EP033: How To Pick The Right Niche For Ecommerce Drop Shipping

Released Friday, 28th February 2014
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Since I launched episode number 5 on building a drop ship business and finding the wholesalers online, I’ve gotten a lot of questions about just how to pick the right products or the niche to get into.

Well, todays podcast addresses two specific needs most of my audience has had since listening to that introduction podcast. As a result, I’ve thought a lot about this and think it’s best that I create a podcast centered around how to narrow down your products to sell with drop shipping and also give a few tips on how to measure the demand.

Step One: Measure Market Demand


Let’s be realistic, without measuring market demand, you won’t really be selling much. While these days, anything and everything on the Internet sells like hot cakes, there are probably way too many people selling the same widget you’re and only a certain number of searches are being done for that product per month.

Therefore, in order to sell and become profitable, we need to measure market demand and figure out the supply and demand equation. For now, lets start off with eBay and Amazon:

Ebay and Amazon Categories: eBay is a great place to get inspiration from and also check out what people are selling. They have hundreds of categories but if you look closely, the most viewed categories are at the very top which includes Fashion & Electronics as the most prominently displayed categories.

Compete.com: Although a bit pricey, compete.com can provide you with a plethora of information about any web site that is on the web. You will find such information such as how they get their traffic, regardless if it is being paid or organic. You can also search by demographics which is very necessary when you want to find out who best to target.

Google trends: Google trends is a great little tool you can use to find out a lot of information about a product or a thing. For example, with trends, you can measure demographics, search volume, seasonality of the product and if the product has seen an increase in searches over a period of time.

Watchcount.com: Alongside eBay, watchcount.com is a great web site to find out how many watchers a particular product is getting. The best thing about this free online app is that you will be able to find out exactly what products are selling the most. From there, things get a lot easier in building a list of niches to get into.

Step Two: Analyze Your Niche


Selling price: The selling price is very important. For this reason, you want to pick a product that is somewhere around $100-200 in price. While I have sold sunglasses in the past that were a lot less expensive, my profit margins were astronomical. The only place you will find a lot of profit on inexpensive items is in the fashion and accessories niches which we will talk about later. However, to be on the same side since you’re just starting out, it’s best you stay around $100-200 so there is a lot of room for profit. Also, the less expensive the item, the less calls you will get but the more expensive an item is, the more customer service calls and inquiries you will have.

Market Size: if your market is big, then great. However, if your market size is small, you may have a problem getting visitors to convert as there is a lot of competition and higher PPC fees. 

Market Age:  Is your  product geared towards seniors or kids under 18? I bring up these two inverse situations because although most people are web savvy, there are seniors out there that still lack great experience shopping online or let alone trust anyone with their credit cards. As for kids younger than 18, they might not have a credit card.

Product rarity: Is your niche something that is easily available in local malls or department stores? If so, it may be hard to sell online because who wants to pay shipping and wait for an order to arrive when they can buy it at the local store?

Product Obsolescence: Ideally, you want to sell a product that won’t go out of fashion or become obsolete. As an example, if you sold an iPhone case and a newly designed iPhone replaces the old one, the case will become obsolete in a short period of time. Ideally, you want to get into a niche where  you can build a web site with products that are here to stay and then build a lot of great wonderful content around.

Product Seasonality: I love sessional products because when the time is ripe, the customers just want a whole lot of it. For example, I sold sunglasses for a long time and during the months of Feb-Aug, that’s when I was rock-n-rolling. However, not everyone is comfortable with that.

Product Size & Weight: Ideally, you want to pick a product that doesn’t cost a lot of money to ship. One of two things will happen – either you will over inflate your prices to make up the loss in shipping or you will charge a lot for shipping which will then turn off most customers. This is one of the biggest reasons for shopping cart abandonment.

Profit: This is the reason why you’re in business in the first place. In an ideal world, you want to shoot for 75-100% profit for your products. This can easily be done with selling accessories and fashion products. However, most products are not this way. Therefore, you want to pick a niche that you can make at least 20-30% profit. With this much profit, you will at least have wiggle room to advertise if you needed to and still make some money.

Is this Your Passion? – this will get you in trouble – why? Following your passion is great but it also makes you ignore everything I just talked to you about. If you’re passionate about candles and you have a dozen of them laying around your home and want to start selling them online, you can and thats great but have you done your due diligence about everything we’ve talked about? When I started selling sunglasses back in 2001, I became passionate about sunglasses when it started making money for me, not the other way around.

I have my niche and my products picked out – now what?


Woo-hoo, you made it! Congratulations, this is the toughest part! My advice for you now is to go find the manufacturers. Sure, there is a list of drop ship companies out there but most of them are a waste of time and I wouldn’t bother. A lot of them are middle men to begin with anyway. Settle with calling the manufacturers directly and ask them if they drop ship. You may refer to podcast episode #5 where I talk about this in more detail.

Good Markets To Get Into:



  • Cosmetics

  • Greeting cards

  • Mattresses and furniture

  • Clothing

  • Jewelry (diamonds, watches, etc)

  • Sunglasses or eyeglasses


5-Star Reviews This week on iTunes



  • Nicholas Graham

  • Jessie

  • Rav3ns Fan

  • Ewaldsreef


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Episode Details

Length
30m 21s
Explicit
No

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