How to Find a Profitable Dropshipping Niche

If you decide to open a dropshipping store, the first step is to choose a niche. Understanding the niche will help you build an audience, influence your marketing efforts and content, and make it easier for your customers to find the right products. But choosing a niche for dropshipping is quite difficult.

Should you sell the products you love? Is it better to choose a niche that is relevant to the US or to think globally? How do you know if the products you choose will sell using the dropshipping model? Whatever the answers, your task is to find an area in which to focus your business.

So if you want to open a store based on the dropshipping model, but don’t know where to start, our guide to finding a profitable niche will help you.

How to Find a Niche for Dropshipping

Even if your idea seems amazing to you, if there is no demand, it doesn't matter. When no one needs a product, it is extremely difficult to make money on it. It is easier to satisfy existing demand than to try to create it.

Fortunately, there are tools that can help you measure demand or market size.

Facebook Audience Statistics

Facebook is the world's largest social network. More than 2.23 billion users spend time on it every day, and each adult in the United States does it on average 38 minutes per day. Facebook Audience Insights is a great tool for market research, finding profitable niches and trends.

Facebook Audience Insights is a free service that allows you to learn more about your audience. It collects information about social network users and helps you estimate the size of the potential market and the interests of people in a particular niche.

With this tool you can find the following information:

• Demographic data: age, gender, education, profession, marital status, lifestyle.
• Likes: Categories and topics that interest audience members.
• Location: Place of residence and languages ​​spoken by audience members.
• Actions: clicks on ads, comments, device usage, etc.

For example, if you want to explore whether dropshipping is a viable option for the fitness and wellness niche, you can enter any relevant keyword and Facebook will show you how many monthly active users are interested in that topic globally.

You can also see how many people in certain locations are interested in the niche and what pages they liked.

Let's take the meditation niche as an example. If there are 200,000 to 250,000 Facebook users worldwide interested in meditation, that means the meditation niche could be profitable for dropshipping.

You can research demand in such narrow niches as leggings , Buddhist meditation , meditation music , and any other interests related to the main topic. This will help you find and research different dropshipping business ideas.

The estimated audience size will vary depending on the interests you select.

You can narrow your audience by location. For example, if you're targeting people in the United States, you can do research specifically for that location, and then see that group's meditation-related interests in the Likes tab.

This data allows you to see what topics your potential customers are interested in so you can test different ad sets and improve your return on investment.

Google Keyword Planner

The best way to measure the demand for a product online is to find out how many people are searching for it by entering a query into a search engine. Luckily, Google has made this data publicly available - you can get it using the Keyword Planner. Enter any word or phrase, and the tool will report how many people search for it each month.

There are entire programs that teach you how to use Google Keyword Planner - it's impossible to cover the topic in full in this article. But to get the most out of this valuable tool, you only need to keep three things in mind:

• Match Type: The planner lets you choose between broad, exact, or phrase match keywords. Choose exact match unless you have a compelling reason to do otherwise. This will give you the most accurate data about your keyword's search volume.
• Search Location: Make sure you understand the difference between global search and local search. If you plan to trade primarily in the US, focus on local data for that region.
• Long-tail keyword variations. The first thing that catches your eye are the general one- or two-word phrases that the tool shows a huge number of queries for. But in reality, it is the long keywords, more specific and less frequent, that provide the bulk of the traffic from search engines. Such search phrases are called long-tail keywords.

Take these metrics into account when researching potential markets and niches to enter. If a query has many variations that users are actively interested in, this is a good sign - it means the market is large and has a wide variety of interests.

If the number and volume of search queries drops sharply after the first few high-frequency words, it is likely that there will be less traffic from long-tail keywords.

Google Trends

The Keyword Planner is great for raw search data, but for more detailed information, many people use Google Trends.

It gives you access to information that the keyword planner doesn't have, such as:

1. Dynamics of search activity over time for a particular request

The best option is when the niche you are entering is expanding. Google Trends will tell you if this is the case. For any given search query, you can see the growth or decline in search volumes over time.

2. Top or growing queries

Google Trends can provide statistics on the most popular queries and a list of queries with the fastest growing popularity. When planning your marketing and SEO strategies, it would be wise to focus on them.

3. Geographic location

Another useful feature of the tool is the ability to track search queries by the geolocation from which they originate. This allows you to determine where the largest number of target audience representatives for a particular niche is concentrated. For example, if you sell canoes, it will be useful for you to know where most of your customers are likely to come from, because demand will be uneven in different regions.

4. Seasonality

Understanding market seasonality, that is, the sudden change in demand for a product at different times of the year, can be key.

