If you’re thinking about starting a dropshipping business or you’re already using this method to generate a profit but want to increase revenue by adding new product lines, this article will tell you everything you need to know about how to choose dropshipping products and how to source your chosen items.
What is dropshipping?
Dropshipping is a way of selling items online without keeping a stock inventory. Instead, you use third-party suppliers to ship items directly to the customer.
By using the dropshipping method, you can avoid paying for expensive warehouse space. If you sell using the Amazon FBA service, you won’t have to do the time-consuming fulfillment process as well. In a nutshell, FBA dropshipping allows you to avoid any contact with the goods you’re selling, being responsible only for your ecommerce marketing tactics.
Amazon dropshipping enables you to launch a new ecommerce business or introduce a new product line without investing thousands in stock upfront. You’ll have the freedom to test the market, changing your product selections if they’re not performing well without having to worry about unsold stock languishing in storage. You’ll also be able to jump off retail trends as they happen without worrying about surplus items once demand cools off.
Dropshipping is often done by sourcing products cheaply on Alibaba or AliExpress (although some sellers find using American dropshipping suppliers better for delivery times and customer service). Then they are sold for a profit on Amazon, eBay or your own store.
How to start a dropshipping business
There are two major ways to operate a dropshipping business:
- Operating within the Fulfillment program of a major eCommerce site like Amazon
- Working with a trusted supplier who ships out individual items direct from their stock but sold through your own ecommerce website or social media.
Amazon’s fulfillment service often used for dropshipping is known as Fulfilled By Amazon (FBA). It allows sellers to piggyback onto the site’s well-oiled, highly respected fulfillment, delivery and customer service services. Sellers must ship their product, in bulk, to one of Amazon’s warehouses and pay a fee for each transaction that takes place through the program. In return, they’ll be free from the stress of dealing with order fulfillment and customer service and will be able to sell their items on the world’s largest ecommerce site. Using FBA also gives sellers a boost for the Amazon Buy Box.
Each method has its own pros and cons which are discussed later in this article.
Finding a product niche for dropshipping
The success or failure of your dropshipping business hinges on choosing the right products to sell.
Trends will come and go and it’s tempting to ride on the coattails of the latest craze. Picking dropshipping products that are unrelated, random items based on a craze is quite common. This strategy is often successful in the short term, but it can be hard to maintain high sales over time. Sometimes concentrating on a good niche and sticking to it is the best strategy.
Product research is important in order to find items that are in demand and will generate a high sales volume. You will also need to select dropshipping products that can be sold for a healthy mark-up and for which there is low competition. Picking the most popular current items may seem like a winning strategy, but in a crowded market, product margins for smaller retailers will be squeezed ever tighter if competition is high.
What to look for when choosing dropshipping products
When thinking about which dropshipping products to sell, it’s never a good idea to purchase items based solely on personal preference or a ‘gut feeling’.
The world of dropshipping is competitive and rapidly changing. In order to compete with established sellers, you’ll need to conduct thorough product research and analyse existing sales data. Guesswork just won’t cut it if you want to rise above the competition.
Popular dropshipping products tend to be either impulse buys (the kind of item you wouldn’t make a special trip to the local shop to purchase individually, but might notice and pick up at the supermarket checkout while you’re waiting to pay for everyday items.)
Impulse buys are usually cheap. Most shoppers can afford to spend up to $40 without thinking too hard about whether the item represents good value or if they genuinely need it. For more expensive purchases, we tend to do more extensive research and shop around for longer before making a decision.
Dropshipping products that sell well fall into two categories:
- Colourful, eye-catching, fun items like pocket money toys (slime and squishies have both trended in 2019).
- Useful items that solve an everyday problem for the consumer. Neck mobile phone holders have proved popular in recent times as they offer an alternative to holding a phone to your ear for long periods. This is something many of us do that can cause painful medical issues!
As you will probably be promoting your dropshipping items through social media channels, it’s also important to remember that people don’t tend to buy boring, everyday household items on Facebook or Instagram. You’re looking for eye-catching, gimmicky and amusing products that provide a talking point and catch someone’s eye when they pop up in their feed. This type of item will also be shared via social media and your ad could even go viral if you find a way to tell a story with your product.
Fun items that also serve a practical use combine these two key areas and are almost guaranteed to be winners. Think clear plastic shoe protectors that look funky but that also protect expensive footwear from rain damage. Or perhaps a blow-up travel cushion for your cat or dog.
Products may also be seasonal, for example, you’ll sell more of those shoe protectors during monsoon but very few during high summer.
