Thanks to its low cost of entry and ease of implementation, dropshipping has become one of the most popular business models for new and seasoned ecommerce entrepreneurs. And since you don’t need to carry any inventory, it’s also one of the most flexible businesses to start.
But the first step to starting a dropshipping business is finding a profitable niche. And all the fake dropshipping gurus will tell you that it’s easy, but it’s not. It’s actually quite difficult to find a niche that meets all the criteria for being profitable, though it can be done with a company like Oberlo.
In this article, we’ll take a look at how it’s done.
Crazy Egg’s Favorite Tools for Finding Profitable Dropshipping Niches
At Crazy Egg, we try lots of software and tools so we know a thing or two about which ones are the best. Our coveted Golden Eggs are the cream of the crop—the best tools in the game.
Oberlo is the best dropshipping company for most. With automated Shopify fulfillment and a robust free plan for up to 500 products, it’s hard to beat its convenience and cost-effectiveness. Right now, you can join Shopify and set up an account with them in less than two minutes.
SaleHoo has the greatest list of pre-vetted suppliers. With over 8,000 verified suppliers, over 2.5 million products, a 60-day money-back guarantee on all orders, and a step-by-step training program, beginners don’t have to worry about companies scamming them or sending out products that aren’t as described. Today, you can access that network and start dropshipping for just $27.
Clothing businesses are among the most popular dropshipping businesses, and Printful makes it incredibly easy to dropship apparel and décor. Companies can choose from brands like Champion and Adidas and put their designs on some of the most well-respected brands in the industry. If you get started with a free trial today, you can start customizing shirts and open your apparel business right now.
More Tools for Finding Profitable Dropshipping Niches
Although the top three are the best of the best for most dropshippers, they aren’t the only ones to consider. We’ve researched several dropshipping companies, most of which are trusted by millions of people. In our full review, we dive deep into the nuances of each one so that you can make the best decision for yourself.
If none of the above sounds like a good fit for you, check out our full list and reviews of dropshipping companies here.
Step 1 – Brainstorm Potential Niches to Sell In
Before you get into the nitty gritty of niche selection, you should have a list of potential niches to choose from. That way, you won’t be overwhelmed by the millions of different options out there.
To come up with a list of potential niches, start by brainstorming ideas. Write down anything that comes to mind, no matter how far-fetched it might seem.
The goal here is just to get your creative juices flowing and generate as many ideas as possible. You might even have a few in mind that you think could be profitable, or you might have an idea for a store or product already in your head.
Passion and Personal Interest
Starting a dropshipping business is no easy feat. It will take lots of work to set up and optimize, and it will require an upfront investment.
If you choose to sell a product you’re passionate about or have a personal interest in, it will make the process of starting and running your business a lot easier. You’ll be more motivated to put in the work because you’ll be doing something you enjoy, and you’ll already have some knowledge about the products and industry.
And by choosing a niche that you can see yourself selling in, finding the founder-market fit and becoming an extension of your brand will be much easier to do.
Most business owners don’t start their companies out of the blue. They usually have a deep, developed relationship with something related to their business. This could be an industry they’ve worked in for years, a problem they’ve faced that led them to develop a solution, or simply a hobby they’re passionate about.
When you have experience with the thing you’re selling, it will show through in your marketing and copywriting. You’ll be able to speak to your potential customer’s pain points and needs because you’ve experienced them yourself.
This will give you an edge over the competition, who might be selling the same thing but don’t have the same level of experience or understanding of their audience.
Sadly, you can’t just sell anything you want (unless you’re a billionaire, of course).
You need to have a budget for your business, and that will limit the niches you can enter. If you’re on a tight budget, you’ll need to be more strategic in your niche selection.
For example, an aspiring ecommerce business owner with $10,000 saved up can’t realistically enter the luxury watch market. They could, however, start a store selling more affordable fashion watches or jewelry.
