Your first step in starting a dropshipping business is to find a profitable dropshipping niche.
Not only will your audience be based on it, but so will your business plan and marketing strategies. Even though it sounds simple, there’s more to this than meets the eye.
First of all, when you have thousands of choices, it’s easy to feel confused. And even if you think you’ve found a good niche, what’s the guarantee that it will bring in money?
This is why our Ultimate FAQ Guide goes over everything you need to know about choosing a dropshipping niche to make the process easier.
So let’s get right down to it.
What Is a Dropshipping Niche?
If you’re new to e-commerce, you might be wondering what a dropshipping niche is in the first place.
In simpler terms, a niche is a specialized market or area that you choose or aim for. So, if you go by this definition, a niche in dropshipping would be the specific category of products around which you want to build your business.
Still not sure? Let’s say your business sells clothes. Now, you can either sell any piece of fabric you see and become a “jack of all trades,” or you can become a “master of one.”
This can be done by focusing on a specific group, or a “niche.”
It could be a certain type of clothing, such as jackets, shorts, or even pants. This is what it means to go after a niche market in dropshipping.
What to Choose, a Niche Store or a General Store?
Your next logical question might be why you shouldn’t choose a general store instead of a specialty store.
General stores will help your business grow the most if they have everything your customers want, right? Well, it’s not quite as easy as it seems.
Here are a few things that might help you decide between a general store and a store with a specific focus:
Niche stores are much easier to rank on the search engine results page than general stores (SERP).
The algorithms value niche stores more than general stores, so the same product in a niche store would probably be placed higher than in a general store.
So, if your niche store ranks higher, you’re more likely to get more traffic from both filters and organic search. This is one reason why general stores often find it hard to compete with stores that specialize in one thing.
It’s also not that surprising, since most people prefer to buy from sellers who specialize in a certain niche, even in real life. Unlike someone who has all of the products in that category lined up.
A store with a narrow focus also has a much better chance of making sales.
That’s because it’s much easier to market your business if you focus on just one type of product than if you try to sell everything.
When your marketing strategy is focused on a specific niche, you can think of a lot of creative ways to get people’s attention.
In the same way, marketing a niche store on social media sites like Facebook and Instagram is easier and less expensive.
All you have to do is choose who you want to reach and pay the price. But things are not so black and white at a general store.
A key way to make more money is to do good marketing and rank higher on the SERPs.
So, a niche store can make a lot more money in the long run than a general store. Since it is aimed at a specific group, you are more likely to get repeat orders.
Even though it may take some trial and error to find the right niche, the results make it well worth the trouble.
Tips to Keep in Mind While Searching for a Good Dropshipping Niche
Before you dive into your search for a profitable dropshipping niche, there are a couple of things you need to be mindful of:
Do Not Rush the Process
One of the most important steps in finding a good dropshipping niche is to have a focused brainstorming session. Even though we all want to get started as soon as possible, you shouldn’t rush through the process.
The better results you can get, the more time you spend carefully analyzing the pros and cons of a niche, its market competition, and its overall profit margins.
Avoid Copying Other Businesses
What works for someone else might not work for you in the same way. Every business has its own unique marketing plan and techniques to get customers’ attention.
Instead of copying what other businesses do, you should first figure out what your own strengths and weaknesses are.
Narrow it down to the niche you know the most about. Most people have the wrong idea about how easy dropshipping is. Before you can finally launch your business to success, you have to try a lot of different things.
Think from a Marketing Mindset
Your dropshipping business will only be successful if you can market it well. This is why it’s important to think like a marketer when looking for a good niche.
Try looking into how different products can be sold. Think about how you can present it to people and if it has a selling point that you can use to your advantage.
In short, you should think about whether the product can solve the customers’ problems and how to present it as a solution.
Avoid Temporarily Viral Products
We know how tempting it can be to make money off of a viral trend, but is it really worth it in the long run?
Most things don’t stay popular for a long time. If you build your dropshipping niche around a popular product, it will only make you money for a short time before it falls apart.
This is why you shouldn’t settle for short-term money, but instead try to build your dropshipping business around a niche that will make you money in the long run.
How to Find a Profitable Dropshipping Niche
Now that you have everything set up and know the basics, it’s time to figure out how to choose a profitable niche.
Even if you think you have a great idea, it doesn’t matter if no one wants to buy your product.
So, here are a few steps you can take to make your search go more smoothly:
Search for Rare but Trendy Products
Look at the market and see what the trends are right now. First of all, you may have noticed that people are buying more wireless headphones. But is it a good product around which to build your business?
