Will selling electronics be profitable? Should I work with suppliers from China? How much knowledge should I have about the niche I'm selling? These are questions we frequently ask ourselves before diving into setting up our eCommerce store.
If you have a niche in mind and you are worried about making a sales, then listen to this podcast to know what you, as a seller, should look for before you start.
What's Covered in This Episode:
Three levels of Product Research:
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What's up, everybody? Anton Kraly here from ecommercelifestyle.com, and welcome back to the podcast. In today's episode, we're going to talk about what products you should not dropship. Now, when you're doing research and you're looking to get into eCommerce or build a new store or launch a new product line, there are three different levels of where you want to research to make sure you're choosing the right products. Now, the first level is the niche level. That's the highest one, right? What type of products do you want to sell? After you lock that in, you want to move to the supplier level and make sure that the suppliers you're finding are ones you actually want to work with if you want to make money doing this. Then finally, the deepest level is the product level.
What I'm going to share with you in this podcast is what to look for at all three levels to make sure you're not wasting your time if you decide to build one of these stores and actually build a real business. Now, before we get into it, I should let you know that if this all sounds good to you and you're looking to build your very own highly profitable semi-automated store, you're definitely going to want to go check out dropshipwebinar.com. If you go there, you can get my full free training. It's about two hours long, and I go deep into how we build these businesses for ourselves and how you can too. But with that being said, let's go ahead and get into today's episode. Okay, so let's start at the niche level, which is the highest level of where you'll do your research.
What you want to look for there is, is this niche customer service intensive? What I mean by that is will the niche require a lot of work on your end to basically keep customers happy and make sure all of their questions get answered. Now, an example of a product type that I don't like is electronics and the reason is a lot of times people will go and buy them from you or me. They'll get the thing in their home and then maybe they won't know how to put it together. They won't know how to get the things set up correctly. They won't know what button to press, or whatever it is, and they're not going to reach out to the brands, the brand name that's on it. They're going to reach out to you or me, the person or the company that sold them this thing.
Because of that, there can be a lot of back and forth that can suck up a bunch of time. Now, that could be you if you're running the business as a one man or woman show or that could be a employee or virtual assistant of yours. But regardless, it's someone's time and time is money, so you want to stay away from that. Now, something else you want to look at when it comes to customer service is if you're going super high-end. Now, again, if you follow anything I put out, you know that we do sell expensive products, but that doesn't mean high-end products. I'll just give you an example. Let's say you were selling sofas. Well, you could sell sofas that are $1,000, $1,500 $2,000 and those would appeal to the upper middle class, which is a great demographic to target.
On the other hand, you can go super custom, $10,000 fully custom sofa made to your specs, made to your choice of leather, made to your choice of the legs that are on the thing and the exact measurement. If you're going to do that, you can make a ton of money per order, but just know it's going to be a much more customer service intensive business and you're going to be more likely to have people on the phone. You're going to have a lot more questions. You're going to have a lot more post-purchase interaction. It's something that can be a huge suck on time, so make sure you keep that in mind. If you're looking for a true lifestyle business that's as hands-off as possible, do not dropship those products. Now, the next thing that you should look for at the niche level is, is there a high return rate?
Because returns can cost you money. Even if it's no out-of-pocket money, you still had to do the work to get the sale, to ship it to the customer, and then only to take that back. It's just a waste of time, waste of money. How do you know if a niche has a high return rate? Well, a couple main things to look for. One is, is the item really what I would call personal? Some items that fall into the category of personal would be things like mattresses, things like bedsheets, even things like apparel. These are things that people do buy online, but they have very high return rates. The reason is because they're very personal. You could see a photo online of a mattress or a new set of a high thread count bed sheet. But then when the person gets it to their home, they actually see it and they touch it.
Well, guess what? If it's not what they had in their head when they saw the image on your website, then they're going to want to return the thing. Now, something else you want to look for at the niche level is, do these items damage frequently while in transit? That's just another headache, right? It's more customer service. It's more back and forth. It's more money going out instead of in. Some ways you can figure this out on your own is by doing research and just going online and looking at reviews from people that are already selling the things that you want to sell. If you notice a common thread of complaints because of damages, then you know, you know what?
