we get from new resellers. There are infinite options when it comes to choosing the type of products you want to sell, which supplier you want to work with, and essentially what type of business you are going to run. The endless possibilities can give many “analysis paralysis”… real thing :).
The good news is that millions of products are sold everyday online from almost every conceivable product segment. If you are making your own craft items, then you might be creating a product where there is not enough demand. But, when you are purchasing products from a wholesaler, they have already decided that there is enough demand to warrant the large volume stocking of these brands and items. So, the question isn’t so much about if the products can sell, but rather who is best to sell them.
So, when asking “What should I sell online?” the correct response will depend a lot on who you are, not what should be sold. Some sellers might add, “Which products will make me the most money?”…but again, it’s not a single product type for all users, it’s about finding the right products based on who you are, and finding the right fit for you will determine your true profit potential.
Here are some considerations to help maximize your chances of finding a lucrative dropshipping product opportunity and executing to get the most on your dollar spend.
What Products Do You Know Best?
The first way you can evaluate products to sell is asking yourself what the product types and categories that you know best. Having a passion or deep knowledge of certain products often differentiates what makes retailers successful. Sure you might be competing with Amazon, but if you can provide added value through your knowledge and expertise of the product, that will get you sales.
For example, if you enjoy shopping for and setting up game and entertainment rooms in your house, you will be able to add value to your customers through design recommendations, advice on certain brands and the ability to answer the tough questions like “how do I manage the audio for 5 TVs in one room?” This would eventually lead you down a path to start searching for suppliers in the gaming, casino, bar supply and electronics space.
Now, there are some arguments out there that say “following your passion” is the least important factor in finding products to sell. Sure, doing keyword analysis and using tools to determine demand are great ways to find underserved niches in the market and start a business. However, the dropship market has become pretty saturated with retailers taking this approach, and in order to build a sustainable business, you will need a competitive edge to win out over your competition. Most retailers find their competitive edge in their customer service and knowledge/specialization in their product category, as well as their ability to build a brand name in the communities that purchase their product.
Having familiarity with your products will also help you know which products might be better as the featured items for your store and marketing materials. You will be able to more quickly improve the product and category content, and you might already be familiar with where fans of these products tend to spend their time online or good forums and blogs that focus on this niche.
Choosing a product on keyword and trend analysis alone can be tough to simply get started and gain traction. You might get a tip that artificial flowers are an underserved market with huge demand, however if you have no familiarity with this type of product you might feel lost in getting started with just some of the basic steps needed to launch your site. Writing product content, designing your site into logical categories, identifying your target buyer, and finding the digital communities will all have a steeper learning curve with a product you are unfamiliar with. Regardless of the total demand and potential sales volume, without knowledge of the products you are selling it is tough to add value to your consumers and much longer road to simply getting started.
So yes, doing research in trends and demand analysis is a great way to pick a niche; however, you will want to make sure it is a product category you can invest the time and effort into researching to become an expert in the field and a knowledge leader in the digital communities to win in the dropship world.
Taking the first steps with an online venture can be the hardest part, so start simple with products you know. You can always expand into new product lines or types in the future by adding suppliers to your existing site or marketplace account, or even adding additional stores as you grow. But if you are new, starting simple can help get going by adding value to your customers more quickly.
Evaluate Buzz and Hype
It’s one thing to identify products you know and enjoy, but the validity should be tested. Do some independent research to see if these products are really resonating with actual customers. Also, check whether the product is popular in another region. Often, a product trend that has been successful in one place will do well as it spreads to other regions. The same is true on a country level, such as electronic trends spreading from Japan to Europe. Google Trends is an obvious source, with increasing search term traffic a promising sign.
Other good sources for exploring product categories are tools like Google Keyword Planner, Wordstream and even the autocomplete function of Amazon search.
By now you should have a fair idea of whether the buzz about a product is genuine, and hopefully you picked up a list of potential keywords and a profile of the customer in the process.
It’s important to remember, there is a big difference between a product generating buzz and a product people are pulling out their credit card to purchase. This step is more important. Tools like JungleScout and ASINspector are good for researching product success on Amazon. Sales Rank is the best indicator of real demand. A good rule of thumb would be a product with an Amazon Sales Rank between 1,000 and 5,000 (along with a number of reviews below 300 which indicates a lack of competition). Another indicator is the popularity and number of YouTubereviews for the product.
Another tactic for those familiar with marketing funnels is if you look at the first page of results for the product name, you can tell by the proportion of upper funnel vs. lower funnel results that rank high. “Lower funnel” simply means the page is around purchase intent, whereas “upper funnel” are typically pages that are more informative and educational. If there are a lot lower funnel purchase pages in the search results, it is a sign there are a lot of people in the purchasing stage, and this product converts fairly well without much of a sales process. If a product looks very promising at this stage, it might be worth getting serious about investing in some Facebook ads to test and hone in on demand. $100 spent on a Facebook ads split test run promoting a “pre-order” campaign (selling the product first and ordering it from the merchant if anyone buys) can be a useful experiment to undertake. This will take a bit of front-loaded effort to establish the relationship with the supplier, setup a landing page and create some advertisements, but if you think a product is promising, it can be worth it.
