Choosing a niche is one of the first steps in dropshipping. This is the point that many dropshippers are overly concerned about as it can make or break your dropshipping business. It is a part of the dropshipping process that should not be rushed. There are several steps you must take to find the best niche for dropshipping and I will discuss them in this post.
What is a niche?
A niche is a distinct section within the market where there is unmet customer demand. It is a targetable segment of the market that dropshipping businesses should identify and focus marketing efforts to earn more profits. If you’re looking to make dropshipping business for the long-term, you should find the right niche first before you find a product.
By focusing on a specific niche, you’ll be able to position yourself as the brand that a specific audience can go to. Your credibility is more established than generalist dropshippers and you have a more focused business that the right customers can relate to. There are several niches that you can pursue and these can even be segmented further. The key to finding the best niche is to look for something that you can master and has a sound audience of customers.
One example of a niche that has many segments is women’s clothes. Clothes for plus-size women can be a niche market so do clothes for corporate women and clothes for athletic/sporty women. Almost every market can be divided or refined based on preferences or specific needs of its members. Below are how niches are usually defined:
Demographics (age, education level, gender, income level)
Geographics (residents of a neighborhood, city, and country)
Level of Quality (economical, handmade, premium)
Psychographics (attitudes, interests, values)
Price (discount, luxury, moderate)
Why find a niche before products?
Many dropshippers are more inclined into finding a product idea first rather than a niche. However, identifying your niche before you look for dropshipping products has the following advantages:
A niche can last forever but products always come and go. A product is profitable while it is popular but once the popularity declines, the market is gone. If you have a niche, you can still get sales with steady sellers while waiting for the next trend in your niche.
A specific niche market allows you to better understand your audience. You will no longer struggle about finding product ideas as you know what products to promote to meet your audience’s needs.
How do you find the best niche?
To come up with the best niche in dropshipping, here are five steps that you can do:
Choose a niche audience.
These can be people that you represent yourself (male college students age 18 – 25 years old, middle-aged housewives, single moms in their forties).
A niche audience can be people you like hanging around with.
A group of people that constitutes the niche you are interested in (pet owners, gamers).
Identify your niche audience’s problems.
Research the aspirations, challenges, desires, pain points, and problems that your niche audience has. You can find information from popular blogs, niche forums, trend websites, and how-to websites.
Select the most profitable problems.
You might find many problems for your chosen audience. However, you cannot solve them all. Pick only the most profitable problems by using filters like the following:
Number of monthly searches online
Number of searches to find the solution to the problem
Amount of free information online that has good quality
Analyze profitable problems.
Find out what your audience exactly needs. What are they looking for in a product that can solve their problem? What are their issues with existing product offers? Take note of the language they use when describing their desired solution so you can use them in your sales page and ad copies later.
Test sell to validate the niche
Validating the niche will let you know if you found the best niche for your dropshipping business. Create an online store and sell niche products. Invest in paid ads and market the products to your niche audience.
What are the types of niche products you can sell?
For you to validate the profitability of your chosen niche, you have to look for dropshipping products to sell. There are three types of products that you can dropship depending on their purpose.
Products that are nice-to-have.
These are products that do not solve any problems or offer basic benefits. They are nice-to-have because they bring pleasure to buyers. Fidget spinners are popular examples of such items. Hundreds of millions of units were sold for a brief period and sales plummeted after the product reached its peak. Toy collectibles also belongs to this type.
Products that meet an emotional need.
A product like iPhone 7 fills an emotional need to be part of something bigger than one’s self. It enables people to become part of a group or a technical revolution. Based on research, the consumer’s intention to buy is influenced by his emotional response to an ad. A product that deeply touches the emotions of the buyers is a good niche product to dropship.
Products that solve an immediate problem.
These are considered to be the best type of product to sell because they provide an immediate solution to a problem. For example, organic soaps to treat acne in women with age between 18 – 25 years old who prefer green skincare products. There is a need for natural acne treatment in millennials and you give them a solution by selling organic soaps.
Whichever type of products you pursue, check if the product is already saturated before selling. A saturated product is bad for business because either the demand is already declining or there is no longer a demand for it. Products that are not mainstream and not available in a brick and mortar store are best to sell online.
A profitable niche will let you generate revenue for the long-term regardless if you offer a trending product or not. So make sure that you first find the best niche for dropshipping before selling anything by using this guide.