Dropshipping has become one of the most profitable online businesses in the last few years, and it doesn’t look like that will change in 2023. Because of this, there is a lot of competition in this segment. Especially when it comes to certain dropshipping niches that store owners choose to go into without doing proper market research and business estimates. This could be one of the biggest mistakes a newcomer to dropshipping could make. Before getting too far into a business, it’s important to do research on the market and make smart decisions, because it would be hard to go back.
Most store owners who start a dropshipping business make the mistake of not looking into all dropshipping niches in depth. Few resellers know that not all dropshipping niches are profitable and can make you rich overnight. In the end, some dropshipping niches may seem like a good place to start, but they may be too competitive or too hard to handle.
So, if you’re just starting out, you might want to learn which dropshipping niches to stay away from instead of picking one at random because someone else was successful in it. Every dropshipper has a different story, and just because something works for one person doesn’t mean it will work for you too.
Let’s talk about which products and dropshipping niches you should stay away from if you don’t want to fail.
Heavy & bulky products
Why should you not dropship heavy or bulky items? There are a few good reasons why this statement is true. The bigger the item, the more it costs to ship. Look at the UPS flat rate shipping example below if you don’t think there’s much difference between product sizes.
Say you want to sell small items for the kitchen. Average costs for packaging and shipping are $20 per item, so you’ll need to set higher profit margins if you want to make money. On the other hand, your competitors probably sell the same products at lower prices and get all of the customers. Your store is in a “status quo” situation, which means you can’t even make decent profits or raise the price of each item.
You might be interested in something as simple as office desks, furniture, or kitchen drawers. Sure, you can talk to local manufacturers about prices and start reselling, but how will you get the goods to your customers? Will you be in charge of logistics on your own? If you don’t have your own shipping company and warehouse, it’s hard to sell a lot when you’re just starting out.
It’s great to sell electronics, as long as you haven’t used them first. You can’t sell something you’ve never seen or touched, because neither you nor your customers will know what to expect from it. As with most dropshipping niches marked “to avoid,” there may be a problem with the quality of the products, so you can expect a high number of refunds because of a manufacturing error. This depends on how good your supplier is, so make sure to read reviews of their products before you decide to sell them.
Shipping and refunds are two other important things that resellers worry about. If you can figure out how much it will cost to ship, how long it will take to get there, and what their refund policy is, you can easily tell if it will make money for your store. Still, you need to know something about the subject to show customers how a certain kitchen appliance can save them hundreds of dollars per month.
Lastly, even though many U.S. companies outsource production to Asia, products made in China are not very popular in the U.S. From the point of view of a U.S. customer, it’s very unlikely that they would be any foreign-made products, and they prefer electronics with “Made in the U.S.A.” labels.
During some times of the year, people make a lot of money. Seasonal marketing can be profitable if you have more than one supplier who sells products that go with the season. For example, you can use one of your suppliers for swimwear and then talk to another about toys and clothes with a Halloween theme. Black Friday and Christmas will be here before you know it. It’s time to switch again, since the last one went out of business. You don’t have much time left to find a new provider. But what about the profits and the ability to ship?
This is a very stressful way to sell products, so new dropshippers shouldn’t do it. Imagine being on the go all the time, getting ready for every big holiday and event, negotiating prices, and selling your products. It all sounds exhausting, doesn’t it? You should not sell products that are only popular for about 10 days a year and instead focus on the ones that are always in demand. Every year, the seasons change, but some things will always be important. Quality clothing brands are the same way. You can buy clothes for every season, wear them for a long time, and be happy to shop there again because you’re happy as a customer.
Products for health
Without knowing how they work, it’s very hard to sell health products. That’s like selling “elixirs of life” to old people, knowing that they will all want their money back sooner or later. First and foremost, people expect the product to work miracles. You can’t guarantee anything unless you’re a manufacturer with over 100 years of experience in the field. This type of marketing is no longer used, so when people talk about your online store, they may say things like “fraudulent, please avoid.”
Most stores don’t make it through the different customer comments posted every day on review sites, so it’s probably best to avoid this dropshipping niche. If you want to try your hand at sales, you can learn more about CBD-based products and maybe give this business a shot. But most countries still don’t let people buy or sell things that have cannabis in them. To sum up, you can’t promise someone that the face cream you sell will make their wrinkles disappear by magic. If you don’t expect to get back thousands of dollars every month, you should stick to something more reliable.
First of all, you’ll need to know a lot about both computer hardware and software to be able to sell these products. Before buying, customers almost always ask a number of questions. So, don’t even start if you can’t explain how the graphics card works with the way their laptop is set up. Also, this niche is on the list of dropshipping niches to avoid because there are a lot of returns because the products don’t work. Many of the items can break while being shipped or transported, so you’ll probably have to pay more and mark them as “fragile.”
So, before you do anything else, you should find out how much shipping will cost and figure out how much you can make. Pay close attention to competitors coming from Asian markets, as they tend to focus on quantity to get the most sales, even if it means making less money per sale. Overall, it doesn’t sound half as bad as the other dropshipping niches, but in reality, it’s a very complicated niche with sensitive products to show off. You can try this one out once your online store is making enough money each month to let you try out other niches.
Things that are very fragile
Items in the same categories as “home decor” and “toys” are always fragile. You have to pay for anything that breaks. Shipping companies have rules about what to do in these kinds of situations. Some of the employees won’t care much as long as it gets done in record time. Vases, RC toys, and other things that are easy to break can be packed with extra layers of protection. The fact is that it will still cost you more, and you can’t be sure that every product will get to its destination safely.
So, unless you find a reliable shipping company with good reviews, there will be a lot of unhappy customers who want their money back. Dealing with fragile things is risky, so you might want to focus on something less fragile. Items made of glass, porcelain, valuable collectibles, optics and accessories, musical instruments, and laboratory sets are all examples of fragile items.