Consider the Price Range of Your Target Items
If you are familiar with a wide mix of products or are looking to use a large supplier with a diverse catalog, it’s good to get an understanding of how many items they have priced in the $70-170 range. The supplier does not have to have the majority of their items fall within this range, but it’s good to get a feel for the product types in this range because these might want to be the items that you more actively feature and promote online.
It’s important to note, you might do well with a supplier who has some items in this range, even if the majority of their items are from smaller priced parts or higher-end items than just items within this range. Moreover, you can still be successful using a supplier whose products are all under $20 or over $200. However, if considering your areas of interest or expertise did not help to narrow your distributor search, considering the $70-170 rule can still be a great way to evaluate different wholesale catalogs for your online venture, or at least be a good tie breaker if deciding between a few final sourcing options.
When a product cost is in the $70-170 price range, it’s large enough to make a reasonable profit per order without needing to service the sale with too many customer pre-sale questions or with a little less demand for more detailed content. People might not think too much when it comes to making a $70 purchase from an online seller. But, if you are pushing laptops or items over $1,000 for your focus, you will likely need to offer much more detailed product content with your listings. People will really want to make sure the item is exactly what they are looking for before they spend $1,000 online.
They might also need to see how easy you are to reach via phone or email to get them comfortable enough to buy from you online and not some larger retail chain. Moreover, there may be issues with the product once it is delivered. If it is a $20 cable, some people might not bother to return the item or might be fine getting a discount on their next purchase to make up for the issue. But, if it is a $2,000 product with an issue, you can be certain you will hear from that client until the issue is resolved.
Also, there is going to be a more natural order volume for products in the $70-170 range vs. higher priced goods. There are just less people buying large ticket items vs. lower price points and this is true for traditional retail as well as ecommerce. So, if you are selling only high dollar items, you will want to know you have ways to reach this smaller customer population or have ways to add more details and customer support time vs. lower cost items to leverage the most from the time you spend on your business.
If most of your items are well below this price range, you are going to want to focus on order volume to your total revenue count. You might want to more quickly list items on marketplaces like eBay and Amazon to leverage their existing traffic, or you might want to consider suppliers at this price point if they have order integration options or a simplified order process to make it easier to quickly process smaller orders in bulk.
While products sell at every price point, and there are successful sellers at all ends of this spectrum, it’s still worth considering the time you might need to spend supporting your sales or managing your order volume to make sure that your products are a match for your ability to add value and your available time. For example, if you don’t have much time to support potential questions because you have another job outside your ecommerce store, it might be easier to select lower cost items as your starting point.
One common trait with dropship products that sell well online is their lack of availability in local brick and mortar stores. If it is something like a flashlight, hammer or what I refer to as a “life commodity” that any local store has in stock at any given time, it likely won’t do very well as a good dropship product to sell online. However, the caveat here is you can’t just say “well flashlights are available everywhere, so it won’t do well online”, because if it is a type of flashlight from a specific brand or with specific set of unique features that might not be so readily available in a your local store. You might have a product that would sell very well to the “enthusiast buyer”, which is one of the best buyer types to target for dropship products.
When I talk about staying away from products that are considered “life commodities”, I am basically saying don’t try to dropship a product that is found valuable by every average joe and is designed for daily life. Your brick and mortars and large retailers already dominate this segment because these products are in such high demand. However, these same products that appeal to a mass audience often have variations of the product that appeal to the “enthusiast buyer”. Using the flashlight example, there are some high-end extremely powerful flashlights that have a high appeal to your outdoors and tactical enthusiast. This is a great example of a product that has a common need, but appeals to an “enthusiast buyer” that find value in the additional features and functionality of a standard household “life commodity” product. This type of product will be in high demand by this “enthusiast” segment of the market with little competition from your other retailers focused on higher demanded, “mass” appeal products.
Timing of Need
When looking for a product that you want to sell online, you need to put yourself in your customer’s shoes and ask yourself one question… “can I wait till next week to use this product?” If the answer is no, it likely won’t do well selling online. Maybe you have a great dropship supplier that can get products in your customer’s hands within 48 hours, however that doesn’t factor in to the customer’s buying process. In our current state of commerce, customer’s have been conditioned to expect products that are bought online to arrive to them within 3-5 days, with the exception of Amazon Prime purchases. On top of our shipment timing assumption, we also subconsciously factor in potential delays and rarely risk relying on a product to be consumed within a few days from purchase. Because of this, we usually seek local methods to buy products we want to feel confident in being able to use/consume within that week. So, an overly obvious example is don’t try to dropship headache medicine in your online store.
Evaluate Search Engine Competition
If you can’t rank for it, it can be hard to sell. Some niches, products and their related keywords are wide open for competition. Analyzing the top ranked results and their SEO is a good way to get a quick idea of how hard it will be to rank. Take note of Yahoo! Answers or eHow pages that are ranking high for a product as they are easy to knock out of position, as they are low quality content pages. The Ahrefs keyword toolgives you a direct idea of the competition for a keyword. Also, take a look at the UR and DR of the top ranked pages (using Ahrefs toolbar). If it is difficult to rank for keywords related to your idea, and of course if the first page is taken up by big companies and brands, it could be very challenging.
