One of the first things to do when entering the world of dropshipping is to pick a niche. A niche is a narrow field of interest, for example, sports or beauty. Having this concentrated view of the market will enable to you effectively create marketing and plan your campaigns. This, in turn, helps to locate shoppers who will be specifically interested in your products and sell your items to them.
However, not all niches are the same. The popularity of the products you want to offer might prove to be seasonal, popular in only specific locations, or be such a narrow niche that within weeks you’ve already saturated the market with your product and run out of shoppers. Can you be sure that your chosen area of interest will sell any products at all?
These questions are essential and need to be considered before you commit to any specific ideas. While you have no need to ever own stock upfront with dropshipping, it is still important to do your research and test your products to ensure that they arrive on time and are of a quality that satisfies your customer. You also need to ensure that there is a market for your offering before you spend hundreds of pounds down on platform fees.
With that in mind, we offer you this guide to finding the perfect dropshipping niche.
Getting started with Dropshipping in 2022
With the dismal year that was 2021 sliding into its final months, now is a great time to begin making plans for your 2022 break-out product range. With our help, you can learn to find high-margin products and sell them successfully.
How to spot a dropshipping niche opportunity.
Spotting a demand in the market is going to be the goal of becoming a drop shipper. Many drop shippers state that they look for a need or a pain point, and they then try to fulfil or ease these. It is important to find such demand because without it you’ll struggle to make any money!
Luckily, it’s not so hard to begin looking for the right product; you certainly don’t need to leave it to chance. There is a selection of online tools available to allow you to identify the current interest in a product for a specific market.
Facebook Audience Insights.
You’d have to be new to the internet not to know that Facebook is the largest social media network in the world. With over 2.89 billion active users globally. Most adults within that number spend over half an hour a day on Facebook, making them a prime source of information about interests and habits while also exposing them to clever adverts and funnel marketing. Facebook Audience Insights helps you access and use this data to identify dropshipping products, find niche markets, and spot trends.
The Facebook Audience Insights is a fantastic and free tool that will help you discover more about potential audiences, including how they are interacting with your adverts, including retargeting users who showed interest in you, maybe by clicking through, but then failed to make a purchase. The information available via Insights allows you to estimate the potential market size for your dropshipping niche.
Using Facebook Insights, you can research a wide range of data, for example:
- Demographics: Check out the ages, genders, lifestyles, education, job roles, or even relationship status. There are many more options. This might allow you to target a wedding ring business at couples who have celebrated a year together.
- Page likes: Finding out what the audience is already interested in via their liked pages gives you a huge advantage. For example, if you plan to sell sneakers, you might consider targeting followers of the official Nike and Addidas pages.
- Location: Find out where people live and the languages they speak. Clearly, T-shirts branded with English slogans will sell best when targeted at English-speaking countries. But can you find another region that would take an interest?
- Activity: What does your target audience like to do on Facebook? Are they gamers? Maybe they want that gamer-inspired mug you sell. Perhaps they have made comments on posts about Gothic-inspired notebooks.
As a further example, say you wanted to target users interested in beauty products, you can search any word, and Facebook will show you the number of people who have shown an interest in that topic this month. The data on them could include their likes and their location.
Going further, you can begin to narrow down on a specific product. For example, if you have identified 10M users in your target area who are interested in beauty, how many of them have shown interest in mascara pallets? Maybe a recent drop by a popular brand is worth identifying and retargeting?
Using this information will help you locate the right audience and prepare you for testing ad groups later, ensuring a more rapid return of interest (ROI) than a scattergun approach.
Google Keyword Planner
Do you want to know what search terms people are using? Us too. Luckily, Google allows us to see the search volume flowing through its search engine. Google releases this information publicly via its Keyword Planner tool. A quick search will tell you if the gadget you’re setting your hopes on is much in demand or never heard of, or more likely somewhere in between.
As with the Facebook Insights Tool, we could dedicate pages to how to make the best use of the Keyword Planner, but there simply isn’t space in this document, which is long enough already. That said, the three most accessible and valuable metrics are as follows:
- Match type. Using Keyword Planner, you can look for search volumes in a broad, phrase, or an exact match. We recommend that you use the exact match option for most tasks. The information reported back to you will give you an accurate picture of just how many people have been searching for the keyword.
- Search location. Does the interest in your keyword vary by area? For UK sellers, be sure to investigate the results based on your own region in addition to that of other areas or globally. Remember that an English phrase might have different results in many other English-speaking countries.
- Long-tail variations. While it’s easy to chase the perfect one- or two-word terms, such as your product name, that get higher amounts of search volume, the truth is that long-tail variations will make up most of your traffic from the search engines. For example, if you plan to sell furniture online, you will quickly discover that the word “furniture” is included in many searches, with results targeted towards better-established websites. How do you get a slice of the pie? If you specialise in a specific type of product, you should consider searching for those, such as “Art deco daybed” is more likely to show you who has been looking for what you have to offer.
