How to Choose Your Products/Niche
When it comes to creating your dropshipping store, the first question to ask yourself is:
“What am I going to sell in my store?”
You’ll need to establish if you’re going to create a general store (all and any products) or a niche store (specific to one category).
Here are the benefits and cons for both:
+ Wider selection of products to choose from
+ Larger target audience
+ Able to target multiple niches
– Usually lower conversion rate
– Harder to target your audience
+ Easier to target the right people
+ Usually higher conversion rate
– Higher competition, the niche may be very competitive
– Fewer products to select from
So do you start with a general or niche store?
We’d recommend you start with a niche store and here’s why.
If you’re just starting out with dropshipping, there’s a huge learning curve initially. Choosing a niche store makes things a little simpler for you. It narrows your options, making it easier to focus your efforts on one group of people and choose products aimed at those people.
Beginners are very prone to “shiny new object” syndrome, where they start one thing and then get easily distracted by another thing. Keeping things focused and narrowed, will make it a lot easier for you to build your business whilst learning on the go.
Yes, certain niches will be very competitive and we’d recommend that you maybe don’t go for a niche that quite literally everyone else is doing. But there are plenty, and we mean plenty, of niches out there with opportunities for new dropshippers to get involved.
Niche Selection: How to Choose Your Niche
There are many ways people decide to choose their niche and here are some things to consider:
1. Would you buy it?
Some dropshippers go by the notion of what they know. It makes sense because if you’d buy it, then it’s likely there are other people like you that will too.
You might have a lot of knowledge or experience in that niche e.g. ukuleles or fishing rods. You’d know better than another dropshipper that doesn’t play ukulele or fish, what kind of products are suitable, the build and quality you’d expect for the price, any technical aspects your customer may be looking out for in the description, any extra information about the product – all these things can give you a competitive advantage. So choosing what you know may be a good starting point.
2. Passion or problem niche
Another really popular method to finding your niche is to consider passion or problem niches. The general consensus with this method is that you have much more “hot” customers (this means customers who are in buying mode) and so you’ll generally have an easier job selling products.
In turn, using a passion or problem niche can often give:
- Higher profit margins – people are willing to spend more than average for the product
- Higher conversation rates – it’s easier to convert prospect customers into customers
So why is this?
Marketing often has a great deal more do with people’s emotions than what the actual product is you’re selling.
Some people get confused with thinking a passion niche is about choosing a niche that they’re passionate about. This isn’t the case. This is about tapping into niches that people are crazily passionate about so much so that it’s part of their identity. So how do you find them?
Passion niches are hobbies, but you’re focusing on hobbies that people really get invested in and it’s easy to find items in that niche. For example, minimalism is a growing movement that’s definitely a passion niche, people often make it their whole livelihood, but would prove harder to find items to sell for or sell much of, since the whole point of the minimalist movement is to own and buy very little.
Remember, people are much more likely to buy things if they feel passionate about the niche and/or product. These people are already interested in that niche, and so are “warm” customers. They’re also more willing to spend money, or just buy things with less thought, than customers outside of that niche. Examples of good passion niches include:
- Pets – cat lovers, dog lovers etc.
Pain niches can work just as well as passion niches, as instead of dealing with a strong positive emotion, it’s with a strong negative emotion. People in pain niches are trying to fix, stop or prevent something, buying something to solve it. A lot of pain niches can be found from typing into google “how to___”, where people are looking for a solution to a problem. You then become the person that solves their problem. People in this niche, like passion niches, are already in “buying mode”. They aren’t in a money scarcity mode, in fact, they’re more willing to give their money in order to get a quick solution to their problem.
Examples of pain niches include:
- Pets – behavioral problems (peeing, aggression, training etc.)
- Fitness – loose weight, gain muscle, dieting etc.
- Beauty – acne treatment, anti-aging etc.
- Home solutions – (leaky shower, blocked drains, fix a broken item, prevent item breaking etc.)
3. Product price point
Another aspect to consider is your product price point. Are you going to choose a niche that sells products at much higher price points, or lower?
If you choose a niche that sells high-value items then you have to ensure the supplier is reliable, that the quality is always good, the delivery time is fast and the overall customer experience is premium. If they’re paying a premium price they expect a premium service.
That said, if you sell low-value items, you’ll still need to provide good service and decent delivery times but there’s less expectation from the customer. The difference between low and high-value items is the profit margin and how many you’ll have to sell.
If you choose low-value items, they’re likely a lot easier to sell but the profit margins are smaller, so you’ll have to sell more of them. High-value items you can sell fewer and the profit margins are higher, but items are harder to sell and you have to make sure that every customer is fully satisfied as you don’t want any bad reviews or returns.
4. Trending products vs niche products
Lastly, consider trending products. Now, sometimes trending products do fall into the category of a certain niche, but the majority of these products tend to be just silly, fun or a bit of a craze.
For example, a trending product from 2016 would have been the “selfie stick”, from 2017 is “the fidget spinner” and so on. A fidget spinner could be classified as a stress-relieving product and you may decide to set up a store selling similar products like the fidget cube or stress ball.
Some dropshippers decide to focus solely on ‘trending’ products, and in a way that makes their store “niche”, since they’re dedicated to trending and interesting or unusual products. There’s definitely a market for that.
Deciding on trending products can be hugely profitable, find the right product and the right audience and you can make a lot of money very quickly. The problem with trending products is that you’ll have periods of very high sales and traffic and then almost nothing until the next product comes along. It’s competitive and you have to react quickly. When something starts trending, you need to source your product, sell it at a competitive price and then find the right audience who will buy it before your competitors do. Using trending products or not is up to you.