Dropshipping to a saturated market is difficult. Many dropshippers avoid entering a market where the volume of a product is already maximized because the chance of getting a sale is slim. For dropshippers who have limited capital and want to earn days after launching their stores, they will avoid saturated products as much as possible. Who would buy from them when people can find the same product anywhere, right?
If you’re looking for dropshipping as a means to generate money to tide you over until you find a new job or career then, by all means, find an unsaturated market. However, if you want to build a business for the long-term then stick around as I discuss how you can penetrate a saturated market and become successful.
What is a saturated market?
Business Dictionary defines a saturated market as a “Situation where practically every prospect already has the product (or its substitute) and, thus, it is a replacement market with only a little chance of new sales.” It means more competition and bigger marketing costs to generate sales from a customer base that is already spread too thin. Yet, why would you be interested in dropshipping products in this market condition? Because this is where the great opportunity lies.
Saturated markets are everywhere. There are millions of businesses out there, online and with a physical location, and many of them are doing the same thing. Retail outlets are selling the same products yet every day new businesses are joining these saturated industries. Some earning big while some are still struggling to get a sale but they persist. These are clear signs that these companies saw opportunities in selling to a saturated market. And you might see them too after reading this post.
What are the challenges of a saturated market?
Competitors abound in a saturated market. Everyone is competing for buyers’ attention in terms of promotion and pricing. Marketing spend is high because you’ll feel pressured to advertise your wares. There will be a continuous race to drive prices down to get customers and your product can become obsolete after some time.
Many dropshippers avoid these challenges by opting for an unsaturated market. Yet, it will only take a short time before competition starts rolling in and the market becomes saturated. When that happens, they’ll also be vying for customers by intensifying their marketing efforts and reducing prices unless they exit the market and hop into another trend.
What are the opportunities for a saturated market?
A saturated market sends clear signals that there is an active market for the product. You no longer need to do testing to find a market because it’s already available. The more competitors you have, the more buyers will learn about the product. This will also validate to consumers that they need this specific product and should buy one for themselves.
You, however, need to read the signals properly to come up with a plan that will make you stand out from competitors. These are four ways you can do to stick out in a crowded market.
Have a distinct personality.
Different people react to different styles and approaches. By having a distinct personality, style, and voice, you’ll attract specific types of consumers. They would buy from you instead of competitors because they can relate to you regardless if your prices are higher than others. Ensure that you communicate your brand personality in whatever you do as this will draw the right buyers.
Niche down to find an ignored sub-niche.
Popular niches are often saturated but if you look at the sub-groups under it, you might find a sub-niche whose needs are not met yet. People in this sub-niche might only be settling on whatever fitness products out there because they don’t find anything more suitable for them. If you sell the right products to this group, they’ll gladly buy from you instead.
Fill a gap in the market.
Look around the saturated industry if there is a gap. There might be items that should be offered but are not being provided effectively or not yet available. This is an opportunity for you to fill that gap with the right product. When people see that you’re selling what is lacking from the current offerings, they’ll buy from you.
Increase customer’s perceived value.
According to Business Dictionary, perceived value is “A customer’s opinion of a product’s value to him or her. It may have little or nothing to do with the product’s market price, and depends on the product’s ability to satisfy his or her needs or requirements.”
To stand out in a crowded market, you must boost the perceived value of your dropshipping products. When customer’s perceived value is higher than the product price, chances are they are going to buy. Advertising and marketing can help in boosting perceived value but you need a unique selling point (USP) to separate your dropshipping business from competitors.
Creating a USP can be challenging when your product is not unique which is common in dropshipping. To come up with your USP, you must research your competition, not to mimic them but to look for weaknesses. When you know their weak points you’ll be able to leverage what you have that your competitors are lacking. You can also use their weaknesses to evaluate your business and make some adjustments to gain an edge over them.
These are the points to look at when you make competitor research:
- Ease of using website
- Quality of customer service
- Return policy and customer guarantee
- Product pricing
- Shipping options
How to avoid competing based on prices?
Lowering prices is not a smart way of competing with your rivals. In a saturated market, sell the customer experience, not the product. Highlight the benefits of buying from you, not the product features because that’s what everybody does. Here are things you could work on your USP:
- Offer to match the lowest price advertised by a direct competitor.
- Provide great customer service because consumers will pay 17% more if you do.
- Offer product bundling to increase prices.
If you dropship in a saturated market, build a distinct personality, pick a niche, fill a gap in the market, or increase perceived value. It also helps to research your competitors to find what they’re not doing so you can offer the things that they’re missing. Create a unique selling point that will differentiate your brand from others but never compete in prices because it will drag you down. Dropshipping products in a crowded market is not easy but many have succeeded. Use these strategies to gain a competitive edge and achieve new levels in your dropshipping journey.