The biggest challenge of getting any ecommerce business started is finding winning products. Most entrepreneurs understand that it’s important to find products that are successful, but how to find those products (or even understand that they’re successful), or what to do with a product after you’ve determined it’s winning is another issue entirely.
This is a challenge that many businesses can’t overcome, and it’s estimated that about 35% of businesses fail because there’s simply no demand for the product they are offering. Fortunately, EcommOps has years of experience understanding the best strategies to find winning products, as well as how to scale with successful products.
While we can offer great guidance for people entering dropshipping, EcommOps is not a dropshipping agent. We are a full-service China fulfillment center, and we work with businesses who have the order volume to transition away from dropshipping and towards traditional fulfillment that can reliably scale.
We also understand that successful ecommerce businesses start with basic dropshipping operations. That’s why we’ve created content (like this blog article) to help entrepreneurs interested in entering dropshipping, growing their sales and operations, and eventually building the capacity to join us. EcommOps cares less about you having a winning product and more about our clients having a mindset of creating a successful ecommerce business.
Below, we’ll touch on three cornerstone points of finding winning products for dropshipping that can be great launch pads those just getting started in ecommerce:
- How to perform proper product research and make wise product selections
- How to appropriately test and validate products to determine that they are winning
- Why it’s important to never stop testing products for consistent, reliable growth
Product Research and Selection
Researching products and making your choice is the first step to take. It can be intimidating for new businesses (or businesses that have struggled to find a winning product) to navigate this step with confidence, so we have a few pieces of advice about what to do (and what to avoid) while you research and make your choice.
Winning Strategies for Product Selection
How can you find a winner that’s not already winning and saturating the market? Here are a few tips:
- Look for Facebook or Instagram ads with high levels of engagement: If you come across an ad that has tens and thousands of views and hundreds of comments, then the brand is likely having success with selling. If it’s a newer product, there may be room for competitors to jump in without worrying about entering an oversaturated market.
- Research Chinese market platforms: Winning products usually take off in China before they take off in western markets. Platforms like Taobao are good places to research for products that may be rising in popularity but haven’t been noticed in international markets yet.
- Research pain points and pay attention to culture shifts: Finding solutions to pain points or jumping on culture shifts are the best way to find winners before they take off. For example, stores that sold home fitness equipment during COVID lockdowns experienced enormous demand as culture shifted to at-home exercise.
Avoid Products That Are Difficult or Expensive to Ship from China
There’s more to a winning product than whether or not it’s popular. Winning products generally need to be easy to ship (and this is especially true of new businesses that don’t have the resources to manage a difficult-to-ship product). Let’s examine the different factors that can make a product difficult to ship:
The most obvious factor that impacts shipping costs is the weight. The heavier the product, the more the shipping cost will be, but how heavy is too heavy? Dropshipping brands should pay special attention to products that are 1-2 kg or less.
Even if you decide that a particularly heavy product is worth pursuing, some courier lines have a maximum weight limit, so trying to sell a heavy product means there may be a limit on which countries you can sell to, which will limit your ability to test the true demand of your product.
Lightweight Products with Unusual, Large Shapes
Even if your product is light, if it’s an unusual or large shape, it could spell trouble for shipping costs. Light products that take a lot of volume have a shipping cost based on volumetric weight, so even lightweight products can end up having unexpectedly high shipping costs.
Fragile products have a two-fold problem with shipping. First, they’ll require extra packaging to prevent damage, which will increase the weight, which increases shipping costs. Next, even with protective packaging, breakage rates for fragile products can be 10-50%, which creates a terrible customer experience and sends your refund rates soaring.
Liquid products come with a lot of shipping restrictions, so your options of reliable courier lines will be limited. There are some courier lines that ship liquid products, but their services are often inconsistent, and they often can’t ship to all available countries. If you’re just getting started, liquid products may be more hassle than your business can handle.
Powerbanks and Standalone Batteries
It is extremely difficult to ship standalone batteries. They can’t be shipped by air freight because standalone batteries are an extreme fire hazard. That leaves sea freight as your only shipping option, which is rarely cost-effective for dropshippers (and it’s going to have much longer shipping times compared to air freight).
Green Flags for Easy Products to Ship from China
You have a good idea of the kinds of products to avoid, but what are good signs of a winning product? The following characteristics make a product a great choice for a dropshipping business just getting started:
- Products with a single SKU or very few SKUs: The less SKUs you have to manage, the easier it is to manage products and avoid mistakes.
- Products that don’t need boxes for protection: Boxes are heavy, so if you can find a product that doesn’t require a box, you’ll have lower shipping costs.
- Small, light, and dense products: As we’ve said, lighter products are cheaper to ship. However, a dense product can help you avoid being charged by volumetric weight (which is applied to products that take up a large volume of space).
- Easily bundled products: The wholesale pricing on products will be lower if they can be bundled together (instead of purchasing those same items individually). If you have a product that’s easy to pack together or is otherwise sold in packs, your fulfillment costs will be lower. It also makes it easier to get discounts from suppliers.
Beware of Gurus Giving “Winning Product” Advice
There are all kinds of gurus online that offer suggestions for winning products, but it’s important to take their advice with a grain of salt. Assuming their advice is good, hundreds of people are getting the same advice, so hundreds of people will be attempting to sell the same product at the same time as you.
