Amazon dropshipping is a great way to make money online by selling products on Amazon. But how do we know which products to sell? Choosing the right dropshipping product from millions can be tricky and time-consuming. Therefore, a smart research strategy for a dropshipping business is essential for success.
In this article, we will cover the key steps for finding the best products for our Amazon dropshipping business.
How Does Amazon Dropshipping Work?
Amazon dropshipping is a business model where an online retailer doesn’t maintain any inventory. Instead, the seller lists the item on Amazon, and when a customer orders the item, the seller passes the order and shipping information to the third-party vendor or wholesaler. The supplier or wholesaler then ships the item directly to the customer. This allows the retailer to offer a wider selection of products without maintaining and storing inventory.
Amazon dropshipping is a popular choice for entrepreneurs looking to start their own online businesses, as it doesn’t require a large upfront investment and is relatively low risk. All of the dropshipper’s profits come from the difference between the amount they charge their customers and the cost of purchasing items from the suppliers.
Amazon Dropshipping Product Research
Amazon dropshipping product research is the process of researching and finding products to sell on Amazon that are in demand and have the potential to generate sales. This process can involve researching the most popular items, analyzing the competition, evaluating prices, and more. Researching products on Amazon can help us maximize profits and minimize risks when starting a dropshipping business.
When researching products for dropshipping on Amazon, it is important to focus on products that are trending, in demand, and have low competition. We also need to ensure the product is a good fit for our target market and our budget. So, let’s look at the criteria for optimal dropshipping products.
Dropshipping Products Criteria
Determining the criteria will help us ensure that we are working with products that have a good selling potential.
There are many factors that dropshipping products must meet. Here are the main ones:
- Quality: Make sure the product you are researching is of high quality. Research customer reviews, ratings, and the product’s materials, quality, and warranties.
- Price: Dropshipping products should be competitively priced to ensure good profit margins.
- Demand: Review your sales data to determine the current demand for the product. Next, analyze customer data to gain an understanding of who is buying your product and why.
- Profit Margin: Calculate potential profit margins to ensure you have enough to cover your costs and make a profit.
- Niche Analysis: Identify the target market for the product and find out what other products are popular in that niche.
- Competitor Analysis: Analyze the competition to gauge the potential for success with that product.
- Delivery: Ensure the dropshipping supplier offers reliable and timely delivery. Research delivery times and shipping costs.
- Returns: Find out the dropshipping supplier’s return policy. Make sure that customers are allowed to return the product if it is unsatisfactory or damaged.
Following these product research criteria can ensure that the research process is focused and effective. This can result in valuable insights that can lead to successful product launches and profitable outcomes.
How To Find Products to Dropship on Amazon: Step-by-Step
The best way to find Amazon products to dropship to our stores’ products is by using a product research tool that identifies profitable niches and analyzes product data (such as reviews, sales rank, and pricing). In addition, it’s important to research competitors’ products and pricing to ensure that the product we are selling is competitive.
Using helpful tools like AMZScout Dropshipping, Online Arbitrage & Wholesale software can help us analyze any product step-by-step.
These are the steps we need to follow to conduct Amazon dropshipping product research properly:
- Research Trending Products
- Check Each Product’s Demand
- Check The Numbers & Types Of Sellers
- Analyze Competitors
- Calculate Your Profit Margin
1. Research Trending Products
Research the latest trends and products in your niche to identify which items are particularly popular among customers. Look for items that are selling well on other e-commerce sites and in stores.
The Amazon Best Sellers list is a great resource for finding popular products to dropship on Amazon. This list is updated hourly and contains products that are selling the most frequently. And look for products that have strong product descriptions and high-quality images. This will make it easier for customers to find and purchase your products.
2. Check Each Product’s Demand
A great way to find products to dropship on Amazon is to look for items with good monthly sales. Amazon does not provide real sales data, but some tools provide estimated numbers. For example, the screenshot below shows how the extension demonstrates estimated monthly sales data for each product on the page.
For example, products with more than 300 sales per month can be considered in demand.
Another way to check the demand for a product is to check queries using tools like Google Trends. The more search queries for a product keyword, the more likely it is to be bought.
3. Check The Number & Types Of Sellers
Try to find products that don’t have too many sellers on the listing. You want to be able to compete and make a profit, so look for products that aren’t already oversaturated.
If Amazon sells this product, you will face a lot of competition and have a lower chance of winning the Buy Box. Pay attention to products that have both FBM and FBA sellers.
4. Analyze Competitors
Look at what your competitors are selling and how they are pricing their products. Look for gaps in their product offerings and pricing.
In addition, see how many items they’re selling and the frequency of their sales. This can help you determine the success of their dropshipping business and how you can compete with them.
5. Calculate Your Profit Margin
Once you’ve identified a product you’re interested in selling and analyzed the competition, it’s time to calculate your potential profit margin. Make sure the cost of goods sold plus Amazon fees don’t exceed your selling price.
As we can see in the image, with a price of $18.99 and fees of $7, you can make a profit of about $7 if you find an item that costs $5. And if the initial cost is lower, then the profit will be greater. A profit margin of over 50 percent is considered ideal.
Dropshipping Business Tips
Once we understand the basics of dropshipping and how to find products, we should explore further strategies to optimize our business operations.
To maximize our Amazon dropshipping business efficiency, we can take advantage of a tool like AutoDS. This all-in-one Amazon dropshipping tool automates product listings, customer orders, price/stock monitoring, and more, freeing up your time to focus on growing your business.
In conclusion, choosing the right profitable products to dropship on Amazon depends on a variety of factors. These factors include seasonality, the amount of competition, and the current market demand. It is important to do research to identify the most profitable products for your niche and develop a strategic plan for selling these items.
Additionally, you need to keep up with trends and stay ahead of the competition by providing quality items from reliable suppliers. Following these steps will help you maximize profits and keep your Amazon dropshipping business running smoothly.