If you're looking into how to start a dropshipping business, the biggest questions you have are "is dropshipping worth it?" and "how to make money dropshipping?"
The answer to the first question is yes, and the second is there are several ways. Both are possible by going after the right dropshipping niche. After all, learning how to dropship and how to make money dropshipping is meaningless if you don’t have the right target audience.
The blog post contains the most profitable dropshipping niches, how you can get a foothold in them, and how to achieve long-term growth. Once you discover the right dropshipping niche for your business plan, you’ll have a roadmap for actualizing maximum profit for your venture.
How to Find a Dropshipping Niche
With so many different dropshipping niches, choosing the right niche market is difficult. You also want to maximize your return on investment (ROI). It’s vital to keep in mind the ROI meaning in order to manage your capital wisely.
ROI is what you make compared to what you spend. You want to grow quickly while also setting yourself up for long-term success. This will also help you build the most accurate drop shipping business plan. Check out what is a good ROI.
That’s why it’s important to discover the best dropshipping niche for your business and fill the gap in the market. With that in mind, here are six tips on how to find the best dropshipping niches:
- Aim for Low Product Turnover
One of the biggest dropshipping beginner mistakes is choosing the best dropshipping products that have a limited window of popularity or relevance. While these can bring you profits at the time, you'll have to move on to other products rapidly. Chasing these products is time-consuming and won't help you build a brand that customers can rely on.
Unless you plan on using automated dropshipping for your site or are adept at drop surfing, this type of product procurement will limit your growth. Instead, you'll spend an inordinate amount of time learning how to find dropshipping suppliers who offer the latest popular product.
- Find Niches Ripe for Cross Selling
Dropshipping businesses rely heavily on high order volume, so any chance to increase your customer's average order value can pay dividends. Focus on product offerings that are related and will be useful for cross selling.
For example, if you chose to sell phone cases, you could also look into selling charging cables, selfie sticks, PopSockets, and more. Then, you can use a widget on your website that shows these accessories on the phone case product pages. Customers will be more likely to add these products to their order and help you get the most revenue out of every sale.
- Look for Passionate Customers
One of the best ways to ensure your dropshipping business can grow is to target a market with passionate customers. These customers may be more discerning in what they buy, but they are also great for building long-term relationships and will become brand evangelists when they like your business.
Targeting passionate customers also ensures your eCommerce marketing efforts are more successful. They provide access to a number of customers who can help you increase sales through affiliate marketing.
Since you don't have to choose between affiliate marketing vs dropshipping, you can increase your profits by doing both. Profit can be calculated by using the break even point formula.
- Perform Demand Planning
Understanding the ebb and flow of customer demand for products is vital. It helps you adapt your product offerings and grow your business. Don't just pick the products you offer on a whim or based on limited information. Perform demand planning to be prepared to meet the needs of your customers.
Take the time to properly research customer demand trends, how long a given product will be popular, and any seasonality related to the product. Then, adjust your product offerings and marketing materials to reflect what the market wants.
Implementing a productive supplier relationship management strategy will help guide you in this area. This includes focus on selling high demand products that can easily be sourced, and you'll see profit in no time.
- Use the Right Software
The eCommerce software you use can make or break your business. You need to be able to create a dropshipping website that competes with the best dropshipping websites, take and track orders, send data to your suppliers, and do product research.
This means you may have multiple types of software that all need to communicate with each other, so you don't drop the ball. For example, software may help monitor your cart abandonment rate, helping you implement solutions to reduce it.
Do your research and don't try to save money by picking the cheapest option that can't grow with your business. You may even want to invest in an ERP system for small business to help centralize all this data.
Dropshippers who use BlueCart eCommerce to sell online don't have to worry about all these moving parts. It's an all-in-one platform that is perfect for dropshippers. We take care of store design, eCommerce payment processing, and more, so you can focus on selling.
Even better, all BlueCart customers also get listed in our online marketplace where their products can reach 95,000+ buyers in the U.S. Book a demo today to see how our tools can grow your revenue and maximize customer satisfaction.
- Focus on Quality
We can't emphasize this enough, but you cannot grow a successful dropshipping business on the back of low-cost, low-quality products. For years, some dropshippers were flooding the market with poor customer service for dropshipping and low-quality products. This hurt many consumers and led them to ask "is dropshipping dead?" and "is dropshipping legal"?
Those businesses all failed, so it's clear that you need to balance your margins with product quality. Long-term success relies on your ability to keep customers happy and establish your brand as a trustworthy source of products. If your business develops a reputation for offering low-quality products, then people will look elsewhere to shop. Even if it means paying a bit more money.
Most Profitable Dropshipping Niches
The dropshipping model can be adapted to nearly any industry and serve any market. That being said, not all dropshipping business ideas offer the same return on investment. You want to research each potential industry and decide which one best fits your profit goals.
