If you want to succeed as a dropshipper, you’ll have to find the best dropshipping niches and build a strong brand and following in your chosen niche.
Even in the presence of big retailers with extensive product selections, there will always be a portion of consumers with unmet needs. And this is where your dropship business can enter.
Small businesses—startups, even—can shine in niche markets. Having a niche allows you to focus on your target market and connect with them in ways that most big businesses can’t match.
In this article, you’ll learn what a niche market is and how to find the best dropshipping niches for your business. Let’s dive right in!
Table of Contents
What is a Niche Market?
A niche market is a portion or subset of a broader market. It has its own traits, needs, and preferences that make it an ideal audience for certain niche products, unique selling propositions, and marketing approaches.
Identifying your niche market naturally follows once you’ve selected a niche or product category to focus on. But the tricky part is that there are many niche markets within every product category out there.
For example, let’s say you’ve decided to build a business in the women’s apparel category, with women as the general market.
Once you start doing market research, you will find several niche markets, including petite women, plus-size women, pregnant women, office women, and eco-conscious women looking for eco-friendly clothes.
Depending on your resources and assessment of the profitability of these markets, you’ll need to define which of these markets to sell to.
Why it’s Important to Find the Best Niches for Dropshipping
While general dropship stores have their share of advantages, a niche store is usually more scalable and sustainable in the long term. Plus, if your goal is to build a strong brand, you’ll more likely fare better with a defined and laser-targeted dropship niche.
With a niche, it’ll be easier to find out what clicks with your niche market and what you can do to motivate a purchase. So if you choose to sell office clothes for women, for example, then you can position your business as the best go-to shop for those particular products.
A defined niche also helps in directing your branding, narrowing your marketing efforts towards your ideal customers, and eventually, establishing a loyal customer base.
As the respected businessman and philanthropist Charlie Munger said, “Just as animals flourish in niches, people who specialize in some narrow niche can do very well.”
Why Do Some Dropshipping Stores Fail?
Having a profitable niche boils down to either targeting an underserved market or creating product differentiation through branding and marketing.
These two strategies can definitely be combined, but let’s focus on finding an underserved market for this article. Here are some tips you can use to find profitable niches that serve underserved markets:
- Brainstorm and do basic research
- Filter steady from trendy
- Assess what consumer needs are not being met
- Research the competition
- Evaluate your niche’s profitability
Brainstorm and do basic research
There’s value in starting with the obvious. What products have people been raving about over the past few months? What have the people around you bought lately?
Do a quick check of trending products on social media and web discussion groups. Check out viral products on shopping websites like Amazon, AliExpress, eBay, and Etsy. These platforms are great sources of information. Plus, they are free to use.
If you want to take your research up a notch, it’s advisable to read articles about forecasts on profitable niches. Keep in mind, however, that while these articles can be good resources, they are also available to a lot of people who could be your potential competitors.
As you research, it would be a good idea to come up with a list of potential niches. Write down all niches that seem viable, but don’t evaluate them yet.
Later on, you can shorten your list by removing niches that are already oversaturated or are dominated by big brands. Then, you can proceed with evaluating the products that fall under your listed niches. Are they ideal for dropshipping? Are there good reasons for people to buy them online instead of shopping from a physical store?
Here’s a checklist that can help you evaluate the products in each niche you’ve listed.
A product is ideal for dropshipping if:
☑ it’s lightweight
☑ it’s hard to find locally
☑ it can be reordered frequently
☑ it can be used for people’s business
☑ it has accompanying accessories that you can also sell
Filter steady from trendy
Riding the wave of trends and virality could be a good idea when it comes to choosing products. But when choosing a niche, it’s not a sustainable course of action.
Go for niches with products that have a steady demand. This is especially important if you want to establish a brand.
Think for the long haul, and avoid fads that instantly lose their appeal. After all, you wouldn’t want to set up a store only to close it down within a few days or weeks due to lack of demand.