You can buy this product from a lot of different places, both online and off. So it’s safe to say that getting into the market wouldn’t be easy if you chose headphones as your niche.
On the other hand, more and more people are doing woodworking and do-it-yourself projects these days. And you need the right power tools to do that.
When you think about it, there aren’t that many places where you can buy those. So the first step is to try to focus on things that people want but are hard to find.
You can also ask yourself: What are some things you may need in your daily life that are hard to find in stores?
Keep in mind that this could take a long time and a lot of thought, so don’t give up if you can’t think of something right away.
Gather Product Data and Insights
How can you tell if your niches are really in demand once you’ve narrowed them down to a few?
There are a few tools you can use on the Internet. Most dropshipping experts, though, like to start with Facebook Audience Insight because it has more than 2.7 billion active users.
It gives information about a user’s likes, dislikes, interactions, location, way of life, and much more. On Instagram, you could also use Instagram Insights, which has a lot of the same features.
People often look up a product on Google to find out how well it’s doing. Google makes this information available to the public, and you can find out by using its Keyword Planner tool.
In the same way, if Google Keyword Planner isn’t enough, you can also use Google Trends to learn more.
The tools we’ve talked about so far each have their own special features, and dropshippers all over the world use them. In the next part of this guide, we’ll talk more about them.
Calculate Profit Margin
After you’ve found a couple of products that people want, the most important question is, “How much money can I make from them?”
There are a few ways to go about this, but the first step is to find suppliers with the best prices.
This is also a time when you need to do a lot of research, because the cheapest isn’t always the best. The quality of the products is a key part of any business’s success.
But since you’re still doing research, you don’t have to order any sample products just yet. Get a general idea of the market and the average lowest price you can find for the product.
Then, look at how much your competitors are selling the same products for. This brings us to the next step.
Evaluate your Competition
It’s time to make a list of other dropshippers in the same niche and compare their prices.
Find out what the lowest and highest prices are for that product on the market.
Check out the customer reviews at your competitors’ stores to get a sense of how good their products are. That will also help you figure out what your competitors are doing wrong and how you can do better.
Customers are often hesitant to trust new stores because they don’t have any reviews yet, so you want to make the most of every chance you get.
At first, you’d want your profit margin to be as low as possible. Even though this may sound boring, it’s important for building your reputation in the market.
After you’ve looked at the market and prices, you’ll have a better idea of whether or not the niche is worth your time.
Narrow Down your Options
You now have all the information you need to choose between your choices.
Before you choose a dropshipping niche, there are a few things you need to keep in mind. This includes the needs for sourcing, the dependability of the suppliers, and the overall profit margins of the product.
But just because a product will make you more money doesn’t mean it’s the best choice.
Some products with a low margin may be more popular than those that bring in more money per sale. So, if you think a product could help you get recurring orders, you should definitely look into it.
Start carefully going through the information you gathered in the steps above, and choose the product you feel the most confident about.
Congratulations! You’ve found a profitable dropshipping niche and are now one step closer to starting your business.
Finding a Dropshipping Niche using Online Tools
As we’ve already talked about, modern tools can make it much easier for you to find a profitable dropshipping niche. So let’s look at what they bring to the table in more detail:
Facebook Audience Insight
Dropshippers find it much easier to study niche markets and trends on Facebook with the help of Facebook Audience Insight, which gives them information like:
User interaction is the sum of all the comments, likes, and promotions.
Demographics are information about a group of people, such as their gender, age, and way of life.
Likes and Interests: The kind of products, content, and topics that the audience is interested in.
Location – The language the audience speaks and where they live.
Information about Facebook users
All you have to do is type in the keyword, and this powerful tool will do the rest. When you get the results, you’ll know more about which market to go after.
Instagram Insights works pretty much the same way as Facebook Audience Insights, as the name suggests. But Instagram business accounts are the only ones that can use the tool.
You can also change your personal Instagram account into a business account.
Once you’re done, it will be easy to use Instagram Insights to find out what Instagram users are interested in so you can make money from it.
Google Keyword Planner
Most online businesses now depend on how well they do on Google SERPs (Search Engine Results Pages). A dropshipping business is the same way.
Google keyword planner
So, if you want to figure out how well a product is doing online, Google Keyword Planner can help.
You just need to type the keyword into the tool, and it will tell you how many people search for it every month.
So, this guide won’t go into detail about how to use Google Keyword Planner to find dropshipping niches. But keep in mind these three things:
Match Type: You can choose to get results for a broad phrase that also shows other relevant information, or you can choose an exact match.
