Choosing a Niche and an Industry For Your Dropshipping Business

Before you start reading this article please read What is dropshipping e-commerce business model? & 5 golden rules to dropshipping.

Now you have the basic idea of how dropshipping works and how you need to get started, you can begin to think about how you’re going to build your own business. This all begins with choosing your product and choosing your industry/niche.

The product of course is going to be the item that you intend to sell and this is going to be dictated by the industry or niche that you choose to enter.

An industry or niche of course is the subject matter that you intend to write on and the industry that you want to operate your business in. This is important: this choice is going to impact everything from the price of your products, to the type of person you’ll be selling to, to the type of businesses you’ll be working with.

How to Choose Your Niche

The reason we call it a ‘niche’ when talking about an online business, is that a niche is a particular category. This is  not only your subject matter but also the type of person that is going to be reading your content. It’s very important that you choose this correctly because the niche will affect the size of your potential audience.

When you choose a subject matter, you want it to be one with a ‘niche appeal’. This means that it is aimed at a particular type of person who is specifically interested in that type of thing. An example of a niche might be ‘knitting’.

If you have a blog about knitting and you sell knitting paraphernalia, then only people who are interested in knitting are going to read your blog and buy from you. This way, you have cut out a niche for yourself rather than trying to appeal to everyone and that in turn means you have drastically reduced the amount of competition that you’re facing. Now you don’t need to compete with the biggest companies on the net and you’ll find that paying for things like AdWords advertising is considerably more affordable than it would be for a more general topic. Likewise, getting to the top of Google for relevant keywords like ‘buy knitting gear’ online is going to be far easier than trying to get a general ecommerce keyword like ‘shop online’. The latter would put you against mega-companies like Amazon and pretty much every other online business on the net!

But the problem with choosing a niche topic is that sometimes it can be too narrow, to the point where nobody is interested in buying from you. If your niche is ‘puppies with three legs’, then you’re going to have a very small number of amputee puppy owners who can buy from you. You’ll find it relatively easy to dominate the search engines and to be the number one supplier of products in that area. However, once you’ve sold to all 200 readers… you’ve pretty much reached the limit of what you can sell.

On the other hand, a niche like ‘fitness’ may be considered too broad. ‘Buy fitness clothes online’ is a hugely popular search term that companies like Men’s Health, Under Armor and Bodybuilding.com. Ranking for search terms like ‘how to build muscle’ is even going to be very difficult.

The perfect niche or industry then is one with a broad appeal but that still gives you a unique ‘twist’. This way, you’ll be able to appeal to a lot of people but you’ll also be able to avoid directly competing with the biggest competitors.

This will also give you a better ‘route to market’ – which is a term that describes any direct access you might have to your target audience. An example of a route to market for example would be a forum that is dedicated to the subject matter you’re writing about, or an industry magazine.

With all this in mind, how do you find the perfect niche for you?

There are a few things to consider while selecting the niche…

Your current niche

A lot of people reading this are going to already have a blog or a website. In that case, the best niche is obviously going to be the one that you’re already in. All you need to do then, is simply pick a product that your current readership will enjoy. You should already have their trust, so all that’s left to do is offer them products and explain how and why they can benefit from them.

An area of Interest

This will often align with that last point – but you should always pick a niche that you find personally interesting. This makes a gigantic difference to the quality of the content you put out, to your ability to pick the best products and more.

Remember, as a blog owner, you’re going to be required to write thousands of lines of content on this subject in order to demonstrate your expertise and gain the trust of your visitors. If you don’t know anything about the niche, then this is going to come across in your writing and you’re going to find it a very dull job.

On the other hand, if you have a legitimate love of the niche you’re writing in, then you’ll find it no chore to write all that content and you’ll meanwhile find it much easier to wow your readers with what you know. What’s more, you’ll have a better idea of how to pick a truly great product that will stand out and attract your audience. You’ll have your finger on the pulse!

Niches Where You Have an Upper Hand

Again, this relates directly to the previous two examples in many cases. Suffice to say, that most of us will have contacts and advantages in some niches that give us an edge. Perhaps for example, you happen to know the owner of a very big fitness website, or of a very big fitness magazine. Knowing this person will thereby make it much easier for you to get a cheaper advert, or maybe even an article, inside the magazine. Now you can reach out to that audience directly and hopefully sell more product. Have a long think about your lists of contacts and friends and then consider finding a product that will let you make the most of those advantages!

Niches with a strong value proposition

If you look at affiliate marketing, digital products and internet marketing as a whole, you’ll notice that certain niches stand out as being by far the most popular.

Those are:

  • Fitness
  • Making money
  • Dating

Why are these the most popular niches? On the one hand, it’s because they have the broadest appeal.

But the biggest reason is that they offer the best ‘value proposition’. A value proposition is basically the way in which your business is able to offer value. This is the way that your products can change people’s lives. What is the end result of owning your product?

