When you start a dropshipping business, you have to figure out who your customers are and what you’re going to sell them. The best way to do this is to choose a niche—a focus—for your dropshipping store.
Choosing a niche is one of the hardest parts of the dropshipping business model, but this article walks you through exactly how to do it.
Table of Contents
What Makes a Good Dropshipping Niche?
Whether a niche is “good” is subjective. There aren’t objectively good or bad niches. What makes them good or bad is often in implementation. Having said that, there are characteristics that make certain niches better than others.
Passion. The best niches are the ones people are passionate about. Niches related to where people spend their free time and enjoy discussing are prime for dropshipping. When you’re selling to a group of passionate people, it’s often helpful to be passionate and knowledgeable about the subject yourself, but it’s not a requirement.
Money. Are people willing (and excited) to spend money on items in this niche? If not, it’ll be an uphill battle all the way if you start a store in that niche. This one seems obvious, but it’s easy to accidentally choose a niche people are passionate about but not eager to spend money. Make sure your chosen niche has both.
Competition. With a niche, competition is a balancing act. You’ll want to look for other stores having success in the space already. If there’s NO ONE having success, then there’s probably a reason why. But you don’t want a completely saturated market with dozens of big sellers and hundreds of small ones.
These are the high-level requirements for a profitable dropshipping niche. We’ll drill down more into each of these, and more factors, below.
Brainstorm Possible Niches
Everybody loves brainstorming, right? Well that’s the next step in choosing a niche.
Write down all the possible niche ideas you can think of. Put them in a spreadsheet, word doc, or even on old-school paper.
If you want some inspiration, download the giant list of niche ideas.
Questions to ask yourself to help come up with niche ideas:
- What are you passionate about?
- What do you know a lot about?
- What do you spend your discretionary income on?
- What do you buy online the most?
- Do you collect anything?
- Where do you spend your time online? (Check your Facebook likes/groups, Instagram feed, and browser history for ideas.)
Take your big list and do the following:
- Cross out or delete any that sound horrible, based on your gut
- Order them based on which ones are your favorites, top to bottom
- Put them in the niche worksheet and move onto the next step
Research Each Potential Niche
Once you have a list of possible niches, it’s time to dive into research.
To start, put each possible niche in a line in the niche worksheet.
Next, go through each niche and conduct research on the following platforms:
- Amazon
- eBay
- Google Trends
- Google Search
As you’re researching, make notes in the niche worksheet and save them for later. Go through each of your niche options, removing any “bad” ones as you go.
Researching on Amazon
A lot of dropshippers scale to sell on Amazon once they find winning products. It’s also one the largest ecommerce platform in the world. So it’s an absolute must for conducting niche research.
Go to Amazon’s category listing and find the category or categories closest to each niche.
Click into the relevant categories and look for what’s being sold, who’s selling it, and how competitive the prices are.
Researching on eBay
eBay is a go-to hub for dropshippers. Many products sold on eBay are actually dropshipped, so it’s an important place to research your potential niches.
eBay’s category listing is much more granular than Amazon’s, so you can get a lot of great information on potential competitors and products.
Researching on Google Trends
Google trends is an amazing research tool in many situations. And it’s a must-use tool for dropshipping niche research. Google trends compiles data about what users are searching over time so you can see, as the name implies, trends.
The trend line can tell you a lot about the niche. Note that the numbers on the left are Google’s ratings, from 0 – 100, not the actual volume of traffic. That actually makes it great for relative comparisons.
For example, this trend line shows an evergreen topic that people are searching for consistently.
In contracts, the following chart shows an example of a seasonal trend. A niche with this type of trend line will get most of its sales during a few months of the year, which isn’t recommended for those just starting out.
You’ll want to choose a niche that’s evergreen, aka searched year-round, and has a strong Google trends rating.
Researching on Google Search
A few Google searches of your niche can lead to a lot of information about whether it’s a good choice or not. When you search for topics related to your niche, you’ll learn about possible competitors, potential products, and even eventual partners who have a strong presence in the niche.
For example, if we look for “weightlifting equipment” as an example niche (this is a pretty broad niche, but we’re just using for illustration purposes).
We can see there are several ads, strong big-name players in the organic results, and a LOT of Google Shopping results. And we can see there are 8,100 monthly searches and a fairly low ($1.42) cost per click on ads. Plus, the shopping ads aren’t well-optimized, so there’s room to overtake those placements with some quick work.
P.S., the app that pulls in the keyword information is Keywords Everywhere.
Evaluate Niches for Dropshipping
After you research your niche ideas, you’ll have a better idea of the landscape of each one, The next step is to evaluate them through the lens of the dropshipping business model. Eventually you can expand to other revenue streams, but if dropshipping is your core, evaluate your niche based on potential success there.
Download the niche decision matrix.
Evaluation involves thinking about the niche options from a variety of points of view, including how much competition there is, how passionate you are about the topic, what products are available, and more.
Your Passion Level
Are you passionate and/or knowledgeable about the niche? Starting your first dropshipping store around a familiar topic makes it easier and more enjoyable, but isn’t necessarily a requirement.
In the niche decision matrix, rate your passion for each niche from 1 to 5, with 1 being not passionate and 5 being extremely passionate.
Customers’ Passion Level
Akin to your passion level is the passion level of your potential customers. A passionate buyer pool makes dropshipping much more likely to be a success.
In the niche decision matrix, rate your estimate for customer passion for each niche from 1 to 5, with 1 being not passionate and 5 being extremely passionate. This will be a guess based on your previously conducted research.
Competition
Are there a lot of other players in the niche? Competition is a good thing to a point—it means there’s opportunity and a potential market.
In the niche decision matrix, rate the competition level for each niche from 1 to 5, with 1 being no competition and 5 being overloaded with competition. This will be based on your previously conducted research.
Do Customers Spend Money?
You’ll want a niche rich with money and customers willing to spend it. In the niche decision matrix, rate the customer spend for each niche from 1 to 5, with 1 being very little spend and 5 being spend a ton of money. This will be based on your previously conducted research.
You can find additional information on this, at least for large niches, for searching for something along the lines of “Consumer spend on <niche> each year.”
Seasonal Vs. Evergreen
Use your Google Trends research (and your common sense) to decide if the niche is seasonal or evergreen. In the niche decision matrix, put 1 for season niches and 2 for evergreen niches.
Product Availability
When you’re starting a dropshipping store, you need to make sure there are products available in your niche from dropshipping suppliers. If you find that there are a lot of products for sale in your previous research, there are likely dropshipping suppliers behind some of them.
Another way to find out is by searching AliExpress and dropshipping marketplaces.
In the niche decision matrix, rate the product availability for each niche from 1 to 5, with 1 being very few products and 5 being many available products.
Rate Your Niche Options
If you’re using the niche worksheet, you’ll see a total number for each niche you rank in there. The higher the number, the better the niche for you.
If there’s a clear winner, congrats! There’s your niche.
If there are several at the top, that’s OK.
When In Doubt, Just Pick
There’s no such thing as a perfect niche. Sure, there are better niches than others, but it’s so dependent on you and your interests.
If you’re like me, you might have a list of 3 or 4 different niches you want to try and you can’t decide among them. If that’s the case, either go with your gut or go with what the niche worksheet tells you.
Regardless, just pick one. Pick one and start. You can expand to other niche stores once your first one is mastered. But start with one. You can’t make sales until your store is up, after all. You can adjust and refine your niche along the way as you learn more.