If you’re not planning something big, we recommend the second one. As an exact match, you’ll get more accurate information about how well a particular keyword is doing.
Long-tail variations: Most people make the mistake of putting too much emphasis on short-tail keywords (keywords that are made up of no more than 3 words).
You might be surprised, though, at how much you can gain by focusing on long-tail variations (longer and more specific phrases).
That will show you results for a very specific niche with much less competition, which you could use as your dropshipping niche.
Location of Search: The location of your search depends a lot on how you plan to run your dropshipping business. Do you want to work locally or around the world? Set the place up based on that.
You can only get raw search numbers on Keyword Planner. Google Trends is the right tool for you if you want to dig deeper and learn more about your dropshipping niche.
On Google Trends, you should be able to find the following:
Terms That Are Getting More Popular or Less Popular Over Time: Google Trends shows not only the most popular searches, but also the searches that are getting more popular or less popular over time.
You can use that information to build your SEO strategy around it and plan your marketing efforts accordingly.
Seasonal Demands – Before you finish making a product, think about how it will sell during different seasons. For example, water heaters don’t sell very well in the summer. During the winter, they make a lot of money.
Google Trends lets you search for seasonality so that you can plan your marketing efforts for the right time of year.
Geographically Focused Results—When you use Google Trends, you can get search results that are focused on a certain area.
This will help you figure out where you can find the most customers for a specific niche and how much money you can make overall.
What Niches You Should Not Dropship?
It already takes a long time to look for a dropshipping niche that will make money. But if you know what to avoid, you can at least save time.
So here’s a list of niches you shouldn’t dropship:
Products You Can’t Advertise
Marketing and advertising are at the heart of dropshipping. The more people you reach and the more money you make, the better your marketing strategy is.
But you can’t advertise the following items on Facebook, so it’s best to stay away from them:
Weapons for grown-ups
Tobacco Products Drugs That Aren’t Regulated
Even from a logistics point of view, it can be hard to ship products that are big and heavy.
The shipping cost will be higher if the item is heavier. And heavier products are also more likely to get broken because they are harder to move.
On top of that, customers can always ask for refunds, so it’s best to avoid selling big items.
Potentially Dangerous Products
As we already said, you can’t advertise weapons on Facebook. This includes knives that aren’t used for cooking.
Also, every country has its own laws, and some of them may have rules about bringing these products into their country.
So don’t buy anything you’re even a little bit unsure about.
It shouldn’t be a surprise that you shouldn’t dropship fragile or easily broken items unless you’re sure they won’t get broken.
No matter how well you pack the product, it may still be exposed to rough shipping conditions and outside impacts.
And before you know it, your customers will ask for refunds and write bad reviews about your store because you sent them broken items.
Unregulated Health Products
Products that aren’t regulated by the government can’t be advertised on Facebook either.
On top of that, they could hurt your business because some of them might have side effects that neither you nor your customers know about.
So, if you don’t want to be punished and have to deal with legal issues, just don’t do it.
What Are the Most Profitable Dropshipping Niches?
Even though we’re not saying you should only do dropshipping in these niches, knowing what’s popular on the market can help you make a better choice.
So here are some of the most profitable niches for dropshipping:
By 2030, the market for mobile phone accessories is expected to be worth 328.69 Billion USD.
A lot of people also buy cell phone accessories online on the spur of the moment.
In short, you can’t go wrong with this market as long as you focus on the quality of your products.
Home Improvement Tools
More and more people these days spend their free time working on home improvement projects they found online.
There are also not enough good stores that sell tools for home improvement. So this is a whole business that dropshippers can make money from.
The National Pet Owners Survey found that about 70% of US households had a pet in 2021-2022, and this number is expected to grow even more.
So it’s not surprising that demand for pet supplies is also at an all-time high.
This is a good niche for dropshippers to look into, whether they sell pet beds, pet toys, or pet care products.
You can never have too many kitchen supplies. Even if you don’t need something right now, you probably will at some point.
Most people might even buy something on the spot or order a lot of it. So, dropshipping kitchen supplies could be a very good way to make money.
Game Room Equipment
In 2022, the U.S. market for video games is expected to be worth about 51.7 billion dollars.
And since the numbers are only expected to go up, it’s safe to say that now is a good time to start dropshipping game room equipment.
The more you think about and research a dropshipping niche, the better results you can expect from it.
Even though the process can be hard and take a long time for beginners, the hard work you put in at the beginning is well worth it.