The product that the guru is suggesting may have been a winner in the past, but that’s not necessarily true of the present or near future. In general, we don’t recommend investing in products recommended by online gurus.
Beware of Suppliers or Agents Offering Winning Products
Some suppliers or agents may recommend products that they know are selling well, but we never recommend that you take this kind of advice from a supplier. First, it’s poor practice for a supplier to share this kind of information (for example, if you found a winning product, would you want your supplier telling competitors to sell what you were selling?).
Aside from it being poor practice, the supplier just may not be telling you the truth. They could be recommending a product just to clear out old inventory that there’s no demand for anymore. It’s never a good idea to accept product recommendations from suppliers or agents.
Find and Validate Your First Winner
After you find a product (or products) that you think might be winners, you don’t want to go all-in without validating winners. You want to keep risk as low as possible (especially as a new business), so we recommend our clients follow a funnel-like approach. For example, it may look like this:
- Testing: Your business puts 10 products on the market just to test demand and potential issues with fulfillment.
- Validation: After testing products, you find that only 3 are actually profitable. This could be due to high demand, ease of shipping, or a combination of factors.
- Scaling: After examining your profitable products, you may find that only one is worth investing in and scaling.
Following this funnel process helps to avoid investing in scaling products that aren’t profitable, or scaling with products that have issues with fulfillment that create a poor customer experience.
Test with Flexibility in Mind
When you’re testing, you should use a platform that has very low minimum order requirements (MOQs) or no MOQs at all. Even if your profit margins are slimmer, you want to avoid heavily investing in a product before you know whether or not it will be successful.
That’s why it’s common to use platforms like AliExpress, since it allows you to test products and quickly move on from losers. You don’t need to be concerned about moving to a genuine fulfillment provider for the first tens, or even the first hundreds of orders. Your goal is to find a winning product with as low of risk as possible.
It’s a common strategy for businesses to put test products on general, broad niche stores just to test demand. This allows you to gauge general demand without taking the time to set up a niche, single product store for a product that may not actually take off.
You won’t need to worry about negative feedback about shipping speeds on that product, since if the demand is there, you can create a unique store that won’t have any of the testing feedback present. By the time you’re creating a dedicated store, you’ll also have dedicated fulfillment operations in place to avoid that kind of negative feedback as you move forward to scale.
Be Honest When Validating Winners
Finally, when you’re looking at products that have decent demand, you need to validate the success accurately. Be honest with yourself about whether the product has the profit margins needed in order to scale with, or if there are other changes you need to make before you take a big investment leap. The best way to do that is examine ROAS and BEROAS.
Examining ROAS and BEROAS to Validate Winning Products
Your return on ad-spend (ROAS) needs to be a lot higher than your break-even return on ad-spend (BEROAS). BEROAS is calculated with this formula:
Selling price / (selling price – cost of goods sold, or COGS – fees)
Costs or fees that you’ll need to leave room for when you are calculating BEROAS include:
- Operational expenses
- Costs of improving products
- General shipping costs (use reasonable shipping prices, not some kind of untracked, free method that you likely won’t be using)
- Optional faster shipping
- ROAS decreases as ads scale up
As an example scenario (even for as low as 10 orders a day), consider the following:
- If your BEROAS is 1.8 and your ROAS is 2X, you may want to optimize more to reduce BEROAS or increase ROAS, or plan on not depending on the product as a big winner
- If your BEROAS is 1.8 and your ROAS is 3.5X, then that’s a great sign and you should consider scaling. Some fulfillment partners will work with you with numbers this good even if you don’t meet their per-day order minimums (for example, EcommOps will work with businesses that have numbers this good).
When a Winner Is Validated, It’s Time to Get a Fulfillment Provider to Scale
When you’ve taken the time to truly validate a winner, then it’s time to scale with a genuine fulfillment partner. Getting real order fulfillment services will make scaling much easier, and there are a lot of benefits when you shift away from dropshipping to third party fulfillment.
Always Be Testing Products
If you’re serious about running a successful ecommerce business, you should get into the mindset of always testing products. You don’t need one extremely successful product, you’ll want a strategy that helps you find successful products consistently for reliable growth.
Even established, 8+ figure ecommerce experts are always testing products because not all winning products are 7-figure slam dunks. Multiple winners will be necessary for sustaining your business between extremely successful products (or you may get lucky and find multiple 7-figure winners).
It’s a common mistake for new stores to find a solid winning product and not invest in brand building. As soon as the excitement for that one product fades, they’re right back to square one, having to rely on luck and timing to find another winner. Appropriate scaling and brand-building are the keys to consistent success for ecommerce businesses.
EcommOps: Your Partner in Success
EcommOps makes it a business to partner with ecommerce brands who are ready to transition from dropshipping to the scaling power of a true fulfillment provider. We offer unique advantages that other 3PLs or dropshipping agents are hard-pressed to match, including:
- Dedicated fulfillment warehouse in Shenzhen, China
- English-Speaking Support Team
- Inventory management
- Unique fulfillment planning (like how to leverage China fulfillment for your business)
- Ability to scale with increasing product demand
If you’re ready to start scaling, we’d love to talk with you. If you fill out our webform, our experts will be in touch to examine your business and create a strategy on how you can successfully transition from dropshipping to utilizing a real fulfillment partner. We look forward to partnering with you!