Dropshipping Niche Market Selection
You have made the decision to sell online with dropshipping, now your first choice is your niche market. The best way to ensure you succeed in the dropshipping business is to carefully consider which niche market is best for you.
Setting up a business in a niche can be a little more complicated than it seems.
The basic formula is that you should choose a niche market that is profitable and doesn’t have a high level of competition.
Proper research will help you do this, but it will take some time.
If you have a niche market in mind for dropshipping, you need to analyze that niche from a retailer perspective and consider how successful it will actually be for that niche.
On the other hand, it’s okay if you don’t have a niche market idea in mind, because I’ll cover every step from the best niche market research to narrowing down the options.
I know it’s good to find a niche market for dropshipping and set up the store in a matter of hours.
In fact, this is what a lot of dropshipping companies do, they see what niche products are being sold and they start selling right away.
However, this is not a good method, you may have success for a while, but it will not last long.
This happens to almost any entrepreneur who doesn’t choose a good niche, because a business model like this is not sustainable. My goal is to help you build a sustainable dropshipping business.
If you want to turn dropshipping into a steady stream of income, you need to think carefully about your niche market.
Choosing a niche market is one of the most important decisions you will make for dropshipping.
Questions To Ask Yourself For Choosing Your Niche Market:
- What products do you offer?
- How much do you sell?
- Which suppliers do you work with?
- What digital marketing strategies do you use?
These are questions that are too important to take lightly. Dropshippers often realize that their chosen niche market is wrong and they should go back to the beginning. This can cost a lot of time, money, and other important resources.
The more you think about choosing a niche market, the stronger the infrastructure of your business will be. A few months after you start, you won’t be self-doubting. And that’s what this section is about: helping you find the best niche market for dropshipping.
You should know that the secret to success for dropshipping is to ask the right question. Without further ado, let’s look at the most important questions to ask yourself when choosing a niche market.
Niche Market Assessment
Choosing a niche can be confusing because there are millions of niche markets for dropshipping and it is very difficult to know which ones are suitable. The biggest problem is that many of the niche markets are not suitable for direct competition.
Key question: How to choose a profitable niche for dropshipping as a beginner
Every niche market may seem saturated when you think about it, but that’s not true. There are still niche markets where you can sell needed products. Some niches are suitable for selling on your e-commerce site, while there is intense competition in some niches.
However, it can be difficult to know where to start looking for the most suitable niche ideas.
Knowing where to look, how to search, and what criteria to consider to find a good niche is a bit difficult for beginners.
There’s a reason it’s difficult: niche assessment is truly a specialty. You could spend months choosing the best niche, but this is not exactly suitable for the dropshipping business.
Fortunately, there are tactics you can use to pick a good niche in a short time, and you’ll learn about them in this p
Basically, you have to determine if a niche is suitable based on:
- Competition level
- Demand intensity
- Long term popularity
The best dropshipping niche is those with low to medium competition, high demand. At the same time, the product should always remain popular. Of course there is no such niche, so you have to figure out how to balance these criteria.
The right niche for you may not be right for another entrepreneur, so you need to think critically about what elements are important to you. Here’s a simple two-step process you can use to start looking for a niche product and market.
Niche revolves around the idea that products are better than others. Once you’ve found these niches, you can ask other questions to help you narrow it down further.
Step 1: Search for trending or low-competition e-commerce industries.
You can start by doing a simple Google search for the trending ‘dropshipping niche market’ or ‘low competition niche market’. If you know English, researching in English may give you more options.
You will have to narrow down your search a lot, but this is a basic start.
For now, we’re only taking small steps and focusing on a big picture of the various dropshipping niche ideas
When you search for trending niches, you’ll find a list of niche products that are popular now or predicted to be popular in the coming months.
These have a lot of potential, but they can be competitive.
There aren’t many competitors by definition in low competitive niches, but that also means low earnings.
Niches with very low levels of competition will often cater to smaller audiences, which will translate into a smaller customer base for your business.
Additionally, some niches will not be suitable for dropshipping, so make sure you are looking at product-based niches.
When you look at niches, you have to make sure they meet a few important criteria.
You could do this later, but I think it’s best to filter the results early.
Here are some questions to ask:
Does the Niche Market Have Product Diversity?
First, it’s important to make sure that the niche you’re considering has a large amount of products associated with it. Some niches have no assortment, for example digital product-related niches such as cryptocurrency are not suitable for dropshipping due to low physical product diversity.