Maybe I want to stay from this product type because it seems like nobody can ship these things correctly and why waste your time just getting into a business where it's going to be more problematic than it will be beneficial. Another thing you want to look at on the niche level is, is it something that really requires a lot of assembly, what I would call heavy assembly, because that can lead to a high return rates also, especially if you don't make it clear enough on your store. I'll just give you an example. Let's say you're selling greenhouses and there and they're these big 10 by 12 domes that people can set up in their backyard. Again, people see it on your website. Oh, this thing looks great. This is what I want. They buy it.
Two weeks later they get a delivery to their home of a bunch of pieces of wood and maybe some vinyl and they're like, what is this? How do I put this thing together? Right? Things like that, again, there are ways to sell them right. But just know that if you're looking for a business that's more hands-off, then you should not dropship products that require heavy assembly. Once you have that worked out and you really pick your niche, then you want to start looking into different suppliers within that niche. When I say suppliers, I mean the different brands that you'll be selling for. Again, if you want to see how to find them, go to dropshipwebinar.com.
But the things you want to be looking at when you're diving in to the supplier research, first off is does supplier ABC offer quality products? The way you're going to find this out is all of the different brands and suppliers that you think you want to sell for, you're going to go on Google, you're going to search those brand names, and you're going to try to find honest reviews of them. Maybe these reviews will be on different marketplace types websites. Maybe there'll be on your future competitors websites, but you want to see what people are saying because guess what? You want to sell these products. People are already selling them. Let's see what the customers have to say.
Again, is there a common thread that for supplier ABC the reviews say, "I thought this was going to be higher quality. I thought that it was made out of X and it's really made out of Y," whatever it is. If you could find commonalities amongst suppliers on their reviews that show that the products aren't exactly what they are represented to be, then you do not want to dropship those products because all you'll be doing is inheriting those products that your future competitors already have. Make sure you put your time in when you are doing your supplier research. Now, the next thing you want to look for at the supplier level is does the supplier offer a MAP policy?
Now, MAP stands for minimum advertised price and what this means is if I get approved to sell for supplier ABC and you get approved to sell for supplier ABC and the minimum advertised price, MAP, for a specific product is $1,000, that means I sell it for $1,000, you sell it for $1,000, and we're not competing on price. Now, I'll just say there are some ways to make money with non-MAP suppliers, but when you're just starting, I don't want you to get approved with a whole bunch of suppliers that do not have MAP policies because then you're going to be competing mostly on price. As we all know, that's a race to the bottom. That is not where you want to be.
Finally, the third thing that you want to look for when looking and evaluating at the supplier level is, does the supplier charge an application fee? I am not a fan of application fees. In my opinion, any suppliers that want to charge you to get approved with them are nothing more than middlemen and they make their money through these fees. Any legitimate brand that you'll get approved to sell for will not have an application fee. They're going to approve you based on the belief that you will bring in sales for their brand and that will benefit both parties mutually. Make sure if you see application fees, you don't pay them and you move on to the next supplier. Do not dropship products from suppliers or middlemen that charge application fees. Okay, so now let's get into the product level.
We'll keep this one brief because if you did your niche research right and you did your supplier research right, then when you're looking at products, there's only one main thing that you really should focus on and that is, is the price expensive enough that you can offer free shipping and be able to cover it profitably? Now, I've covered how to figure this out in a previous episode, so I will link to that one. But what I mean here is if you want it to sell, we'll go with the sofa example again, and you found a supplier that has 500 sofas and you got approved to sell their 500 sofas. Well, maybe they have 400 of them that you can do great with, but maybe 100 of them cost under $500 and maybe the shipping on those products is $150.
Well, if you're offering free shipping, like you should and like basically every eCommerce store does, you're not going to be able to sell that 20% of sofas, that 100 products and be able to do it profitably. Because if you do, if you get sales and you offer free shipping, by the time you pay for the cost of goods and the shipping and your ad costs, there's going to be no money left. Now, that does not mean to drop those suppliers and not work with them. It just means make sure when you're uploading products to your store, you're uploading the ones that are expensive enough that have that margin built in where you can offer free shipping and still be profitable. Again, I've done another episode on that and how to figure it out. I will link to that in the podcast notes.
But as always, guys, if you got value from this one, please do go over onto Apple Podcast and leave a review. It means a lot. If you're brand new here, you want to know how to get started the right way, go to dropshipwebinar.com. Get my free training and I will see over there. Thank you.