Evaluate Paid Ads Competition
Of course, even if there is a lot of strong competition for the top results, this can be somewhat bypassed with good paid advertising. Just searching the term in question and inspecting the ads that come up, as well as viewing the CPC bidding rates is useful. Tools like SEMrush and the Google Keyword Planner help you evaluate the cost and competitiveness of a keyword.
Here are some additional question you should ask yourself when selecting a product niche:
Are your products complicated?
The more complicated or technical your products are, the more room there may be for you to use your expertise to add value and help people better understand the products to make the right choices. For example, home security equipment is going to be more complicated than fragrances.
Are there a lot of accessories in your product segment?
You don’t need to only focus on high dollar items. For example, while the TV might cost $600, there might not be that much margin on the item, but you can quickly gain more margin total by helping your customers find the accessories they will need like sound bars, cables or adapters. Even though they are lower cost items, they will often have stronger profit margin room, and if they are needing several accessories to go with their primary purchase, like the TV, this will quickly add up.
Also, when people purchase items like a game console or TV, they are often more price conscious on the high ticket item and might compare various online sellers. However, they often spend much less time comparing the price on the various accessories. So, if you are able to add more value and help them confirm the higher priced item is right for them, or you are more familiar with the typical price this item sells for online, you can more effectively use your Product Price Override tool on these items and/or the Category Based Pricing tool in your account to add a higher margin to the accessories you recommend for a better total profit margin.
Does the brand offer strict MAP protection?
Some brands list products with a MAP value (Minimum Allowed Price), which means that it cannot be sold below this price point. This is a great way to know that your margin, even on higher dollar items will be protected. If many of your items have MAP, there is less you need to consider when it comes to your pricing approach (especially when using Inventory Source to update your product prices and manage your MAP compliance) since there will be less pricing variety found online. Since there is not as much room to separate yourself with just price, adding more product content or more cross product promotion on your site will be a great way to add value.
That said, if you see a lot of products with MAP but find other resellers listing these items below MAP, you should reach out to the supplier or brand for advice. If your products have MAP, but it’s not enforced by the brand, it can be harder to sell these items when you are following the rules when other sellers are not. Also, alerting your brand or supplier to a few sub-MAP listings might help them to more quickly block those sellers removing some competition before you even get started.
Do you know how to reach the target customers?
Who is going to purchase your products? Are they hobby items, office items, outdoor gear or fashion accessories? These are all great item types, but the ways you reach these customers will be very different. If you are a hobbyist, you will already be familiar with specific shows and events for your item types, which could help you with marketing. You might be familiar with how government organizations purchase items, and if that is the case, you could find it easier to become approved as an authorized vendor to governmental organizations and have contacts with some of these agencies making it much easier to build an initial customer base.
If your interest is in outdoor gear items or fashion accessories, many of the people in your social networks might have a natural interest in these items making social media marketing an easier place for you to start. Or, you might already be an active member of an industry or product specific forums and message boards allowing you to gain the trust of other viewers more quickly when you promote your website on these channels.
Does your product segment have an active and supportive fan base?
While you can create a lot of great content for your products, you can save time if you can leverage your potential customer base. For example, there are a lot of mom-bloggers who love writing about and reviewing products for other moms- if you sell these items, you might find your customers more willing to write product reviews for the items they purchase. You might select a product which has items which do not have as supportive of a network as mom and baby items, but they might still be a segment that values product experts. For example, sellers of tactical gear who have a law enforcement or military background and promote this on their website, might find customers with similar backgrounds more willing to recommend your website or write testimonials about your products or customer service. Now, you don’t have to have to be a mom or former military member to sell these product types, but if you are already part of these online communities or have a background that might be more respected or allow you to connect with your customers, you might find that you are able to leverage your background to get more help and support from your customers in marketing your brand and website.
Is the product life-cycle a fit for your customer service skills?
Getting that first customer can be hard. If you know that once you win a customer on their first sale you are going to provide great service and follow-up, then look at items which have short life-cycles so they will want to come back for more. Nothing can drive success like repeat business, so products that need to be purchased again and again can really drive your long term sales growth.
Even if you are selling low cost fragrance or grocery items, people need to purchase these items again and again. So, if you know you have what it takes to make new customers loyal customers because of how you handle the post-sale process with follow-ups, newsletters or reminders after a few months about their purchase history to make it easier for them to re-stock, then these types of items could benefit from your approach. If your talents are more in ecommerce marketing and less in customer or post-sale support efforts, then you might be fine focusing on products that require less repeat purchase volume from the same customer base.
Selecting the right product to dropship is both art and science. Whichever products you choose to dropship, it will take an investment in time and marketing to build a business around it. There is no “perfect product”, however there are bad products, and hopefully this has helped you weed a few of those out to start.