Dropshipping: 7 Product selection criteria you must not miss
You may be jeopardizing your chances of success by overlooking these crucial factors
So you’ve decided you’ll start a dropshipping business. Now, the next question looms: What will you sell?
To give yourself the best chance of success, product selection is one of the first and most important things you need to pay attention to.
Yes, some of these criteria I’ll be sharing may seem to contradict each other. But the world is not black-and-white. It’s your job as a business owner to find those elusive products that deliver reasonable trade-offs to achieve your objectives.
The next time you’re scrolling through ads and catalogs to find potential products for your dropshipping store, ask yourself if the product fulfills these:
#1 The product solves a problem
Problem-solving products are, in general, much easier to sell than non-problem-solving products. This is especially important because as a new e-commerce startup, your store is most likely an unknown entity to the potential buyers. While there are certainly success stories out there, vanity products like clothes, decorations, and jewelry are less likely to spur customers to buy from unknown stores.
Compare this with a problem-solving product: Let’s say you’ve been experiencing daily backaches due to slouching and poor posture. Then one day, you come across an ad for a posture corrector that promises to take away all that pain for $25. Aren’t you more likely to take action?
With a problem-solving product, it’s much easier to produce ads and copies that clearly identify and agitate your buyer persona’s pain points and work them up to click that Buy Now button.
Choosing products that solve problems is all the more important now, amidst massive lay-offs and the tanking economy due to the pandemic. People are more likely to be frugal and less likely to be spending money on nice-to-haves.
#2 The product is hard to find in stores
We’re surrounded by problem-solving products in our daily lives. But obviously, not any problem-solving product can make the cut. You must also make sure that your product is not something customers see all the time at physical stores they frequent — the likes of Target and Walmart.
If your customers can find the same item at Target, most likely at half the price you’re selling them — and even get the item immediately — why should they buy it through an unknown ad they saw while scrolling through their Facebook feed?
Even worse, comments proclaiming “I got this for $1 at Walmart!” on your ads will not do your ROAS any favor.
#3 There are more than one supplier
While we want products that are hard to find, we don’t want those that are unique to only one supplier. Maybe the product you have chosen to sell is designed and owned by one company, or you chose an unusual variant of the product that is only made by that supplier. Or maybe there are other suppliers, just that they require an impractical minimum order quantity (MOQ) of 1,000 pieces.
This is a huge risk when it comes to order fulfillment.
After all that hard work setting up your website, getting your copy perfect, and finally getting sales after dumping all that money into ads, you don’t want to fall face-first when it comes to fulfilling the order. But if there is only one viable supplier — even if they performed flawlessly when you made a sample order — and that supplier screws up (natural disaster, internal politics, inability to cope with large quantities, you name it), then that’s what will happen to you.
The consequences of order fulfillment disasters like this go beyond lost ad spend, refunds, and chargeback fees. It can jeopardize the viability of your business by getting you in trouble with payment processors and advertising channels like Facebook.
#4 The product is relatively small and not too heavy
This will save you shipping costs, which is usually charged according to volumetric weight. So, not only does the weight of the product matter, the dimensions are important, too
With online shopping being the norm, and with customers pampered by fast and free shipping through Amazon Prime and the likes, one of the fundamental must-haves to nudge your site visitors into becoming customers is free shipping. It can be free only above a certain amount (say $50), but it’s hard to escape free shipping of some form — or at least very affordable shipping.
#5 The product is not fragile
This one is a no-brainer, but sometimes, in excitement (or desperation), entrepreneurs may overlook this important factor. If you need some convincing, these are a few reasons why you should not choose a fragile item:
- Lower conversion rate: Customers may be less likely to risk ordering online, through an unknown brand, for fear of getting a damaged item and not getting a replacement or refund.
- You may get unhappy customers: Sure, you can screen your suppliers and make sure that they have great reviews. But ultimately, the truth is that the supplier’s actions (such as properly packing the fragile items) are out of your control. Imagine opening a package you’ve been looking forward to for over 2 weeks, only to find them broken. When Facebook asks you about your purchase experience, how will you rate the seller?
- Lower profits: You may end up sacrificing profits for service recovery or damage control. Think about what shipping replacements, giving discounts, and issuing partial or total refunds will do to your bottom line.
#6 The product can be advertised easily
Unless you already have a ready audience that trusts you — may be a loyal following on Instagram, an active and close-knit Facebook group, or a popular blog — you will most likely acquire almost all your traffic through paid advertising.
Facebook (and Instagram) is one of the most popular advertising platforms for new dropshipping businesses. To stay on the platform and continue getting sales from there, you need to play by the book, or risk getting banned permanently.
One of the most basic rules you need to know is what you can and can’t advertise. Some examples of prohibited content are drugs and drug-related products, tobacco and related products, and adult products and services. So, while you might think adult toys are a good product to dropship in this time of social distancing, you’ll need to find other ways of advertising them.
Of course, other advertising platforms like Google, Youtube, and Snapchat also have their own set of rules that you need to scrutinize and understand.
#7 You can mark it up 3x-5x without looking ridiculous
It’s true that the beauty of dropshipping is not having to invest a large amount upfront in keeping an inventory. But that doesn’t mean that costs are that low. Many new dropshipping business owners underestimate the cost components of the business.
Cold traffic from paid advertising costs money — often more than you think. Unless you’re extremely lucky, you’ll spend some time (and advertising budget) testing your creatives, copy, and targeting, before a steady stream of quality traffic starts flowing into your store and making you money.
Free shipping, discounts, and potential refunds are also costs that need to be baked into your pricing.
To counter these costs, you should look for products that are cheap to procure, but looks (or, at least, can be marketed to look) valuable and expensive. This goes back to my first 2 points. If it solves a big problem and can’t be found in stores easily, people are more likely to buy it from you even though it’s a little expensive.
Select your products wisely before pumping in money
Having just committed to starting your business, you may feel an overwhelming rush to start setting up your website and channeling traffic to your store. Although speed and agility are important, remember that successful business owners spend a lot of effort on strategy and planning before executing their vision.
If you jump to the execution phase without giving product selection the attention it deserves, you risk throwing away your time and hard-earned money into the abyss of paid ads without getting the returns you want.
I hope this list of product selection criteria gives you a systematic checklist and inspires you to think through your product choices carefully.