If you measure the volume of requests at the wrong time using the scheduler, you may draw some inaccurate conclusions, since the tool shows data for a month.

We believe that canoes are a very seasonal product and that demand peaks in the summer months. If you measure demand in the summer and expect to see the same numbers year-round, you risk making incorrect predictions.

You need to take the time to understand the intricacies of search volume in a specific niche for each product. Using Google Trends to analyze search volume, geolocation, dynamics, and seasonality can help you avoid costly mistakes and optimize your marketing strategy.

Most Profitable Dropshipping Niches in 2023

If you want to start an e-commerce business with the best chance of success, you can't go wrong by entering the dropshipping niche, which has already proven itself to be popular.

Based on the research, we have identified the best niches for dropshipping in 2023:

• Clothes and footwear
• Beauty and self-care
• Kitchen and dining room
• Child care
• Pet Supplies
• Home interior
• Office Supplies
• Tools and Home Improvement
• Accessories for phones
• Car accessories

For a more complete overview of products in each niche, check out our article on the best products to dropship in 2024.

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If the above mentioned areas do not appeal to you, you can explore other niche markets. Here are some tips to help you find the best ones.

1. Look for niches that offer a wide range of accessories. Dropshippers rarely make good money on expensive items. For example, the margin on TVs or laptops is only 5-10%. The main source of income comes from selling accessories. They allow for significant markups, but buyers are less price-sensitive. A consumer may spend several weeks choosing a TV and shopping around to find the best deal, but they won’t think twice before spending $30 on an HDMI cable. However, there is a good chance that a cable business will be just as profitable as a TV business. By choosing a niche with a large number of accessories, you will significantly increase your profits while reducing the number of price-sensitive buyers.
2. Look for customers with passions. It's amazing how much money people are willing to spend on their hobbies and interests. Mountain bikers buy hundreds of lightweight accessories to shave a few pounds off their frames. Avid fishermen spend tens of thousands of dollars on boats and related products without a second thought. If you can offer a product that solves a problem these customers have, you'll have an audience that's interested in buying.
3. Look for trending products that you can’t find at your local store. If you want to buy gardening equipment, you’ll probably head to your local Home Depot or Lowe’s . But where will you look for magician’s accessories or surveillance equipment? Probably online. Choose niche products that are hard to find at your local store, and you’ll be able to capture the attention of the vast majority of potential customers because they’ll be searching online.
4. Pay attention to niches with infrequent product line updates. If the product models you work with are regularly updated, you will be wasting valuable time on products that will soon become obsolete. Selling products with infrequent product line updates gives you the opportunity to invest in an informative website that will remain relevant and viable for years.
5. Consider selling disposable goods or consumables. Having regular customers is important for every business. After all, it is much easier to sell to those who already know and trust you than to convince new potential customers to buy something. If your product needs to be ordered regularly, and customers are satisfied with it, consider that you have every chance of creating a profitable business with a regular income.

Finding the right product is just one element of the equation. Even a niche that meets all of these criteria will not be the best choice if demand is low or competition is stiff.

To make an informed decision, you need to take into account demand, competition and supplier characteristics.

How to Measure Competition in Your Niche

Conducting a competitor analysis of a potential market can be challenging. If the competition is too high, it will be difficult to compete for visitors with experienced market players. Low competition may indicate a small market size, which will severely limit your growth.

Some dropshippers use paid advertising to promote their products, but most rely on organic traffic. With this in mind, the best way to gauge the overall competition in the market is to analyze the sites on the first page of organic (non-advertising) search engine results.

We can't cover SEO in depth in this dropshipping guide, so for a more in-depth look, we highly recommend reading our beginner's guide to SEO or our business SEO checklist.

Number of domains linking to the site

Google's ranking algorithm relies heavily on links. The more external links a site has, the higher its search ranking.

Knowing how many backlinks your competitors currently have gives you an idea of ​​the amount of work you need to do to get external links to your site in order to outrank your competitors.

There are dozens of different SEO metrics, but one of the most useful when assessing a site's ranking is the number of unique domains that link to it. This metric is often called "linking root domains," and it represents the number of unique domains (i.e., independent sources) linking to a site, ignoring duplicate links coming from the same domain.

To better understand this concept, think of external links as personal recommendations. If your best friend recommends a restaurant to you, you'll probably remember the name. If he spends a week raving about the restaurant (you'll hear seven recommendations from him), you'll probably go there for dinner. But even his commitment to the place wouldn't have as much influence as if seven different, unrelated friends recommended the restaurant to you. Because they're independent sources, their recommendations would carry more weight.