You may also do better with unique products that aren’t easily available in local stores. People will often use the internet to search for items they can’t find locally. If something is hard to get hold of at a bricks-and-mortar store but is also in high demand, it’s an ideal dropshipping product.
An online search of the top ten most popular dropshipping products for 2020 will return mixed results. However, you’ll find that all items listed have one or more of the following qualities: they’re inexpensive, problem-solving, a novelty, unusual, eye-catching or exclusively sold online.
Examples of best-selling dropshipping items for 2020 include:
- Play slime
- Mobile phone neck holder
- Magnetic / wireless phone chargers
- Waterproof mobile phone cases
- Car phone holder
- Posture corrector
- Portable blender
- Spider nail gel (for customizing nail designs at home)
- Eyeshadow stamp
- Inflatable pet collar
How to research great dropshipping products
You can either do your own research by browsing top-selling products on popular eCommerce sites like Shopify and AliExpress for inspiration and helpful information or you can use a product research tool like Niche Scraper that analyses thousands of products each day to show which have the most dropshipping potential.
This type of software uses a simple search function to analyse millions of products in different marketplaces across the web. It looks at current order volumes along with a product’s sales history to predict future sales potential. This type of tool can help sellers to jump on dropshipping products that are about to trend rather than already trending. It also provides insight on when to drop a certain product or range that is starting to drop in popularity.
Tools like Niche Scraper can also be used to spy on top-performing Shopify sites in selected niches in order to find guaranteed winning products.
High-ticket and low-ticket items
The difference between high- and low-ticket items is simple: a low-ticket item is simply a low-priced product, like a pen or a mug, that won’t yield a huge profit margin for the seller. High ticket items like furniture sell at more expensive prices and have bigger returns (but bigger risks) for the retailer.
When dropshipping, it’s better to concentrate on the sale of low-ticket items as customers are much more likely to impulse purchase these products, meaning that your sales volumes and profits should be higher.
When making buying choices about high ticket items, buyers will need more time to reach a decision and much more support from you, meaning you’ll spend more time handling customer inquiries which may not necessarily result in sales. Customers also need to build trust with a retailer before spending large amounts of hard-earned cash and may prefer to visit a bricks-and-mortar store or showroom to physically handle a higher priced item before buying it.
Low ticket items carry a much lower risk for dropshippers and are a more sensible choice, especially for a new seller.
Helpful tools, software and websites for dropshipping
Niche scraper is a powerful dropshipping and product research bot. It replaces the need to do hours of manual research into products with hit-or-miss results. Instead, you are provided with concrete sales data to help you make decisions and even spy on your competition. The guesswork is removed as you can view products that are guaranteed to sell well.
Google trends is a free service provided by Google that shows you the latest trending search topics. The total global search volumes for chosen terms can reveal a lot of interesting dropshipping niches if you’re prepared to do some digging around!
Camel Camel Camel is an Amazon price tracking website that alerts you to price drops for millions of products listed on the site. It was voted as the most popular price tracking tool amongst Lifehacker readers in 2019 and allows you to follow price changes in real-time by using an RSS feed.
DS Comparison is a site that allows you to compare dropshipping software in order to decide which tools will best suit your individual needs.
Dropshipping products to avoid!
When researching the perfect dropshipping products to sell, you must be careful of products to be avoided at all costs.
Firstly, steer clear of any type of product that could provide difficult to advertise. Facebook, for instance, prohibits ads that feature adult toys and e-cigarettes. Lack of marketing opportunities for your dropshipping products will, obviously, lead to fewer sales – so stick to family-friendly goods!
Amazon also have certain restrictions on products you can sell and categories and products that require approval before you can list them. eBay also have restrictions, although they’re slightly less stringent. Make sure you have checked these before choosing products for your dropshipping business.
Don’t forget your overheads
It may seem obvious, but it’s important to steer clear of items that are expensive to buy wholesale. This will require you to add a huge mark-up to make a decent profit. Remember to factor postage into your costs – a good rule of thumb is to steer clear of wholesale purchases over $15-$20.
It’s also best to avoid large, heavy or bulky items when dropshipping. Many dropshipping programs (including FBA) charge a fee based on shipping cost, meaning that larger items incur a heftier charge. As you’ll need to add shipping costs to the price of your item, it’s also sensible to choose small, light items on this basis to keep costs as low as possible for your customers.
Finally, you should make sure that the items you sell within this market aren’t too unusual. As an example, stocking a range of brooches shaped like different breeds of dog will appeal to a wider market than selling only a Labrador or Chihuahua breed. You should also research the most popular dog breeds, as if only a handful of people have a certain type of dog, the chances of selling a high volume of related products are very low.