A good rule of thumb is that if a search term has many variations that are actively being looked up, it’s indicative of a healthy market for those sorts of products. The chances are that there is plenty of competitors, but also plenty of customers, with a lot of interest. Inversely, if the search term has little or no search volume, then no one wants what you have to offer.
Building on the previous tool, Google Trends can provide considerably more detailed insights than the Keyword Planner. It’s still free to use, which is great considering how much data it provides. Here are some of the main areas in which it can assist you in hunting down your dropshipping niche:
- Search interest over time. This metric will show you the rise and fall of the search volumes in the search term that you are researching over time. It should be obvious to you, but you want to join in on a rising market, so interest should be growing and certainly not shrinking.
- Top and rising terms. Here you can get an idea of the most popular related search terms that have been trending recently.
- Geographical concentration. A handy tool that lets you see where the search traffic is originating.
- Seasonality. Does the demand for your search term dramatically change over the year? Can you expect massive Christmas Sales but low interest for the remainder of the year? Or are Summer holidays the time of year your shaded paddling pools will sell?
Don’t rush into any one product. It is vital to do your due diligence and research the hell out of it. When you’re ready, you’re going to be signing up to multiple platforms, plug-ins and other monthly costs, so it’s vital to get it as right as possible before the first listing is ever up and running.
What will be profitable in 2022?
There are two ways to be successful as a drop shipper. You can either enter an already established niche and outperform your competitors in as many ways as possible or successfully spot the next trend. That second option has the potential to make you far richer, quicker, but it’s also a significantly riskier option. And once you succeed, expect others to copy.
We can’t tell you what will be the perfect product to launch over the next few months, but here are some of the best performing niches in 2021 so far:
- Health and personal care: Estimated to be worth up to £1 trillion by 2026
- Fashion: While high street stores have suffered, online fashion retails are going stronger than ever.
- Kitchenware: Mod cons to make life easier in the kitchen are a consistently strong performer.
- Gaming: Gaming is no longer the snobby preserve of boys tucked in basements. The gaming industry craves gadgets, furniture, lights, and so much more.
Advice for finding your own niche
Of course, if you are not keen on any of these, or you’re determined to carve out your own niche in a new and interesting way, remember to research, research, research. Here is some further advice to help give your search some focus:
Accessories are key.
Frequently the high ticket items, such as TV’s, PCs or furniture, make only small margins, in the region of 5 to 10% for most. But if those items are accessory rich, this is where the money can be made. For example, whilst a touch screen tablet might not make much money, you can upsell a case, stylus, and keyboard for it. Disguised as a bundle, you’re liable to make significantly more money.
Look for passionate interest groups.
Provide a quality product that a group finds useful, and you can find yourself with a slew of sales through word of mouth. Sports enthusiasts spend a lot of money on their equipment, as do anglers, bikers, and even internet streamers. Find the right group that matches your product and promote to them for an instant hit of sales. Don’t forget to market the accessories to them too!
Source products that are tricky for people to find locally.
While anyone can go out and buy a hand tool from the local hardware store, how easily can they pick up a 3D printer or spare parts for their car? The chances are they will turn to online stores. Find a product that customers are already hunting for online makes the task of getting them to visit your store effortless.
Find products with long-term popular appeal.
Investing in marketing, product photographs, and website copy is all going to become out of date if the product you sell is frequently getting revamped. Anything that might be considered to have 2021, 2022 or 2023 editions is likely to cause you some pain down the line as you have to dedicate some time and money to update all your materials.
It may not be the most environmentally friendly message, but it may be worth selling consumable or disposable items. In fact, played correctly, it can come across as very environmentally friendly, especially when highlighted against the alternatives. Consider, for example, bamboo sporks packed in kraft paper boxes rather than plastic items in plastic wrap. Those are great selling points for a product that can be thrown away and purchased again. And getting past customers to continue to trust you repeatedly is much easier than enticing in new clientele. Keep the customer happy, and you’ll be on to a recurring winner.
How to judge how much competition is in your chosen niche
It is wise to attempt to analyse the level of competition a niche make have. But the reality is that this can be tricky. Even when you can gain a clear picture of all the competitors out there in your chosen field, this has to be considered in terms of the size of the market being catered to. If there is very little competition in your target area, there may be too small a pool of potential customers. On the other hand, if every shop online seems to have some variant of the product you want to bring to market, the chances are that that item has already reached saturation point, and you’ll struggle to make many sales.
There are two general models for taking on the competition in terms of google ranking. The first is to use carefully crafted search terms (see the long-tales variations section above) to target potential customers from other stores and have your link shown as an ad at the top of the google page.
