Are you looking for products to drop ship? Should be quite straightforward. Just find a few vendors that offer drop shipping, copy their products to your shop and you’re ready to go, right?
Well think again!
If you want your drop shipping business to succeed, there are a few things you need to consider. One of the most important is of course which products to sell!
Thousands of people fail their business launch because they don’t get this part right. Choosing the wrong product can have catastrophic effects on your profitability, margins and brand identity.
Finding the right product can be tricky. Here are 7 easy steps to identify great products that will help you kick-start your drop shipping career.
1. Define your brand identity and target market
Before you even consider which products to sell, take a huge step back. What does your brand want to project? Are you a freedom brand? Perhaps you are classy?
Here are some great tips on how to define your brand identity.
Once you’ve done this, find out who’s heart your brand will touch. These people are your target market.
Eliminate any product that doesn’t match your brand identity or your target market.
2. Make sure there’s demand for the type of product you want to sell
Sure, a drop shipping business doesn’t have fixed costs. That’s fantastic. But don’t forget that if there’s no demand for your product, there’s no income either!
Even worse, you can find yourself losing tremendous amounts of money on paid advertising for products that nobody wants to buy.
Perform a market research to examine if your target market wants this product. There are many ways of doing this. Google’s Keyword Planner can be an indicator for example. If nobody is searching for your product on Google, chances are there’s not so much demand for it either.
Some products can be easy to create demand for. RC Drones, for instance. It created a huge stir out of nowhere in the last couple of years.
People might want to buy them on impulse just because they they are so awesome.
A cheap and easy way to find out if there’s demand is to simply ask people from your target market if they would buy your products.
Once you have identified a product range you think will succeed on the market, you can move on and find reliable vendors.
3. Identify reliable vendors
So they’ve got great margins? Well that’s not enough.
Finding the right vendor is so much more than choosing the one with the most attractive price list.
Before you start working with the first vendor you happen to find, dig deep and find the right vendor. You don´t want to miss this step and see all your effort crash in front of your face.
Make sure the vendor is likely to keep his promises. How familiar are they with drop shipping? Are the products they carry in line with your brand identity?
Try to find if anyone has had any issues with this vendor in the past.
Remember that if your vendor doesn´t deliver, you don´t deliver.
4. Find quality products that are profitable
Once you’ve made a list of reliable vendors, you can move on and select among the products they offer.
Don’t try to compete with price. It’s extremely difficult with this business model. I know it can seem like a good idea to offer products at a low price and gain on volume. But in drop shipping, this type of thinking can easily turn out to be flawed.
If you can start a drop shipping business and offer your products at the lowest possible price, why can’t someone else do the same?
Think about it.
In the end, this way of doing business will lead to price wars with zero profit. You’ll have to go back to the office and work for your old boss.
Look for quality products with recommended retail prices and attractive margins instead. It’s much better if the vendor protects the market for his brand by not allowing price wars among retailers.
Margins can range from five percent to several hundred. You’ll want products that have a margin of at least 20% after everything has been accounted for. This will permit you to turn your business into that monstrous money making machine you are hoping for.
5. Make sure your profit doesn’t get slashed by shipping rates
Fantastic products can be ruled out just because they are difficult to ship.
The most important factor you need to consider regarding shipping is, where your target audience is located in relation to where your products are sourced from.
Are you targeting a worldwide audience or are you going local?
If your target market is far away from your vendor, you’ll want to sell products that can be shipped inexpensively. Examples of this are clothes, electronics, candles and other small items. Sometimes it can be profitable to offer bigger products like furniture if the vendor can ship them in flat packages.
Make sure to eliminate any product that isn’t easy to ship to your customers.
6. International taxes & customs can kill everything
Again, are you shipping Worldwide or local? Remember that when it comes to international sales, the buyer will be considered an importer.
Your products will need to pass through local customs and border protection and they will be taxed. Can your product pass this filter without losing your margin?
Make sure it’s legal for your consumer to import the product to the country you are targeting. You wouldn’t want to drop ship French cheese to USA for example.
You’ll want to work with a shipping company that can take care of customs and local taxes for you. It’s absolutely crucial if you want your shipping processes to be successfully automated. If you don’t, say goodbye scalability.
7. Only sell products that allow you to scale up your business
You don’t want to call your vendor’s office and wait five minutes talking to Grandma Johnsson before you’re finally passed on to her grandson Fritz and can place your order.
Neither do you want the product to run out with your vendor as soon as your business is growing.
Make sure your vendors are going to be able to follow your remarkable growth journey by having systems that can be integrated with each other.
In the end, choosing the right product can be a deal breaker if you want to make your business dream come true.
The way I see it, it all comes down to having a selected few great products rather than a long list of mediocre ones.
If you complete all the seven steps above, you shouldn’t be too far from achieving this.
If you want to succeed in this business, you are going to have to automate everything. You’ll need a drop shipping software that takes care of the nitty gritty details, such as inventory management, placing orders with your vendors, shipping to your customers etc. If you don’t have dropshipping software yet you can try Jetti for free.