Assess what consumer needs are not being met
Once you’ve done the basic research we’ve recommended, you should already have an idea about the target markets that fit the niches you’ve found. Now, it’s time to think through your list and find niche markets that have needs you could potentially meet.
Here’s an example that you can take inspiration from. Consider a target market consisting of active and health-conscious millennials who are working remotely. With their situations in mind, we could name a few problems they might have and the products that could help solve these problems:
Problem / Need
They need to set up a home office so they can continue working in the safety of their homes.
Due to shelter-in-place orders and strict restrictions, they are forced to exercise at home .
They need to have their daily healthy smoothie before working. They don’t have much time to prepare ingredients and clean up because they’re busy working.
With these details jotted down, you can assess them even further by answering these questions:
- Is the scope of this need/problem wide enough that I can sell several products, and therefore, have multiple opportunities for profit?
- Do these products have a lot of variations and styles?
- Are these products unique enough that my customers will wait through the delivery time to get them?
If you answer yes to at least two of these questions, then you’re on the right track. You’re well on your way to closing in on your first dropshipping niche.
Additional word of advice: try not to target a niche that’s too small. It will limit the products you could offer and could make business scaling more challenging.
Research the competition
The presence of competitors reflects the viability of your niche. So don’t be discouraged if you see online stores offering the same products as you.
Check their websites and social media pages to figure out how you can stand out from the competition. List down the ways you can differentiate yourself, and then use these to create unique offers and present fresh marketing approaches.
You can also look at your competitors’ reviews section to spot gaps in their services. What do customers complain about? Use the feedback derived from angry or unhappy customers to improve your offering. This improved offering is more likely to cover all of your customers’ pain points.
Evaluate your niche’s profitability
Businesses strive to solve problems and add value to consumers’ lives in exchange for profit. And that’s why you have to dive even deeper and refine your choice of a dropshipping niche.
Start with researching the availability of products that you could offer. Can these products be sourced easily? Where can you possibly source these products?
Next, assess their marketing potential. Since the bulk of your job is to market your products, you have to choose a niche with products that are easy to market.
Lastly, check whether you can profit from your niche market. Your products should retain their appeal even after you’ve added a markup, and they should be something that people are already talking about or looking for.
Here are a few tools you can use to gauge the profitability of your niche:
- Google Keyword Planner – Use this tool to search for keywords that pertain to your niche and see if any terms result in at least 10,000 searches per month. A higher search volume means a higher market demand.
- Social Media – Browse social media platforms like Facebook and Instagram to spot popular content and hashtags. This should give you an idea about the size of your niche market and the conversations that may be relevant to your business.
- Publications – Look for publications (print or digital) that cover your niche. If you see results, then that’s a good indication of a profitable niche market. Once your store is up, you may also explore contributing to these publications to establish your expertise in the niche.
What Makes a Good and a Bad Dropship Niche
Niche selection can be tricky. To avoid wasting time and effort on unprofitable business ventures, it’s important that you validate your niche idea before diving right in and building an online store around it.
Thankfully, there are key traits you can look for to distinguish a good niche from a bad one. Here’s a simple infographic to help you out:
If you’ve checked every mark in the good niche side, then that’s the go signal for you to start building your eCommerce store. But if you find your niche on the other side of the fence, try to tweak some details and assess it again.
You can refer to the infographic above to evaluate all potential niches on your list and narrow down your options.
Final Thoughts: Take Your Research Game Up a Notch
There’s no one-size-fits-all formula to choosing a winning business niche. Conducting thorough research on your chosen niche and determining its viability are parts of the winning formula, and it would be a big boost to your business if you do these things right.
After the research and validation phase, another battle will start when you finally take action to launch your dropshipping store and test your niche. Remember: the longer you wait, the sooner someone else might come up with the same niche idea as you.
So go ahead and apply all the tips in this guide and claim that niche with the right market demand and profit potential. You may also revisit this guide once you’re ready to open more niche dropshipping stores.