By: Andres Zamriver
Whether you’re planning on starting a drop shipping business, or you’ve already made the necessary preparations to launch one, the most important knowledge that you have to equip yourself and your business with is the ability to spot opportunities. The reality is, some markets will be worth servicing more than others.
As enticing as “I want everybody to be my market” sounds, it’s not ideal. You’ll be able to spare substantial money from advertising if you’re able to identify the right niches, instead of blindly going after anyone with a heartbeat.
A niche is a specific section of your target market that has specific needs. Going after a niche is easier than trying to supply for a broad market, since niches have more in common, including their preferences, needs, buying capacity, demographic profile, and more. Niche selection should be the first of your priorities when it comes to establishing a drop shipping business.
It precedes other steps in the process because your chosen market will help determine what your evergreen products should be, as well as the kinds of niche-specific merchandise you can offer. Marketing and publicity becomes easier, the moment you’ve selected a niche you want to specialize in serving. Knowing the customers you want to provide your service to will help you with market research and will allow you to analyze the current opportunities and threats in the external environment.
Who are your competitors, how are they serving their customers, and how will you be able to serve these customers better? These are only some of the many questions niche selection will be able to give resolution to, once it’s been determined.
Niche Selection Crash Course
We know the prospect of selecting your market can potentially be overwhelming. After all, making the wrong choices in deciding the clientele you want to serve can make or break your business. We have come up with a guideline on how to determine the market that fits you. Many think that reducing their target market to a niche is not the way to run a drop shipping business. This isn’t actually quite accurate! The truth is, the more focused your choice of clientele is, the better you will be at providing solutions and outstanding customer service for them.
1. Research and Ideation
You’ll have to start somewhere and the best source for your market choice is...you guessed it right! Yourself and the people around you. Gather a list of your preferences--products that you opt to find on the internet rather than looking for in brick-and-mortar establishments. If you’re into keeping yourself healthy and muscled, you can turn to the internet for an index on bestselling fitness products.Study the niche using Google’s Search Volume.
Using this tool will allow you to see trends and how many people have researched a particular related keyword over a period of time. You can also take a look at big eCommerce companies’ most profitable items and start conducting market research from there on. Looking at the feedback section of Amazon will be as good as conducting focused group discussions, except you’ll piece together the profile of your market with a quarter of the expense.
Pick out the most common remarks you can find, and use these to draft a persona of what your prospects will look like. What are factors that you should consider when choosing a niche to serve? A few of these include market opportunity or the liberty you can take advantage of if you go after a certain market. There’s also your capacity to provide versus the size of your audience.
There’s nothing better than finding a niche with so much profit potential only to realize you won’t be able to cater to their needs. Keep in mind as well that just because a particular product is selling and has high demand, doesn’t immediately mean you should go after that specific market. You have to check whether the existing niche is oversaturated with competitors--at which point you should be alerted with the possible challenges this will bring.
These competing brands are a threat because they enjoy the leverage of establishing goodwill and having repeat customers because they were able to provide for the demands first. Go for a market that receives an ample lack in servicing, but with a considerable demand and start establishing your drop shipping business for them.
2. Identifying and Selecting Demand
By the time your research process is done, you should have a clear picture of who your market is. You understand that you chose this niche because they have distinct needs and wants that you can provide. However, your niche won’t have just one problem they require solutions to. Not all needs are created equal, so in this step, you’re going to have to pick out a need that you foresee your market will be willing to spend money on.
Be aware that there are products that have high demand, but consumers are hesitant on buying online. For instance, clothing is a relatively enormous and profitable niche to handle, but analytics tell us that a good 30% of the total demand population are still wary of transacting online because they want to make sure they come across the right fabric, size, and fit.
Same goes for TV buyers who worry about the authenticity and features of their visual box. You have to fully understand what your prospects are after before you are able to provide resolution to their problems.
Once you have selected your market and decided which needs are going to be profitable once gratified, it’s time for you to validate all your research with testing. This step doesn’t have to be costly. In fact, a successful testing can be done for reasonable charges, and still generate the facts you need. Find a way to lead testing activities to your site--this can be the first of your branding initiatives. Send out email newsletters to your niche, offer them free samples, perform case studies, and see how many of them will respond back to your initial introduction methods.
Go for it, Champ!
You may think that running a business is a huge gamble, and for the unequipped and unprepared, that may be the case. Of course, there will be factors in the external environment that can potentially affect how your dropshipping business runs and will simply be out of your control, but when you’re geared up to take on the online marketplace, the uncertain gamble becomes a calculated risk--one that gives you countless opportunities to be financially afloat.
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