The same logic applies to how nuanced your product is going to be. If you want to sell a product with a preexisting design (e.g., screenprinted t-shirts), you can get away with a lower budget than if you’re selling something more complex (e.g., hand-designed, high-fashion t-shirts).
Step 2 – Research Current Dropshipping Trends
Once you have a basic idea of what you want to sell, you’ll need to research and evaluate current trends to see which ones are worth pursuing.
eBay is a good place to start your research. Look for items in the niches you brainstormed and conduct a few searches. Then, navigate to the “Advanced Search” function to the left of the search bar.
Once you click the button, write in keywords for your niche. Then, move down and select the box that says Completed Listings.
Once you complete this, eBay will show you all of the listings for that item that has already sold.
Items highlighted in green are items that have sold recently, while items in red were taken down or their auction ended without a sale. If your search turns up mostly red items, that’s a sign that there might not be much demand for that product.
Look closer into the products you find that are in green, and repeat the completed listing search but only for that specific type of product. Once you find several products within one niche that consistently sell (10+ units daily), you’re onto something.
Step 3 – Use Amazon to Refine Your Niches Further
Amazon is the world’s largest ecommerce search engine, with 1.6 million packages shipped daily. And with so much data at your fingertips, you’ll be able to do plenty of research into just about any niche.
To use Amazon’s search functionality to find new products to sell, follow these steps:
- Click on the All tab to the left of the main search bar (on the upper left of your screen). This will populate a list of categories or “niches.”
- Click on a specific category based on your previous research (or at random).
- When you choose a category or department, you’ll see another list of subcategories to choose from.
- Choose your subcategory, and you will arrive at the main landing page for that category.
These products are featured items, best sellers, and items that Amazon thinks you’ll be interested in.
To get to the real meat of the matter, we need to do a little more digging.
Click on See all… next to either “Best Sellers”, “Hot New Releases”, or “Movers & Shakers”. You’ll be brought to a page with a list of products within that category, listed in order of rank.
The products at the top are the best sellers (i.e., the most popular).
You can further filter these results by clicking on Refine on the upper left side of your screen. From here, you can select different filters like price, average customer review, and brand.
You can also use the Sort by drop-down menu to sort products by popularity, price, etc.
Step 4 – Use an Amazon Product Research Tool to Activate Insights
Once you know which products are performing well and you’ve established a list of potential niches, it’s time to do some keyword research.
Keyword and product research is important for two reasons:
- It helps you understand how people are searching for your potential products.
- It gives you insights into sales metrics, profit margins, and competition.
You won’t be able to pull a website’s Shopify or Google Analytics data, and you certainly won’t be able to look at their balance sheet, so using an Amazon research tool can put you at a significant advantage.
Jungle Scout and Helium 10 are two of the most popular options, and they are both relatively affordable. If you decide against purchasing a service like this, your product decisions will be less informed, and you’ll likely make more mistakes.
When using these tools on Amazon, there are a few things you should look for:
- Profit Margin: An optimal profit margin for ecommerce is around 20-30%. This number will obviously differ based on your product, price point, and shipping costs, but it’s a good range to aim for.
- Sales Volume: The more sales a product has, the better. Obviously, you want to choose products that are in high demand.
- Competition: You’ll want to avoid products with too much competition. If there are already a ton of sellers on Amazon, it will be hard for you to break into that market.
- Keywords: Find out which keywords your target products rank for using a reverse product lookup. Jungle Scout’s Product Database is a great way to do this.
- Trends: Cross-reference the keywords you find with the ASINs (Amazon Standard Identification Numbers) of your target products to see if there is a consistent upward trend.
Step 5: Cross-Reference Your Findings With Other Audience Insights
To get a clear idea of which niches are the best, you’ll need more than just Amazon data. You’ll also want to look at other platforms like Google and Facebook to see what people are talking about.
