10 Dropshipping Niches to Avoid in 2021
Dropshipping has become one of the most lucrative eCommerce businesses in the past few years that shows no signs of slowing down in the upcoming 2021 as well. As a result, it’s a segment that presents dense competition. Especially when it comes to certain dropshipping niches that store owners choose to pursue without making proper market research and business estimates. This might be one of the biggest mistakes one could make as a newbie in the dropshipping game. From here emerges the necessity to research the market and make smart decisions before getting deep into the business – a point from which would be tedious to come back.
The majority of store owners that start a dropshipping business make the mistake of not exploring all dropshipping niches in-depth. Not many resellers know that not all dropshipping niches are profitable and can make you rich overnight. In essence, there are some dropshipping niches that may seem like a good starting point, but they might end up being too competitive or too complex to handle.
So, if you’re just starting out, it might be a good idea to learn which dropshipping niches to avoid, rather than choose a random one because you saw someone successful in it. Each dropshipper has a different dropshipping story and what works for someone, doesn’t mean that would work for you as well.
Let’s explore which products and dropshipping niches you should avoid in order to escape the risks of failure.
Heavy & bulky products
Why avoid dropshipping heavy and bulky products? There are a few reasons behind this statement, and good ones, too. The bigger the product, the bigger the shipping costs. If you think there’s not much difference between product sizes, have a look at the UPS flat rate shipping example below.
Let’s say you want to sell small kitchen appliances. Packaging and shipping start at an average of $20 per item, so you’ll need to set higher profit margins in order to make some profits. On the other hand, your competitors probably sell the same products at lower prices and get all the customers. It’s a ‘status quo’ situation for your store, meaning you can’t even earn decent profits, nor increase the price per product.
Perhaps you’re interested in something as simple as office desks, furniture, and kitchen drawers. Sure, you can negotiate prices with the local manufacturers and start reselling, but what about shipping? Will you take over logistics by yourself? Unless you have your own shipping service and a warehouse, it’s very hard to sell big when starting small.
Reselling any type of electronics is great unless you haven’t tested it first. You can’t sell something you haven’t seen or touched before, because neither you nor your customers will know what to expect of it. As with most dropshipping niches labeled “to avoid”, there might be a problem with the quality of products, so you can expect a high amount of refunds due to a manufacturing error. This depends on the quality of your supplier, so make sure to read the reviews before you decide to sell their products.
Another important thing that concerns resellers is refunds and shipping. If you can calculate shipping rates and delivery time, as well as check out their refund policy, you can easily find out whether or not it’s profitable for your store. Still, you need to have some sort of expertise in the area, to explain to customers how a specific kitchen appliance will save them hundreds of dollars per month.
Finally, products made in China are highly unwanted in the U.S. market, even though many American companies outsource production in Asia. From a U.S. customer’s perspective, it’s highly unlikely they would be any foreign-made products and prefer ‘Made in the U.S.A.‘ labels on the electronics.
Some people earn big during certain seasons. Seasonal marketing is profitable if you have multiple suppliers selling event-specific products. For example, you can use one of your suppliers for swimwear, then talk to another one about Halloween-themed toys and apparel. Before you know it, Black Friday and Christmas are here. Time to switch between suppliers again, only the last one has run out of business. You now have little time left to find a replacement supplier. But what about the profit margins and shipping availability?
Selling products this way is highly stressful and not recommended for beginner dropshippers. Imagine being constantly on the move, preparing for each big holiday and event, negotiating prices, marketing your products – it all just sounds tiresome, right? You need to leave out products that are trendy for about 10 days a year and focus on the ever-demanding ones. Seasons change every year, but essential products will always stay essential. Such is the case with quality clothing brands – you can buy clothes for each season, wear them for a long time, and gladly shop again because you’re satisfied as a customer.
It’s incredibly hard to sell health products without knowing the effects first. That’s equivalent to selling ‘elixirs of life’ to the elderly, knowing that sooner or later – they will all ask for refunds. First and foremost, customers expect miraculous effects from the product. Unless you’re a manufacturer with over 100 years of experience in the industry, there’s no way you can guarantee anything. This type of psychological marketing is long outdated, so expect many mentions in the form of ‘fraudulent, please avoid’, describing your online store.