As you do more research, you will find that certain niches have more assortment. For example, the clothes are good for dropshipping because they offer more variety of products. You may not want to sell everything, but don’t have a wide variety of niches.
That’s why a niche with many products is perfect for dropshipping.
It gives you an opportunity for growth and expansion. This can be difficult because there is often a high level of competition with a large amount of product variety
However, outside of the most popular niches, you can find some niches that are not competitive but have a wide variety of products. You have to make sure that the products are easily accessible for you and your customers.
For example, custom made or handmade items are often more difficult for dropship and will not give you good profit margins. As a general rule, a product that caters to a broad group within the niche is a good product for dropship.
How Popular Is This Niche Market?
Ideally, you shouldn’t be after a niche that isn’t very popular. It is necessary to choose a niche with sufficient interest and product demand to keep a dropshipping business going.
When doing niche research, if you know that a niche is popular, you’ll be prepared that it will be difficult to get into that niche.
As a new dropshipping agent, you will face a competitive challenge. And although larger niches may seem more attractive, a niche with a lower competition is much easi
The niche evaluation steps in this section will help you find a good niche that doesn’t have very low demand or high competition. In other sections, you can get a more detailed idea of how popular your niche is when you research products.
Is This Niche Just a Trend?
There are many trends that come and go every year, within a few months, sometimes over weeks. Businesses open up to new markets to take advantage of these trends, but when trends die, so do businesses. At the same time, a new trend could become the next big niche.
Recently, niche products like drones, fidget spinner, and virtual reality hardware have become hugely popular over the months, and dropshipping companies in these niches have had a big share of that.
However, it can always be risky to enter the new niche, so choosing a niche that has been around for a while is generally safer. If you find a niche that is relatively new, it may not be a good idea to follow it, but you have to evaluate it on a case-by-case basis.
As a general rule, you should choose niches that are well established and catered to the community.
Am I Passionate About This Niche Market?
I know this seems like a strange question because usually passion is a good thing. But in this case, too much passion can actually hurt the dropshipping career.
Let’s say you’ve had an interest in lava lamps all your life.
It’s a good passion, but it may not turn into a sale.
You can’t build a dropshipping career in lava lamps because it’s not a very good niche.
You may be interested in all the lava lamps in the world, but you cannot miraculously turn them into a sustainable business.
Also, passion often blinds you to the harsh realities that come for a business.
Perhaps certain niche products don’t sell well, but you still want to sell because you like it and believe it will be good.
While it may seem good to have a lot of passion, it’s generally ideal to have neutrality in the niche products you choose.
This doesn’t mean you can’t pick your favorite niche for dropshipping. If you can objectively evaluate your niche and it seems like a good choice, then it’s okay.
Getting an outside opinion helps a lot in this decision.
It is necessary to step back from your ideas about a niche and take an entrepreneurial lens.
You will have to make business decisions based on facts and figures, and you should be able to do this easily without investing emotionally or personally.
Can I Add Value To This Niche?
This is another question that only a few dropshipper have asked. Many people don’t know about adding value when starting a business. If you are opening a store that is basically an exact copy of an existing store, you are not doing anything new or different.
You have little opportunity to distinguish yourself from your competitors.
But the biggest problem is that some entrepreneurs who start dropshipping this way don’t want to provide value. These are the people who see the dropshipping process as a get-rich-quick tool.
Customers can see this, and it is unlikely that they also have an overall customer base. It is easy to tell whether a business is seriously trying to deliver value or just trying to make a quick buck.
People are more likely to support businesses that value them.
By putting your customers first and emphasizing value, you will be creating the best conditions for your business to grow. If you don’t focus on value, you’ll have a hard time selling.
That’s why you have to be honest with yourself here. Can you really add value to the niche market you are thinking about? Why would customers buy from you when there are many retailers to choose from?
One of the best ways to evaluate this is to look at retailers that are already in the niche, and that’s what the second step is about.
If you think you can’t look at it from an interesting angle or do something different, rethink the niche. Instead of picking a niche that won’t work for you, you should choose a different niche from the start.
Step 2: Research available vendors.
Next, you should take some time to research the retailers that are established in your niche. For now, simple Google searches will suffice. To see who is selling what, you should use a variety of combinations and product keywords and pay attention to who the big sellers are.