Using Google Keyword Planner
To see how in-demand an item is online, the best method is to look at how many people are searching for it using a search engine such as Google. This information is available to the public through Google’s Keyword Planner tool. After you type in a word or phrase, the tool displays how many searches are made per month.
There are three key metrics to pay attention to when using Google’s Keyword Planner:
- Match Type (Broad, Phrase, or Exact): Broad match type is the least restrictive and will show you the most results. It includes all variations of your target keyword and related terms. Phrase match type is a little more restrictive and will show you results that include your target keyword phrase and related terms. Exact match type is the most restrictive and will only show you results that include the exact keyword phrase without any related terms.
- Search Location: You’ll want to ensure you’re looking at results from the country you’re targeting. You’ll also want to pay attention to the difference between local and global search volumes.
- Long-Tail Variations: These are keyword phrases that are more specific (and usually longer) than your main target keyword. They usually have a lower search volume but can be easier to rank for. If a term has lots of these variations to rank for, it’s probably a good product to sell.
When using the keyword planner, also pay close attention to the CPC (cost per click) and competition metrics. A high CPC means that people are willing to pay more for ads related to that keyword, which might be a good sign, but it also indicates that you will have to spend more on advertising. A low competition score means it will be easier to rank your product in Google search results.
When deciding on which items will be profitable for you, consider the CPC of your niche’s keywords and whether or not you can make money while running the ads.
Using Facebook Audience Insights
There are four main sections you’ll want to pay attention to when using Facebook Audience Insights:
- Page Likes: This is a list of pages that your target audience has liked. You can use this to get an idea of the interests and demographics of your target audience.
- Location: Here, you can see which countries and cities your target audience is from.
- Age and Gender: This data will give you an idea of the age and gender breakdown of your target audience.
- Interests: This is a list of interests that your target audience has. You can use this to get an idea of what topics they’re interested in.
To get the most accurate results, you’ll want to create an audience that’s as close to your target audience as possible. For example, if you’re selling feminine care products to a US-based market, you might want to create an audience that’s female, aged 18-24, and located in the US.
Once you get this data, you’ll notice that some interests will pop up more often than others. These are the interests you’ll want to focus on when finding a dropshipping niche.
Using Google Trends
Audience insights and keyword research are great for diving into what you might want to sell with your dropshipping business, but to get a broad idea of what’s popular, you’ll want to use Google Trends.
Google Trends is a free tool that shows how often particular terms are being searched for on Google. It also shows how these search volumes have changed over time. This is useful for seeing if there is a consistent upward trend in searches for a particular product or niche.
To use Google Trends, simply enter a keyword or phrase and select the country you want to research. You can also compare multiple terms side-by-side.
There are four things to look for while using this tool:
Interest Over Time: This line graph shows how popular a search term is over time. You’re looking for terms that have a consistent upward trend.
Interest by Region: This map shows you which regions are interested in a particular topic. You can use this to see if there’s demand for your product in different parts of the country (or world).
Related Topics and Queries: The related queries can give you insight into related terms that are rising in popularity. This can give you ideas for other products to sell that are related to your niche.
Seasonality: This tool can also be useful for seeing if there is a seasonality to searches for a particular term. This is useful for planning your marketing and inventory around popular times of the year, such as Christmas ornaments. Seasonality will be indicated by an uptick in searches at certain times of the year, as shown above.
Step 6: Learn By Doing
Now that you’ve gone through the research process, it’s time to start dropshipping! The best way to learn is by doing. You can spend as long as you want waiting for the perfect product, but at some point, you’ll just have to take the plunge.
Start by setting up your store with Shopify. Then, sign up for an Oberlo account and add products to your store. Once you’ve done this, you can start running ads and promoting your store.
Don’t be afraid to make mistakes along the way. The more you experiment, the more you’ll learn about what works and what doesn’t. And, before long, you’ll be an expert at finding profitable dropshipping niches.
If you need help with this process, check out our guide on how to start a dropshipping business.