If you’re new to ecommerce, you may have heard how “easy” it is to set up a store using the dropshipping business model. While it’s true that creating a store is not incredibly difficult (thanks to Shopify and other platforms) the biggest challenge you’ll face is deciding what to sell.
Most ecommerce entrepreneurs understand the importance of finding and selling “winning” products. But, how do you find those products? What is a “winner”? How do you scale with a product after you’ve determined it’s winning?
What We Are Going to Cover:
- Product research and selection
- Finding and validating your first winner
- Always be testing
Product Research and Selection
Researching products is the first step to take. It can be intimidating for new businesses to navigate this step with confidence, so we have a few pieces of advice on how to approach this research.
First off: don’t depend too much on “winning products” shared in YouTube videos, Facebook groups, etc. The problem is you’re going to end up competing with hundreds of viewers who are testing the same products at the same time.
Also, be wary of suppliers, agents etc. offering you winning products. It’s poor practice to share products that their own clients might already be selling…would you want them to share your winning products? And if the products aren’t already selling, then why are they recommending it? They could also just be getting rid of old winners they have in inventory.
Some strategies we’ve seen work well with product research:
- Constantly browse winning FB / IG ads with tons of views / engagement – that means they’re probably making money on it.
- Most winners start as winners in China first, so get ahead of the curve! Check out Chinese market platforms like TaoBao (an option to translate the website to English should pop up at the top of the page) to see what’s selling on the domestic market.
- Understand pain points / market needs as the world changes, and focus on finding, or even developing products that serve them.
- In our opinion, this is the best way to find problem-solving winners before they take off. For example, during COVID lockdowns, a LOT of store owners made mad money $$$ on home fitness products.
Try to avoid products that are difficult / expensive to ship from China…there are plenty of opportunities out there, don’t make it hard for yourself!
- Oversized products: Most shipping companies have a restriction in terms of size.
- This restriction is defined by combining the length, width, and height of the package…this is measured in centimeters and the L X W X H cannot be more than 90cm any dimension can’t exceed 60cm.
- This might include products that take up more space, even if it’s not heavy, because shipping companies will consider the volumetric weight…this is usually measured if the L X W X H in CM divided between 5000 to 8000 (depending courier) is greater than the weight in kg.
- Heavy products over 1-2kg: Shipping cost is directly affected by weight…heavier products see costs go up significantly.
- Some lines also have limitations in the maximum weight as well, which might range from 30kg to as low as 2kg, so heavier products might also limit your ability to ship to certain countries using desired lines
- Fragile products: Anything that can break easily will require extra packaging, which can significantly add to weight and cost, and even then can still see breakage in transit.
- Breakage rate can range from 10-50%…which would definitely be a bad experience for your customers.
- Liquid products: Generally has less options to ship via reliable lines
- There exist some lines that work, but they may not be entirely consistent, and might limit your options to sell to certain countries.
- Power banks / Batteries on their own: Cannot be shipped using air
- Products that include batteries are ok (but require battery lines) because they form a closed circuit…but single batteries can be serious fire hazards.
- Oversized products: Most shipping companies have a restriction in terms of size.
Some factors that make a particularly good product to ship (not necessary, but again, try to make it easier for yourself!):
- Single or few sku products: easier to manage inventory and lower chances of mistakes
- Products that don’t require a box for protection: boxes can get very heavy. Less weight means lower shipping prices
- Small, light, but dense products: Lighter products means cheaper shipping, dense in sizes to avoid volumetric weight.
- Easily bundled products: Products that can be easily packed together or sold in packs will lower your fulfillment costs – easier to get discounts from suppliers.
Finding and validating your first winner
When you first start out, testing is a numbers game. Even 7+ figure store owners might hit only a couple of winners out of 10 testing products. Don’t give up of your first couple of shots if it doesn’t work out!
You want to start testing out with flexibility in mind. Use something like Aliexpress, or another dropshipping platform with no MOQ (minimum order quantity) so you can very quickly test and move on from losers.
Yes, you eventually want to move to a good dropshipping agent, but honestly your first 10s, or even hundreds of orders don’t really matter too much, because a real winner will have far more orders to make up for them.
Make sure you fulfill even “loser” products orders, though! Some experts will refund obvious losers instead of fulfilling if they only get a couple of orders… they believe it to be not worth their time or Facebook feedback score, etc. This is a bad business practice.
Common to see clients have “testing” stores before moving the winners to one product or narrow niche stores. You might want to explore testing products using a general / broad niche store, that sends customers directly to the product link in the ad. This allows for high flexibility of testing without creating new stores all the time. It also gives a bit more freedom in not having the best shipping speeds, Facebook feedback score, etc., since you are not planning to scale with that account.
Be honest when validating if a winner is actually scalable. Make sure your ROAS is a lot higher than your BEROAS
- BEROAS = Selling price / (Selling price – COGS – fees)
Calculate using reasonable shipping prices that you eventually want to scale for. For example, if using Aliexpress, then calculate using Aliexpress standard shipping costs, not some untracked free method.
Leave enough room for:
- Operational expenses
- Potential product improvements
- Opting for faster shipping
- ROAS will naturally go down as ads scale up
Example scenarios, even if you have 10 orders per day:
If your BEROAS is 1.8 and your ROAS is 2X, you’re might want to optimize more, or don’t depend on it as a big winner.
If your BEROAS is 1.8 and your ROAS is 3.5X, then that’s a great sign. If you achieve this, then EcommOps can start discussing working together with you, even before you hit our min orders per day!
Once validated, try to find a good agent and get your supply chain in place to get ready for more scaling
Always Be Testing
Before you hit it big with a custom product and brand with consistent 7+ figures, you should always be thinking about testing new products. Always keep opportunity in the pipeline! Many of the top 8+ figure commerce experts are constantly testing new products, too.
Not every winner is going to turn into a 7+ figure brand. However, if you get a 7+ figure product under your belt, why not have multiple! 😉
It can be easy to rest on your laurels when you have a winner under your belt, and to be fair, you SHOULD focus on scaling that winner up. However, the industry is full of dropshippers who had one 6 figure winner, thought they made it big, didn’t really invest in building a brand, and are now back to square one.
If you are already working with a dropshipping agent, we still recommend using dropshipping for finding a winner. Focus on flexibility while you are testing and then, when you’re ready to try to scale, work with a third-party logistics provider (like us!) or with a dropshipping agent. It’s better to use a different service for testing vs. scaling up. Good luck!!