Not many stores survive the various customer reactions posted daily on review sites, so it’s probably best to stay away from this dropshipping niche. If you feel like experimenting with the sales, you can research more about CBD-based products, and perhaps try yourself in this industry. However, the majority of countries still prohibit the sales of products containing cannabis as an ingredient. To summarize, you can’t give anyone a 100% guarantee that the face cream you sell will magically lose the wrinkles on their face. Unless you expect thousands of refunds on a monthly basis, you better stick to something more reliable.
First and foremost, to be able to sell these products, you’ll need to have extensive knowledge of both computer hardware and software. Customers will almost always ask various questions before buying. Thus, if you can’t explain how the graphics card is compatible with their laptop configuration, don’t even start. Also, another reason why this niche is on the list of dropshipping niches to avoid is the number of refunds due to malfunction. Many of the products can break during transport/shipping, so you’ll probably need to pay more and label them as ‘fragile items’.
So, it would be wise to ask around for shipping costs and calculate profit margins, before you can continue with anything else. Pay much attention to competitors coming from the Asian marketplaces, as they usually go for quantity to reach maximum sales, at the cost of lower profit margins. Overall, it doesn’t sound half as bad as the other dropshipping niches, but in truth – it’s a rather complicated niche with sensitive products to be showcased. You can test this one out when your online store makes enough profits each month, for you to experiment with other niches as well.
Highly fragile products
Items similar to the ‘home decor’ and ‘toys’ product categories are always fragile. If anything breaks, you get to pay for it. Shipping companies have specific policies about these situations. As long as it’s delivered in record time, some of the employees won’t care much. Vases, RC toys, and other products that are easy to break can be packed with extra layers of protection. The fact still remains – it’ll simply cost you more and there’s no guarantee that every product will arrive safely to its destination.
So, unless you find a reliable shipping company with great reviews, there will be many unhappy customers wanting their money back. Fragile items are risky business, so you want to perhaps focus on something less delicate to deal with. Some examples of fragile products include glass items, porcelain, valuable collectibles, optics and accessories, musical instruments, and laboratory sets.
Although always trendy, everyday lifestyle items are part of a niche with the highest variety of product categories. So you can expect a lot of competition here. There are literally tens of thousands of these stores popping out every day, trying to make quick profits. Therefore, for a beginner dropshipper, it would be a real nightmare to start a business with so many rivals around you.
As for profits, they vary from one product to another. Still, you can’t expect to make a lot of money at the end of the month, unless you buy something at a really low price, then sell it with higher profit margins, having to do it time and time over. To make things clear, dropshippers look for safer ways to profit nowadays. This doesn’t include the ‘high competition’ feature in their concept. In other words, find something small, to begin with, and make it grow gradually.
Cheap watches always look good on your hand – when they work properly. You can buy ten of them for less than $100 and wear each one on a different occasion. But cheap watches are known for their short lifespan and this is why low-quality watches will never be attractive enough as a dropshipping niche. The high amounts of refunds and customer complaints will get your business to fail within a few months.
Wooden watches are cool and trendy, even though they aren’t as durable as metal-made watches. Manufacturers often classify their wooden watches as ‘made of wood’, even though some of them include plastic alternatives, wood-like imitations. The biggest concern of all customers is – the watches are not waterproof. One trip to the bathroom, and you’ll find out the hard way how washing your hands with the watch on was a bad idea from the very beginning. This applies to wooden watches, too.
By reading all the negative reviews, you can conclude how your store’s profitability will vary. Most of the time, you’ll be answering tons of dissatisfied customers. So, to conclude, reselling cheap watches is one of the dropshipping niches to avoid.
Fake & counterfeit products
Selling fake and counterfeit products is never good for business. Sooner or later, your customers will notice the difference and you will probably get tons of lawsuits. Anyone knows how famous brands react when someone’s trying to sell cheap copies of their products – which is strongly forbidden. You risk a lawsuit for copyright infringement and bankruptcy only by thinking you can succeed with selling counterfeits.