The alternative – study the competition. You want to take on whoever is sitting pretty on the first page of google results (excluding ads). Take a careful look at the competition and study what they have done. Look at the quality of their copy, the keywords evident and their position on the page.
We won’t go too much into Search Engine Optimisation (SEO) here, as that is an entire series of courses unto itself, but if you plan to use good page optimisation, make sure you have good copy written that contains your keywords several times, preferably at the top part of the page and in header tags. Do some SEO research or try recruiting a talented SEO freelancer from a marketing company or a Freelancer website.
One thing to look at is the number of backlinks that refer to the website of your competition. Generally speaking, the number of backlinks (that is, links on other sites that refer to the one you are studying) will indicate the overall health and reach of the page. Google’s ranking algorithm relies heavily on these links. Once you know how well your competition is doing, you can gauge how much work you need to put into building a similar network of backlinks.
Unique Linking Domains
One particularly useful metric is the number of unique domains that link to it. Often called “linking root domains” or “unique linking domains,” this represents the number of unique domains (independent sources) currently linking to the site in question. This is handy because multiple websites recommending a certain site is more likely to be trustworthy than a single forum rammed with brand fanatics or devious SEO planners).
If you are doing your research properly, you’ll now be looking at the number of unique linking domains for the ten websites on the Google front page. Make a note of the results for both the highest-ranked website and the tenth. This will allow you to observe not only how much work it will take to become number one but what the disparity between the top and bottom of the front page is. You only need to pass the existing number 10 to get on the first page, even if you never get to number one.
To help you understand the significance of these unique linking domains, here is a basic guide to how many you should be seeking.
- 0 to 50 linking root domains. New or poorly performing websites will sit in this category. With some decent content and a little effort on the marketing, your site should be able to obtain enough backlinks inside of a year.
- 50 to 250 linking root domains. This is the common range for most quality websites that bear decent copy, selling products and a moderate level of customer discussion around the internet. It will often take a couple of years to achieve this level of backlinks, but the rewards will be creeping up.
- 250+ linking root domains. To achieve this level of quality backlinks, it takes a team of dedicated professionals in your marketing team to begin to approach this. Your top-level competition may well be in this category, which will take quite some effort to shift them from that spot.
You cannot simply game the system by throwing backlinks around until you suddenly find yourself in the number one position. Google examines the quality of the links, not just the number of them. Because Google ranks all our websites, it is Google that decides which sites, and therefore backlinks, are quality. For example, a link from The Times Online is going to have more sway than the Ipswich Evening Star.
Google refers to page quality as PageRank. It isn’t perfect, but it gives a good impression of which sites are quality and which are not. Checking out the PageRank of your competitors’ websites will give you an idea of how much catching up you need to do to rank. Simply use Check PageRank and check those front-page sites one by one.
So that you understand what you are seeing, here is what PageRank will show you:
- PageRank 1 to 2. This is a minor level of authority. If your competition is on the front page with this PageRank, it suggests that the market for the product is relatively small, as competition would soon drive them off the page.
- PageRank 3 to 4. This is the level of authority you’d expect to see in most of your competition. A small business can achieve this with some effort. If the whole of the google first page has ranks like this, there is a strong chance of being able to break into the market and make some good money for drop shippers. In the UK, Selfridges and Harrods have PageRanks that fall into this category.
- PageRank 4 to 5. Consider this a high level of authority. Sites in this level have some serious backlinks from quality pages and are likely to have a dedicated marketing team.
- PageRank 6+. This is the top end of the PageRank system. High-end retailers, You’ve got a full-time marketing and SEO department, right? Because you’ll need them to compete in a market with sites ranked this high. Amazon.co.uk sits at 6.9, while Amazon.com is at an impressive, if unsurprising, 8.3. If you want an example of the highest level achievable, check google.com.
You can easily look up PageRank here.
Quality Metrics that matter
Beyond the statistics, there are other issues that matter. A customer’s journey needs to be smooth, and they need to feel like they can trust you. As such, it’s important to consider the following metrics:
Site quality and functionality. Pay a visit to the top-ranked for any market consider yourself a customer. Is the website inviting? Do you want to hand over your details, such as your name or email address, for an enticement (like a first-time shopping discount)? Is the site slick and new, or old and clunky? Can you find what you need? Is there aftercare information and a clear set of T&C’s? Most importantly, would you buy from them?
Reputation and brand loyalty. A solid high street retailer might have a stellar reputation, but their online arm is dragging their reputation down. What do the reviews say? You can visit TripAdvisor, Reddit or simply google search for reviews to see how well a company is performing. For 100% online retail, their reputation is all or nothing, and a bad rep will quickly earn your business a swift death. Be sure that no matter how sophisticated or simple your website may be, the background experience is top-notch. Ensure that customers receive their items as swift as possible, with managed expectations and an apology whenever anything goes wrong, even if it is only in the eyes of the customer.