If you’re selling a hair dryer, then what you’re really selling is convenience and dry hair! If you’re selling clothes, then what you’re really selling is the ability to feel good about yourself, to look sexy and hopefully to thrive in your career and in dating as a result.

This is what sells.

Try and sell a book about cats and you’re really not offering much beyond a few hours of entertainment. But sell a book about making money and you’re selling a dream.

By choosing a product that can really change people’s lives, you are providing much more value –even if the manufacturing costs stay the same. This lets you charge more and make more money as a result! And it basically comes down to the niche.

Combining Niches and Finding Sub-Niches

In order to tick all these boxes, one strategy you can use is to target a sub niche; a niche within a niche.

An example of this is targeting a specific type of person within the fitness niche. How about ‘fitness for the over 50s’? Or ‘dieting for the diabetic’? You could even do ‘strength training for martial artists’. In this latter example, you’ve actually combined two separate niches in order to offer something truly unique and interesting!

How to choose the perfect product

Now you have your niche, the next thing to do is to pick an actual product. From here, you can then find the manufacturer to help you provide that.

The important thing here is that there should always be a clear synergy between your branding, your ethos and your product. That is to say that you should have a real affinity with the product and be selling it as an extension of your mission statement.

What you mustn’t do, is to simply find whatever the first product is that you can sell within your niche. An example might be to create a fitness website, build an audience and then try and sell a really basic protein shake that is already well-known.

Can this work? Sure. But why would people bother to buy from you when there are countless other sites where they can find the same thing? Or when they can even buy it from their local high street? Likewise, if you are selling a product that is obviously not your own and that is so generic then it can actually hurt your trustworthiness. It’s clear you’re trying to make money – which isn’t a bad thing in itself – but you’re not offering any unique value in return. You’re just saying ‘oh yeah, and why not buy this generic product while you’re here?’.

On the other hand, if you can find a product that is somewhat new, somewhat different and that mirrors your personal approach to fitness, to business or to whatever your niche is, then you can sell something that you really believe in and can get excited about. And this is something that will come across and make itself apparent for your visitors too. This is one reason why it can be so great to have a hand in helping designing the product – as with a supplement for example where you get to choose the ingredients.

Similarly, you can make money from selling a product that is a little lesser known and that you find particularly interesting and exciting. The best brands will be the ones that can grow with you: find a company that is doing something new and exciting and express that you’d like to work with them. From there, you can then focus on growing and building your business and this will help you to form a real relationship that’s mutually beneficial and that your customers can appreciate too.

More factors to consider while selecting products

Of course there are many smaller considerations to keep in mind when selling your products. Should you sell a consumable, or should you sell something that will last a long time? Should you sell a product that is very expensive? Or one that is very affordable?

On the chapter on ecommerce and pricing, we’ll discuss this in more detail. But suffice to say that it can make a lot of sense to sell multiple products in future, as that way, you’ll be able to benefit from multiple different types of business model and you’ll be able to draw in a wider range of buyers. Having a range of prices means that you can cater to people with all kinds of budgets and build some loyal customers that might increase their average spend with you over time.

For example, a cheap consumable has the distinct advantage of being something that will keep your visitors coming back. If you sell protein shake for instance, then your buyers will probably want this about once every month. If your provide a reliable service and appealing prices, then this is an excellent way to get repeat business and to have a recurring income – which in turn will be highly convenient by letting you make more concrete plans for your budgeting etc.

Another option is to run a ‘box’ business. These are businesses that sell selections of products on a recurring basis. Someone will subscribe to your business for instance and then you will send them a package containing a set number of products each month. This could be a range of different items, or it could be one thing.

Loot Crate for example, is a business that sends pop culture merchandise to comic book and games fans. Part of the fun of this service is that they never know exactly what they’re going to get, but it will always be something interesting and exciting. Then again, you also get men’s grooming services that send the same selection of consumable razors, shaving foams etc. each month.

This is a different way to create your dropshipping business and one that allows you to add some real extra value and also to promote the products of your partners in an exciting way.

There are many other ways you can add value too – whether it’s providing freebies (like some kind of PDF), offering the best discounts, or somehow upgrading the product you’re offering before it reaches the customer.

Whatever you decide, the big question to ask yourself is: what value are you providing? What are you offering on top of the products themselves? How are you providing value not only for the customers but also for the suppliers? What advantage to they get by coming to you instead of going to Amazon?

What Types of Products Will Sell?

Finally, you of course need to ask yourself what types of products will sell well. And this is particularly important when you first start out and perhaps only have one item to begin with. If you’re going to begin your store with just one item, then it is highly important that this one item be something that will sell well and get your business off to the best start.

And the best way to do this is to pick something that has a very clear function and that is easy to explain. Solve a problem that your visitors have. What is it that people in this niche need? And how can you solve that issue for them? If you can answer this, then you should have no problem selling your first item as long as it is well made and as long as you’re persuasive enough to make it sound amazing.

 

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