The same is true for links to a site. A domain can link to a site multiple times, but this is considered one unique recommendation. Therefore, an indicator such as the total number of links leading to a site may not provide an accurate picture when assessing its effectiveness. You will get an objective picture of how difficult it will be to compete with a site by looking at the number of linking root domains. The best way to find out this figure is to use special tools, such as Link Explorer. It provides access to a number of valuable SEO metrics, including the number of unique backlinks.

When studying search results, it is worth paying special attention to the backlinks to the first two sites in the search results and the last site on the first page of results (No. 10). This will help to get an idea of ​​how much effort you will have to put in to get to the TOP and just to the first page of Google results. The vast majority of users stop on the first page of search and do not scroll further, so it is important to understand how difficult it will be to get there.

Here's a quick guide to interpreting the number of linking root domains. These are rough guidelines, but they'll help you make sense of the numbers.

• From 0 to 50. This number of linking root domains can be built up in about a year, provided that the content is of high quality and targeted marketing and SEO efforts are made.
• From 50 to 250. This indicator is typical for sites with a high rating in niches of significant size. It will take more than one year to achieve such a result, but it is possible. With these indicators, the level of competition allows you to get an optimal result in terms of the ratio of efforts made and the result obtained - this is especially true for private entrepreneurs and small teams.
• From 250 and more. Unless you are a talented marketer or SEO master, developing such a number of linking root domains requires serious and long-term efforts. This does not mean that you should not strive for such a result - you just need to be prepared for serious competition.

Authority of competing sites

When determining rankings, Google considers not only the number of backlinks, but also their quality. A link from a blog with five readers will not carry the same weight as a link from the New York Times .

Important SEO metrics are not limited to those mentioned, but they do provide a quick idea of ​​how important Google considers a page to be. As with unique domains that link back to a site, analyzing the homepage metrics of top-ranking sites can provide an idea of ​​how competitive the market is.

The easiest way to find out this indicator is to check the sites manually using the Check PageRank tool.

To interpret the results, use this classification:

• 1 to 2 - Relatively low authority. Homepages in this range indicate relatively low competition.
• 3 to 4 is a common metric for ranking sites in competitive niche markets. It is not easy to achieve, but it is possible. Markets with the best value for money for dropshippers are usually in this range.
• From 4 to 5 - high authority. To reach this level, in addition to a large number of links from regular resources, you will need many backlinks from authoritative sources.
• 6+ - very high authority. To compete in a market where there are sites with such indicators, you will need a full-fledged marketing department.

Quality metrics

Hard statistics like the number of linking root domains and PR are needed to determine how difficult it will be to outrank competitors, but there are also several quality factors to consider.

The quality of the site and its usefulness

Visit a few top search engine results sites and put yourself in the shoes of a shopper. Do the sites seem attractive and enticing to stay on, or do they look outdated and abandoned? Is the navigation and structure easy to navigate, or is even the search box hard to find? Do they have comprehensive information and detailed product cards, or do you have to squint to see blurry images?

Consider how likely it is that you would buy something from these sites. If you are impressed by the level of resources in the market you are studying and you see that it will be difficult to stand out from them, you should consider another niche . But if you see that there is room for improvement and ways to add value, this is a great sign.

Website Reputation and Customer Loyalty

Despite an outdated website with a dull design, an online business may have a good reputation based on years of good customer service. At the same time, a website with an attractive design may earn a bad reputation for poor customer service. It is difficult to judge a book by its cover.

To find out whether your competitors have received complaints from consumers, you can look for this information on the Internet. It also makes sense to look for reviews of competitors on social networks and other platforms. If they have a low level of service, this is an excellent opportunity for you to gain a competitive advantage.

Important note about search results

Keep in mind that when you enter a search query, Google personalizes the results based on your geographic location, browsing history, and other factors. But when analyzing a market, we want objective results, not personalized ones, to get an objective picture of the competitive landscape. Also, if you live outside the US and plan to sell in the US, you want to see the results that your potential customers will see - that is, pages that will rank in the US, because that is where you will be competing.

There are two ways to get around this problem:

1. Search in incognito mode

When using the Google Chrome browser, you have the option to browse in “incognito” mode, which does not take into account your browsing history or personal settings - you see search results as anyone else sees them, and get an objective idea of ​​​​which sites are actually ranking on the first page of results. To use this option, go to the browser menu and select the “Open a new tab in incognito mode” command. Other browsers have similar anonymous search modes that do not take into account your browsing history and other personal settings.

2. Calling up results for a specific region

If you need to see results for a different region, you can add a short text to the end of the URL in your browser's address bar and get data for a specific country.