How to succeed in your niche as a drop shipper
So you’ve discovered the perfect item, carried out your research, and think you are ready to go? That’s great but let’s just check that you have all the final options covered. To create a successful dropshipping business, you’ll need to do at least one of the following and avoid at least one on the list.
Understand your desired customers.
Who are you hoping to sell to? If you’ve struggled to find the perfect item for a yet unspecified market, perhaps try turning it around on his head. Are there variants of products that typically do well for that group? Sometimes you can arrive at an epiphany moment and discover the perfect items by changing your way of thinking.
If you are still struggling, try looking at your own life. What pain points are there in it, what tool would you most like to add to your household? Could one of your passions be an inspiration for a product, even if that product is not specifically for you? Keep the ball rolling until you come up with a list of potential products, then head back to the research.
Make your own products.
Making your own product allows you to control every aspect of the design, manufacturing and packaging. This isn’t drop shipping. You’ll be promoting and selling your own wares, but if you’ve been unable to find the perfect item to kindle a passion for selling it, maybe taking full control of the manufacturing process is what’s needed.
The benefits of this are that you control the product fully, its distribution and price, allowing for a premium price to be charged.
Seek exclusive pricing or distribution.
By its nature, dropshipping benefits the manufacturer/wholesaler greatly, as they get a range of keen salespeople selling their product, with no marketing costs to them. The dispatch costs are all pre-calculated and passed on to you at the agreed price. Because of this, they are not likely to often offer any exclusives, but this does not mean you should not ask.
If you can get a contract agreeing to exclusive distribution rights, at least within your country, you can corner the market locally. Exclusive prices for an agreed volume is just an added perk, as you could pocket the price difference unless there were competitors that you needed to undercut. But see the section below.
Selling at the lowest prices.
This is the one to avoid. If you are paying attention, we warned you at the top of this section. It’s very easy to see a competitor coming in cheaper with you and decide that you’ll undercut them in turn. Before you know it, each of you is dropping your pricing to rock bottom prices.
The problem is, you need that profit to pay yourself some wages, otherwise what is the point? A race to the bottom benefits only the consumer.
Add value in non-pricing terms.
One of the most effective ways to differentiate yourself from the competition is to provide additional value alongside your products. If you can provide detailed usage instructions, aftercare advice, or a blog full of relevant information, you may gain the trust of a customer over alternative brands that have similar or lower pricing. Trust is important in the eCommerce and dropshipping world, so it is worth taking the time to create a website that helps you stand out from the crowd.
More components can be beneficial.
It might not seem obvious at first, but having a product with many parts can lead to customers turning to the internet for answers. If they are researching pre-purchases and your website provides all the answers that they need to figure out what they need, this can lead to trust from the customer and a sale. And being an already trusted retailer, the chance to upsell accessories is huge.
Products that can be customised are going to create questions. Questions mean pain points, and if you can solve a customer’s pain point, then chances are they will stick with you to make their purchase. A website full of useful FAQs and informational blog posts is going to do well.
As an addition to FAQ’s and blog posts, technical guides are easy to produce in advice and leave on your site for the customer to download. Once again, providing free information to a customer before or after they have made a purchase with you will help build trust and potentially create a regular customer.
Browsing your own shop
It’s important to note that Google will provide you with your own personalised page results. This means that when you do a test search for your product details, after weeks of research and page building, Google will know you have an interest in that page and show it higher in the rankings than it may deserve. To combat this, use Incognito mode on Chrome (most other browsers have their own variant of this) to search for your page, which will take away the bias Google may see from any personal browsing history.
Work with only the best dropshipping companies
When it comes to picking a good dropshipping supplier, the first step is to look at their reviews online. Assuming you are buying from a platform like Alibaba, you can view how long they have been on the site, their average review rating, and any certificates and verifications that have been submitted to or by the platform.
After making your decision on a product, we’d recommend finding at least three suppliers and order from each of them. Who dispatched and delivered the fastest? When all three have arrived, is there a difference in the quality of the product? Who uses the most professional packaging, and which is least likely to get broken in transit?
Remember that drop shipping can be a slow process, with the cheapest shipping options frequently taking 6-10 weeks to be delivered. Great drop shipper suppliers will get this down to 3-4 weeks, but you need to know this in advance.
Once you know the average delivery time for your chosen supplier, you can better manage customer expectations, which in turn reduces complaints and builds trust.
Picking a dropshipping niche is a journey. Most start strong, but not everyone is going to make it to the end. For those who manage to find the perfect combination of product, market and supplier, the stars can align and lead to some seriously sizable returns with only a modicum of continued effort. Don’t be fooled though, the work upfront is hard, and then the work mode changes to ranking your shop page up whilst fulfilling as many orders as possible. It can be a grind, but success as your own boss is the goal for so many people. Go get your money!