The Seven Criteria for Successful Drop Shipping Product Selection

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Much like almost any venture you attempt online, niche or product selection is vitally important. Select a too difficult niche and you will give up before you see any rewards. Select a product that has extremely low margin and you’ll end up selling at a loss to move inventory, or working way too hard earning your keep.

One important factor to consider, and one mistake I made on my first store was to consider if the product is seasonal or not. Meaning, do sales spike at a certain time of year or during certain months, and then dry out during others. An example of this might be snow blowers, football cleats, gardening tools, etc. My example was a piece of baseball equipment. I started my store in August of 2011. Sales were very few and slow, and that continued through the winter months. It did occur to me that few people would be searching for baseball equipment during the winter, but it still made me wonder if my SEO efforts were failing or if I hadn’t done something right. Then spring time rolled around and things picked up. I began to see a steady increase in sales at that time. It was a relief and confirmation that in order to maintain a steady income throughout the year, if I was going to stick solely with the drop shipping model, I would have to diversify and sell either non-seasonal products, or other products that would pick up the sales during the slow parts of the year when baseball equipment wasn’t a high selling niche.

Some critical criteria I use when selecting a product to sale:

  • Seasonality – don’t select a product that is extremely seasonal. For example, Christmas decorations would be an extremely seasonal niche to enter and would not profit very much (if at all) from January through October.
  • Local availability – choose a product that cannot be purchased at a local department or specialty store. I use the Walmart/Bestbuy/Bass Pro Shops test. If it can be purchased from one of those stores, I will not sell it. You want your customers to have to go online to find the product they are looking for. And when they go online you want them to find your website first. If it’s something that can be bought at a local store, more than likely the consumer will buy it there out of the sheer matter of convenience.
  • Price. Actually, more profit-per-sale driven. To make the venture worth my while I only choose products that have a profit margin of around $100 per sale. It is OK to deviate a little from this number obviously if you have a good niche you think you can dominate. But if you sell products with profits much less than this then the trouble of handling customer orders and customer service will quickly add up and it will end up being more of a nuisance to handle all that work for very little profit margin.

So those are the three criteria I use when selecting a product to sell. Remember, this is drop shipping. So you will not be creating a product or warehousing any inventory. All of the inventory and shipping will be handled by the manufacturer. You merely need to select a good profitable niche and create the sales outlet for it.

Here are some other important, although less critical, factors to consider:

  • Customer service – I touched on this earlier. Don’t select a product that is going to require a lot of hand’s on customer service. You can’t totally eliminate it. You will always at least have to receive the order from the customer and then place it with the manufacturer. But try not to get into a niche that has a reputation for a lot of returns or customer handling.
  • Technology products – Try to avoid products that are highly technical and will be prone to defective components or compatibility issues.
  • Shipability – This is a new word, I know. Select a product that is a) not extremely heavy, and b) not fragile and prone to shipping damage.
  • Product demand – Chances are if someone else is selling a product, then there is a market for it. Just be cautious not to select such an obscure product that only a couple people will be shopping for it.

Follow these few criteria and you’ll be almost guaranteed to find a good product to sell. Drop shipping is one of the few business models in the IM category that is actually a legitimate business plan. It is also the one that will draw the least amount of criticism when explaining it to your friends or relatives.

Now take this list and get started searching for a product to build your site around.

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