To get the most out of this, you have to take a truly analytical approach at this step.
I recommend that you keep a list of retailers you find and record details such as their name, website, and social media accounts.
You should look at businesses large and small, not just the most popular stores.
There may be smaller retailers that are getting popular and doing something different, and analyzing these stores is just as important as analyzing the big names in their niche.
You should take comprehensive notes about what you see.
Studying the small details that are often important can help you understand why some retailers’ strategies are so successful.
Once you understand what they are doing, you can tear it apart and use the information for yourself.
Once you’ve made a list of 5-10 retailers, you should take this opportunity to look at each store’s online presence as well.
At this point, you don’t need to do extensive research.
You can take a look at each vendor’s site and social media accounts to get a rough idea of their strategy.
Take a look at what types of content they post, how they influence customers, and how they talk about their products. If you can’t find many retailers, that could be a good or a bad sign.
Low competition is perfect, but you still need a large audience to sell your niche products. This means that if you barely find any retailers, you should look at pages and online communities devoted to your niche.
Lots of activities are good, but low activity means this niche is probably a bad choice. It could also mean that there is no great need for niche physical products.
This step doesn’t have to determine the niche you have chosen, but it should give you an idea of what you’re dealing with.
It will give you a clue as to how popular your niche is and how much you can value your customers. Again, you shouldn’t be afraid of spending too much time on this step.
When you’re done, you’ll have a practical niche list for dropshipping, with details of retailers already in these niches.
Should you choose a niche with intense or no competition?
The perfect niche is one that has low competition but a large audience.
In the real world, this rarely happens. A typical niche is moderately saturated with a decent number of retailers and an audience not too big or too small.
But what if you’re stuck between choosing a very saturated or totally unsaturated niche? This is a tough decision.
It’s important to note that you probably won’t have to choose between these two different options. Often times, you will find very unsaturated niches.
If these are the only options for you, you should consider other dropshipping niche ideas from scratch. It’s hard to be profitable in a niche with a lot of competition, but it’s also hard to be profitable in a niche that doesn’t attract too much attention.
Like I said, this doesn’t happen very often, but it’s important to think because it calibrates your mindset.
Don’t focus on getting enough profit to lose when it comes to choosing the right niche.
Going into a huge dropshipping niche seems like a good idea, but when you have thousands of competitors in reality, you can have great difficulty selling niche products.
Is the Niche Market Sustainable?
This is another important question to ask about any niche you are considering dropshipping in.
Whether you’re doing this job full time or on an extra income, you need to consider how sustainable a niche will be for you.
Even if you’ve determined that your niche isn’t something that will explode in just a few months, you need to think about the future.
Thinking long term can mean the difference between success and failure.
Numerous niche products seem ideal for dropshipping, but when you think about where these niches will be in a year’s time, you’re starting to realize they might not be as promising.
Let’s go back to the phone examples.
While the phone case niche is overly saturated, phone cases will always be needed.
People don’t give up their phones, and the number of people with phones is not decreasing.
Most importantly, people will always want to customize and decorate their phone
So this is a sustainable niche.
Now let’s take another niche product on a very specific angle: the products related to the solar eclipse that happened in the United States.
When there is a total solar eclipse, people buy all kinds of gear related to this phenomenon. It seems like it would be wise to start a dropshipping business for this.
Therefore, a store selling these products can only do business during the solar eclipse years. Since most years will have zero sales, these niche products are a bad choice for a long-term dropshipping business.
So if you want to do dropshipping in the long run, you should avoid niche products that end up in trend. When thinking about sustainability, you have to ask yourself what the longevity of your niche is.
See that this niche is popular a year from now? What about five years? What do the experts think? This can be a tough nut to crack, and sometimes there is a risk because it is impossible to predict the future of any given niche.
After that, you should make sure that you haven’t put all your money in a prison that will last more than a month or a year.
Evaluating the Chosen Niche
Now you know which niche to choose and all of the selection strategies, but maybe you’re a little confused about how it all comes together. So let’s put all this into practice by looking at an example.
Let’s say you’re trying to set up your first dropshipping store and you’re searching the Internet for some mature niches for new businesses.
You have a list of 4 niches:
- Travel products
- Custom T-Shirts
- Stress cycles
To limit this list to only one final choice, you can ask the questions listed in the 2 steps above. Here are the questions to consider:
Question 1: Is this a product based niche?