In fact, less than 1% of the customers in developed countries will be interested in buying fake copyrighted products, simply because they can afford to buy from the official stores. Copyright infringement could be a major issue, so always avoid this dropshipping niche. It’s really popular in the less-developed countries, mostly as a concept of ‘pop-up online store’, functioning for a month or so before they close shop. The bottom line is – don’t ever risk starting a business with ‘failure’ written all over it. Start something stable, something that’ll last for years to come.
Lastly, fitness equipment is yet another one on the list of dropshipping niches to avoid. Generally speaking, any type of gym or home exercise equipment is either heavy or bulky. This just adds to the shipping costs due to logistics companies demanding more based on the weight or size of products. This niche is very risky, even though at first glance, it seems highly profitable.
To make things worse, customers willing to exercise usually have no clue what they’ve ordered, nor will they know how the equipment or machine works. Thus, you’ll have plenty of explaining to do with customers. You’ll probably need to share explainer videos and how-to materials with most, if not all of them. Furthermore, you’ll need to rely heavily on customer support.
Most importantly, you might want to consider including more quality packaging since some parts are made of plastic and are small in size, meaning they can easily get lost or broken during the packaging process. This is why the fitness/gym niche is practiced by more experienced dropshippers, ones who can allow losing a few thousand dollars if everything else fails.
Which niche is best for dropshipping?
By analyzing all the dropshipping niches to avoid, anyone would ask themselves – which niche is best for dropshipping? The answer is easy and it basically means – don’t complicate things any further.
Do your research on which are the best-selling and high-profit product categories that don’t come up with the heavy competition. One of these categories is branded clothing, but remember – you will need a trustworthy supplier that sells authentic and genuine products from high-end brands.
Where can I find the most profitable dropshipping niches?
Talking about the most profitable dropshipping niches for your online store, there are a few steps you need to take. If you carefully follow all of them, it will be very simple and easy to choose the best niche for your dropshipping store.
Check the latest eCommerce statistics
Before deciding what you are going to sell, a smart move would be to check the latest eCommerce statistics. This will help you to get a better overview of the eCommerce market and the most trending categories. According to statistics, the most trending eCommerce category currently is fashion. Starting a dropshipping store to sell clothing is something that guarantees success now and in the upcoming years.
Sell more expensive products
Dropshipping suppliers usually give around 20% profit margins to their resellers, for any product category. So, if you’re selling low-priced products, the profit percentage is low. On the other hand, if you sell products of higher value and price, such as luxury clothing, the profits will proportionally increase. Basically, there is no profit in it, if you keep selling products for $2 profit margins per piece. You’ll need to sell 500 of them, to make around $1000 for the month. Out of these $1000, we haven’t calculated the unexpected costs such as refunds and extra shipping costs. More importantly, part of this budget needs to be spent on advertising products later on.
Use marketplaces to find the most profitable dropshipping niches
The whole point here doesn’t end in finding product categories where the competition is low. Instead, profitability should be your main priority. Where can you find such niches? Simply use the world’s largest marketplaces and platforms to browse through their niches. For example, Amazon contains a “sub-niche” option in the search bar. You can find so many subcategories here, new ideas will immediately cross your mind.
In some cases, brainstorming can get you a long way. It’s best to start asking yourself questions such as:
- What items did I keep buying online this year?
- How expensive were they?
- Is there something else, expensive enough, that I really need to buy?
- What did my friends buy online this year?
By asking yourself these questions, you will find out plenty about which products sell the most, and focus your advertising budget on them, instead of the much-unneeded products.
Learning which are the most profitable dropshipping niches and which dropshipping niches you should avoid is crucial to your business. If you can’t opt for the right one, it can easily turn the whole idea into a failure. Worst-case scenario, you’ll end up spending much more than you’d hoped for, in order to market your products. However, everything doesn’t seem as bad as it looks. By efficiently increasing the brand awareness of your online store, you can earn decent amounts of money every month, without having to spend tons of it on marketing. Thus, follow the tips mentioned above and you’ll surely find the perfect product niche in no time.
Table of Content
- Heavy & bulky products
- Seasonal products
- Health products
- Laptop/PC accessories
- Highly fragile products
- Lifestyle products
- Cheap watches
- Fake & counterfeit products
- Fitness equipment
- Which niche is best for dropshipping?
- Where can I find the most profitable dropshipping niches?
- Wrap up