Let's say you're in the UK but want to get data for the US. In that case, you'd add & gl=us to the end of the URL and press Enter . If you want to get results for the UK but you're in the US, you'd add & gl=uk.

For a complete list of countries and codes, visit the AdWords help page.

How to Succeed in a Niche Dropshipping Business

Choosing a dropshipping product with high demand and low competition in the market is only one part of the equation . To build a successful business, you need to meet at least one of the following conditions.

1. Think about who your ideal client is

If it is difficult to immediately come up with an idea for a business, you can approach it from a different angle - first find a client, and then a product that you can sell to him.

Once you figure out who you want to sell to and what pain points they have, the range of products and ways to sell them will naturally narrow.

To decide who you want to sell to and create a unique selling proposition (USP), you first need to draw a portrait of the client - the ideal representative of the target audience. The more specific and detailed this image is, the better you will be able to understand the audience and the more accurately you can set up targeting.

One of the easiest ways to find a client is to look at your lifestyle and interests. Pick one of your own interests and build on that. A favorite hobby or a skill you have are all good options.

2. Production of own product

If you choose this route, you will be the only manufacturer of the product, and control over its distribution will be entirely in your hands. This reduces competition and allows you to set a higher price. When you sell using the standard dropshipping system, your product is made by someone else and there are no such advantages.

3. Agreements on exclusive sales and special prices

If you have the ability to negotiate an exclusive product deal and access to special pricing from a manufacturer or dropshipper, you can sell profitably without having to create your own product. But these deals can be difficult to negotiate, so hundreds of other dropshippers will have access to the same products at wholesale prices.

4. Selling at the lowest price

If you have the ability to set a rock-bottom price for your product, you'll likely grab the lion's share of customers in the market. But there's one problem - this idea is doomed to fail . If the only advantage you can offer is a lower cost, you're entering a price war. And competing in one with Amazon and other established online retail giants is not the best strategy.

5. Increasing the value of the product

Providing valuable information in addition to your products is the best way to stand out from the competition and increase the price of your products. Entrepreneurs aim to solve their potential customers' problems - this rule applies in the world of e-commerce and dropshipping. Offering expert advice and support is the best way to make a business successful.

Add value! Sounds simple enough, but it’s harder said than done. Some products are better suited for this than others. There are a few key features to consider that make it much easier to add value to your offering with educational content.

5.1. Large number of product components

The more components a product requires to function properly, the more likely customers are to look online for solutions. Which is more confusing: buying pet food or a home security system that requires multiple cameras, complex wiring, and a recording device?

The more components a product includes and the greater the variety of components, the greater the opportunity to add value by advising customers on the use and compatibility of components.

5.2. Customizability/Difficulty of Use

Complex-to-use products with customizability also present opportunities to add value through content.

Whether you know how to choose a solar water heater based on your climate or what type of wireless dog collar is best for your yard, offering specific advice on what types of products are best for what conditions is a good way to add value.

5.3. Need for setup or installation

It's easy to offer expert support when selling products that require technical knowledge to set up, install, or assemble.

Let's take a surveillance system as an example. Let's say there's a 50-page detailed installation guide on a website that also describes the most common mistakes buyers make when installing it themselves. If you think it will save you time and stress, you'll likely buy it on that website - even if the same thing is sold for a few dollars less elsewhere. Guides like these are incredibly useful for store owners. Plus, to make extra money with them, you only have to work once, and then no more effort or investment is required.

There are several ways to increase the value of products in complex niches, including:

• By creating a detailed buyer's guide;
• Detailed development of product cards and descriptions;
• By creating installation and configuration instructions (as in the example above);
• By creating an easy-to-use system for understanding component compatibility.

Look for reliable suppliers for cooperation

When starting an online store based on the dropshipping model, focus on finding good dropshipping suppliers. They can help you with determining shipping costs, optimal markup, automation of deliveries, and even market research.

For example, the leading online retail shopping portal Aliexpress has millions of popular and in-demand products. You can use this marketplace to stock your online store - find dropshippers there and order directly or use DSers to find, upload, manage and sell on your Shopify store.

Create your own online store with Shopify today!

You've probably heard the admonition to do what you love . I strongly disagree - it's bad advice that can be confusing for aspiring entrepreneurs.

Especially when it comes to finding in-demand, profitable products to sell. Your love of Star Wars action figures is not a reason to use that niche for your online store. If the goal is a successful startup, you should take a methodical approach and choose a niche with attributes that contribute to success.

Next Chapter: Dropshipping Order Processing: Understanding the Supply Chain