Even though they are always in style, everyday lifestyle items are in a niche with the most different types of products. So there will be a lot of competition. Every day, tens of thousands of these stores open in an effort to make money quickly. So, it would be a nightmare for a new dropshipper to start a business when there are so many competitors around.
As for profits, they are different for each product. Still, you can’t expect to make a lot of money at the end of the month unless you buy something for a really low price and then sell it with a higher profit margin over and over again. To be clear, dropshippers try to find safer ways to make money these days. This doesn’t include their idea of “high competition” in any way. In other words, start with something small and slowly make it bigger.
Watches for cheap
When they work right, cheap watches always look good on your hand. You can get ten of them for less than $100, and each one can be worn for a different event. But cheap watches are known for not lasting long, so low-quality watches will never be a good enough niche for dropshipping. Your business will fail in a few months because you have to give so many refunds and deal with so many customer complaints.
Even though they don’t last as long as metal watches, wooden watches are cool and in style. Manufacturers usually say that their wooden watches are “made of wood,” even if some of them are made of plastic that looks like wood. All of the customers’ biggest worry is that the watches are not waterproof. One trip to the bathroom will show you why washing your hands while wearing a watch was a bad idea from the start. This is also true for watches made of wood.
If you read all of the bad reviews, you can figure out how your store’s profits will change. Most of the time, you’ll have to deal with a lot of unhappy customers. So, to sum up, one dropshipping niche you should stay away from is reselling cheap watches.
Fake and copied products
It’s never good for business to sell fake or copied goods. Customers will notice the difference sooner or later, and you are likely to get a lot of lawsuits. Everyone knows how well-known brands react when cheap copies of their products are sold, which is strongly against the law. If you think you can make money by selling fakes, you risk getting sued for copyright infringement and going bankrupt.
In fact, less than 1% of customers in developed countries will want to buy fake copyrighted products because they can afford to buy from the real stores. Copyright theft could be a big problem, so you should never use this dropshipping niche. It’s very popular in less-developed countries, where it’s mostly used as a “pop-up online store” that stays open for about a month before closing. The bottom line is that you should never start a business that is doomed to fail. Start something solid that will last for a long time.
Last but not least, fitness equipment is another dropshipping niche you should stay away from. In general, all gym and home exercise equipment is either heavy or bulky. This just makes shipping costs go up because logistics companies charge more based on how much something weighs or how big it is. Even though at first glance it seems very profitable, this niche is very risky.
Even worse, customers who want to work out usually don’t know what they’ve ordered or how the machine or equipment works. So, you’ll have to explain things to customers a lot. Most of them, if not all of them, will probably need to see explainer videos and read how-to guides. Also, you’ll have to rely a lot on customer service.
Most importantly, you might want to think about getting better packaging since some of the parts are small and made of plastic. This makes it easy for them to get lost or broken during packaging. This is why dropshippers with more experience and the ability to lose a few thousand dollars if everything else fails work in the fitness/gym niche.
What’s the best niche for drop shipping?
By looking at all the dropshipping niches you should avoid, you can figure out which niche is the best for dropshipping. The answer is simple, and it basically means, “Don’t make things harder than they already are.”
Do some research to find out which types of products sell the most and make the most money without a lot of competition. One of these categories is branded clothing, but keep in mind that you will need a reliable supplier who sells real items from high-end brands.
Where can I find the dropshipping niches that make the most money?
There are a few steps you need to take if you want to talk about the most profitable dropshipping niches for your online store. If you follow all of them carefully, choosing the best niche for your dropshipping store will be simple and easy.
Check out the latest statistics on eCommerce
Checking the latest eCommerce statistics would be a smart thing to do before deciding what to sell. This will give you a better idea of the eCommerce market and the categories that are popular right now. Statistics show that fashion is the most popular eCommerce category right now. Starting a dropshipping clothing store is a surefire way to make money now and in the years to come.
Sell more expensive products
Dropshipping suppliers usually give their resellers profit margins of around 20%, no matter what kind of product they sell. So, the profit percentage is low if you sell low-priced items. On the other hand, if you sell higher-priced and more valuable items, like luxury clothing, your profits will rise in the same way. If you keep selling things with $2 profit margins per piece, you won’t make any money. To make around $1,000 a month, you’ll need to sell 500 of them. Out of this $1000, we haven’t added up the costs that came up out of the blue, like refunds and extra shipping. More importantly, some of this money will need to be used to market products in the future.
Use marketplaces to find the dropshipping niches that will make you the most money.
The point of this isn’t just to find product categories where there isn’t much competition. Instead, your main goal should be to make money. Where do you find these spots? Use the largest markets and platforms in the world to look through their niches. In the search bar of Amazon, for example, there is a “sub-niche” option. There are so many subcategories here that you’ll get new ideas right away.
Coming up with ideas
Sometimes, coming up with ideas can get you a long way. The best thing to do is to start asking yourself things like:
- What did I buy over and over again on the Internet this year?
- How much did they cost?
- Is there something else I really need to buy that will cost a lot?
- What did my friends buy this year on the Internet?
By asking yourself these questions, you will learn a lot about which products sell the most. You can then spend your advertising money on those products instead of the ones that don’t sell as well.
It’s important for your business to find out which dropshipping niches make the most money and which ones you should avoid. If you can’t choose the right one, the whole idea could easily fail. In the worst case, you’ll have to spend a lot more than you had planned to market your products. However, everything doesn’t seem as bad as it looks. By making sure people know about your online store’s brand, you can make a good amount of money every month without having to spend a lot on advertising. So, if you use the tips above, you’ll find the perfect niche for your product in no time.