Here are eight of the most profitable dropshipping niches in 2022 and beyond:
- Clothing and Accessories
One of the most popular dropshipping niches, and one with very low-cost products, is clothing and accessories. You can choose to sell anything from t-shirts to jewelry to hats. The key is to narrow down your product offerings to a particular theme that will allow you to set yourself apart and define your brand.
You can even look into getting your brand added to these items through private label dropshipping. Pair that with a branded packing slip and RMA form in your eCommerce packaging for each order and your business won't even appear like a dropshipping business.
- Health and Grooming
Another niche with quite a bit of room for growth is in health and personal grooming products. You can look at procuring skin creams (including beef tallow for skin), hair products, razors, lotions, and more. These products can all be marked up quite a bit to get you the biggest margin possible.
If you don't know the margin definition, that's the amount of money you make from each product minus the cost. Since grooming products generally cost very little to procure, you can increase these margins fairly easily while targeting a market that has a consistent need for repurchasing. Kitting is a shipping and warehouse technique that many online retailers utilize as part of their business strategy.
- Food and Groceries
While not all food is a great option for dropshipping, there is a very large market for snacks and other non-perishables. If you're looking to sell baked goods online, you can do that, but dropshipping might not be the best choice.
Instead you can focus on non-perishables and try selling alcohol online, selling liquor online, sell beer online, sell wine online, or even sell whiskey online. Offering an online coffee subscription service is an effective way to capitalize on the huge market for coffee.
If you procure all of your products from a particular region, you can market these products as a way to experience the food and culture of that place. This is a great tool for your dropshipping ads and can even be turned into viable subscription box ideas.
That way you add recurring payments to your revenue stream and get the most out of your relationship with your suppliers. If you use BlueCart, you can set up subscription billing right in the same platform and increase revenue with ease. Contactless payments are the wave of the future, so now’s the time to start utilizing the technology.
- Electronics
Electronics can be a tricky business for dropshipping. You may end up with low-quality electronics no one wants, or a thin dropshipping profit margin.
Focusing on lower-cost electronics may be a good choice as you aren't competing against major companies. However, higher-cost electronics are a great choice for a dropshipper that practices reverse dropshipping.
By sourcing high-quality electronics and selling them overseas, you can build your brand as one of luxury and get a foothold in some emerging markets. This may supply you with loyal customers for many years to come.
- Office Products
Desktop items like mugs, notepads, keyboard trays, and more are all great choices for a dropshipping venture. They're low-cost and customers don't expect (or need) them to be of high quality. This means you don't have to worry as much about your product offerings.
There's also a very large market for it, particularly if you can tap into office trends and popular culture. Just make sure not to sell products that another business owns the copyright for. This is a good way to get sued and lose your eCommerce business insurance.
- Tools
One dropshipping niche with a limited number of competitors is tools. You can procure specialized toolkits for different uses like computer repair or just lower-cost tools for the home. You'll likely want to target non-professionals with your tools and make sure to avoid marking up the items too much.
You aren't competing with the major tool brands, as they offer advantages like lifetime warranties and have higher-quality raw materials inventory. Instead, target younger customers who just need a few tools for occasional use at home, work, or in the car.
- Car Accessories
On that topic, cars play a major role in the fabric of American culture. A majority of people in the country own at least one car, and they often spend a lot of time in them. Let’s not forget the delivery drivers who spend most of their workdays handling goods in transit.
Look into product lines like car decals and stickers that customers can purchase to personalize their car as well as useful accessories. Things like a cell phone mount or auxiliary cable are good choices as they can make the driving experience more pleasant for your customers.
- Toys
The final niche with a lot of room to expand is the toy industry. While you can't dropship copyrighted products without a legal contract, you can import a wide variety of toys. Look for toys that fall in line with current trends or that have sustainable demand. Try to avoid seasonal toys like beach buckets and pool noodles or where the market is flooded, like with frisbees and baseball bats.
For example, a few years ago, fidget spinners became the most popular new toy. Thousands of eCommerce and dropshipping businesses jumped on the trend and flooded the market with them. However, only a few actually saw sales worth all the effort they put in.
Remember, these niches are profitable in general, but you don't have to follow everyone else and offer the exact same products. Offer unique products that show creativity and originality and you could build a loyal customer base.
Money Never Sleeps
The dropshipping business model is being adopted by business owners in nearly all types of eCommerce business. By following the tips above and focusing on the best niches, you can start with a leg up on the competition and start seeing sustainable growth.
For more dropshipping tips on growing your dropshipping business, check out our free drop shipping for dummies guide, or take a look at some of our favorite dropshipping books and dropshipping courses.