Wholesale Drop Shipping: Choosing the Products to Drop Ship

by Marcin Rotter on 09-08-2015 in Australian Wholesale Sourcing Guides

Wholesale Drop Shipping: Choosing the Products to Drop Ship

One of the biggest hurdles that most wholesale drop shippers face is choosing the products and the niche to focus on. It is understandable considering that it is probably the biggest decision that you will make and has long term impact on the success or failure of your wholesale drop shipping business.

The most common mistake that most wholesaler drop shippers make is choosing products based on the personal preferences or passion. It is an acceptable strategy if being interested in the products you deal in is your primary objective—and not necessary your business success. However, it is not a good move if you aim at building a profitable wholesaling business. For a successful wholesale drop shipping business, you need to set your personal opinions or passions aside when doing your product research, or at least follow the following criteria:

Perfect Price

Ensure that you consider the price point (of the products you plan to deal in) relative to the level of pre-sale service that you will need to provide. Most customers feel comfortable placing a $100 order online without the need to chat or inquire more about the products that they are ordering. But what about a $2000 item that they are not familiar with? It is highly likely that most of them would want to chat directly with your sales representative before placing an order to ensure that the products are good and to confirm if your store is legitimate.

Accordingly, if you plan to focus on high-value items, it is pertinent to ensure that you are able to offer personalised phone support. Again, you need to ensure that the product margins are rich enough to justify your pre-sale support that you will need for the items. In most cases, $50-$200 price range is a lucrative spot to maximise revenue without the need to provide extensive pre-sale support. 

Marketing Potential

The best time to think about how you will market any business entity is before you launch it, and not a few months when you realise that attracting customers is a nightmare. Try to brainstorm on some of the probable ways that you can use to market your store, for instance, reaching out to online communities that use the products you are planning to deal in, writing articles, and giving away products. If not, you may want to reconsider your decision. 

MAP Pricing

Some manufacturers often set what’s known as a Minimum Advertised Price (MAP) for their products, and require that resellers price their products at or above certain price levels. This kind of pricing floor prevents price wars that often break out, especially for items that are considerably easy to drop ship—and often go a long way in ensuring that merchants make reasonable profit by dealing on the manufacture’s products. 

If you can find a product or niche where manufacturers care to enforce MAP pricing, it can be a huge benefit, especially if you plan to build a high value and information-packed website. When the prices are the same across your competitors, you can afford to complete on the strength of your website without the need to worry about losing business to unscrupulous and cheap competition. 

On the same vein, don’t go for products that will require you to offer the lowest prices to beat your competitors. This is because there are high chances that your business will slump. If the only thing of value that you will offer on the products is low price, you will find yourself in tough price wars that will virtually strip all your profits. Generally, trying to compete with established online giants such as Amason is a poor wholesale drop shipping strategy. 

Products with Lots of Accessories

As a general retail rule, margins on lower priced accessories are higher than those of high-priced products. Consider a product like cell phones. While you may make a 5 percent margin on the latest Smartphone, you will almost certainly make a 100-200 percent on the cases or some accessories that goes with them. 

Again, customers tend to be much more sensitive about the price on big-ticket products and care less about the prices of other small accessories. To use the previous example of cell phones, customers are likely to shop around for the best price on an expensive phone. But are they going to call around to find a good deal on a $20-$40 case? Probably not. They will likely purchase from the same store they’d bought the phone. 

Products That Are Hard To Find Locally

Generally, dealing in a product that’s hard to find locally will significantly increase your chances of success provided you don’t get too specific. Customers in need of a garden sprinkler or rake would simply head to a local hardware store. But where would they buy falcon training equipment or a medieval knight’s costume? They would probably go straight to Google and start searching. 

Smaller Is Better

Depending on the competition around you, sometimes free shipping may be expected in some products. In such cases, it can be challenge to sell large and bulky equipment that are significantly expensive to ship. The smaller the products, therefore, the easier they will be to ship cheaply to your clients. 

Low Turnover

By now, probably you are already convinced that investing in information-rich and high quality website will pay big dividends. However, if the products you deal in keep changing every year, maintain the site is going to be daunting. Accordingly, try to find products or niche that isn’t frequently updated with new models. That way, the time, money and other resources that you invest in your wholesale drop shipping business will not be wasted. 

Picking the right products and niche to focus in isn’t always an easy feat and requires you to consider unprecedented number of option. However, with a good research on a few market parameters, you will have a good idea of the type of products that you can be wholesale shipped easily and profitably. 



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