The first step is to filter out niches that don’t need a great deal of physical products. But even once you’ve done this, it’s necessary to gauge how well physical products perform in the remaining niches. You can immediately answer ‘no’ for coding.
Coding has a few physical products associated with it, but it’s mostly a digital-based niche. So you can remove it from your list. The other three niches have specific physical products associated with all of them, so they get a ‘yes’ for this question.
Now part 2 of this problem. What exactly does each niche have for products? You could argue that all three have pretty big needs, so you can keep thinking about them all for now.
Question 2: How popular is the niche?
Then it’s time to examine the popularity of each niche. Your answers here will not eliminate the niches on your list. Instead, this step is to give you an idea of what you’re dealing with.
The problem with this question is that niche products fluctuate in popularity at times, so there are no quick and hard answers. This is a question you have to answer for yourself.
Researching each niche is the best way to accurately analyze its current and future popularity. For example, I would say that custom T-shirts and fidget spinners are very popular and travel items are moderately popular.
Again, these terms are subjective and I am using them for this example only. In real practice, it is necessary to have more specific data to compare.
This means it has the highest chances of selling travel-related niche products, but doesn’t completely eliminate the other two. It’s simply a sign that these niches (custom T-shirts and fidget wheels) may be too large to enter.
Nothing is impossible; some niches are easier for dropshipping than others.
Question 3: Is this niche the result of a fad?
This is an easy question. You can quickly answer ‘yes’ for fidget spinners. These niche products are definitely part of a fad that will not be carried into the future. On the other hand, custom T-shirts and travel items are not just a fad, so they can stay.
Question 4: Can I add value to this niche?
This question usually decides whether to destroy a niche or not. You have to drive away your dreams and be honest with yourself. Pick any location you want to take seriously and ask yourself if you can add tons of value with a new online store.
Will you be able to fill a need that other traders haven’t filled? Will you be able to suggest something new or different to potential customers? Will you offer niche products that your competitors don’t sell?
This is a tough question to answer, but in this example, the two remaining niches (custom T-shirts and travel products) are quite different in terms of saturation in the market. There are no doubt more exclusive T-shirt stores than travel merchandise stores.
Also, it’s hard to add value to a niche when it’s too saturated, and you can see that is the case with custom T-shirts. You can buy any kind of custom t-shirt you can imagine so you can’t present anything unique.
However, with great design options, it is possible to present something that your competitors cannot do. This question may take some time to answer, but you’re very lucky that this free dropshipping tutorial includes this topic.
You also need to think critically and honestly about your ability to add value to more saturated niches. Overall, in this example, travel products would be the best option.
Question 5: Is this niche market sustainable?
But wait, it’s not over yet. One step left: you have to make sure your niche is sustainable. Only one niche remains: travel products.
Travel-related niche products are definitely something that people will always need, and people will never stop traveling anytime soon, so you can confidently say that the niche is sustainable.
Before finishing this section, I want to say a few words about the niche selection process. I hope this sample process helped you see how to implement these strategies yourself.
Choosing a niche won’t always be that easy, so be prepared to do some research. It can be difficult to tell if some niche products are unsustainable or very popular.
Believe me, I can tell you that even if you try a world at this step, it will pay off in the future. When using this process, you have to be careful. Even if you’ve narrowed your list down to a niche before, you’ll have to ask the rest of these questions.
A good dropshipping niche will always pass this test. Of course, none of the niches you pick might be useless for you. It can be a tough pill to swallow because you might have to start over again, but it’s far better than choosing the wrong niche.
Finally, keep in mind that you may need to go over this step again. In the next section, we’ll discuss how to choose niche products, which in itself is another complex issue.
You may find that your ideal niche has a very crowded product view or hasn’t been profitable for a long time. In these situations, you may want to go through the niche selection process over and over again.
This may seem like a tough job, but you have to deal with it until you find a profitable, sustainable niche with a good assortment. Congratulations. You have completed one of the most difficult steps of the journey.
You now have a dropshipping niche. What will happen now? Now you have to choose the products to sell. Before doing this, I suggest you take some time to really get familiar with your niche.
If you already know a lot about dropshipping niches, this article will be great for reinforcing what you know and supplementing what you don’t know!
If you don’t know, niche selection can take 7-14 days. Take a look at the retailers in your niche, the products they sell, the reviews people make, and the ways people use the products. Try to look at your niche from as many perspectives as possible.