One of the most daunting tasks in online retail is deciding what products to sell. When you use drop shipping the pressure is far less than if you had to order hundreds of items for in-house inventory, but can still be a massive undertaking. Experts have ways to take the pain out of the product selection process and you can learn to do the same.
One of the first considerations when selecting your products will be where you intend to sell them. Canadian drop shippers and other online sellers have several online venues from which to sell their products, ranging from auctions to online marketplaces. Online marketplaces and auctions are highly competitive, but you’ll enjoy exposure to a large number of buyers. You’ll also benefit from market rewards, such as loyalty points, or even free shipping if orders are fulfilled by them.
However, I recommend having a website for several reasons, even if you will only be selling through online marketplaces and auctions:
- Your website is your home base for marketing.
- It makes your business more tangible and establishes trust.
- Owning a website allows you to build your own business instead of relying on someone else.
- You’ll be able to provide extensive product information, testimonials, and other content that helps to attract buyers and make the sale.
- Happy customers have a link to share with their friends.
It’s critical to have proper ecommerce software to build your business on:
The Canadian Guide to the Best ecommerce Platform Software will help you make an informed decision.
Read The Best ecommerce Software Platforms for Drop Shipping to find platforms with the most suitable features and tools for drop shipping products in Canada.
You can learn more about starting an online store with our Checklist: How to Start an Online Store (ecommerce Business) in Canada.
Most people choose a niche before they choose their products, although product research may lead you into a niche. If you’ve noticed a gap in the Canadian market, all the better. The best inventions are born from necessity, and so are the best businesses.
10 Tricks for Choosing the Best Products to Sell Online in Canada
1. Drill way down into your niche when you first begin product research. If you’re into fashion, you’re going to have a lot of competition. If you drill that down to plus-size fashion and then on to plus-size sportswear, you may do better. Even your complimentary products can be specialized, such as a focus on natural sunscreen instead of the average sunscreen you can get at your local Walmart.
2. Once you have defined your niche, the latest news and trends will be a treasure chest of product ideas. Subscribe to newsletters and magazines and pay attention to the advertisements. Many trade magazines are available free of charge to Canadians.
3. If you intend to sell in Canada, you can monitor best selling products in the USA and check for their availability here. For example, how many times have you searched for something on Amazon.com and found it wasn’t available in Canada? So you check Amazon.ca and it isn’t there, or there’s one choice that costs three times as much as it did on Amazon.com. If that product is selling like hotcakes in the US, there’s a good chance the demand will be there in Canada too.
4. The same applies for anything new on the market within your niche. Just last week I read a journal article about Nicotinamide riboside (NR) and it’s ability to stop organ and muscle degeneration. Soon it was all over the news. I’ve looked everywhere for a Canadian source but I haven’t found one single place to buy it online. If I order it from Amazon.com I’ll risk Customs broker charges, pay more for shipping, and take a hit on the currency exchange. It’s a perfect product for the opportunistic Canadian online entrepreneur selling in virtually any health-related niche. Do keep in mind that you should take advantage of limited availability in Canada, but don’t try to exploit it. If you price it outrageously it will backfire one way or another.
5. Avoid products (and their accessories) that quickly become obsolete, unless you want to do a lot of monitoring and changes (website, sales listings, and so on). Smartphones may be popular, for example, but the technology is in a perpetual state of change. There is always a new model coming out and with it comes new accessories.
6. Think very carefully before choosing an expensive product to sell online. At face value, it looks like you’ll make more if the price is higher. However, big ticket items are tougher to sell, often have lower margins, and may require more involved customer service.
7. Round out your product niche with accessories and consumables to encourage larger orders and repeat business.
8. Remember to check laws and regulations. For example, you may be able to drop ship some supplements or pharmaceuticals to the US that aren’t approved in Canada. Some products, like eCigarette “juice” may be confiscated at the Canadian border.
9. Research product availability in Canada, as well as how easy or economical it is for Canadians to find it internationally.
10. Use legitimate, reliable drop shipping suppliers who deal with Canadians. You’ll find a list of them here.
- Retail profit margins can be low in certain categories, such as appliances or electronics. Smaller products, such as accessories and consumables, often have a larger profit margin. You must do these calculations to accurately predict the profitability of each product.
- Factor shipping into your choice. If the item costs a lot to ship it will discourage online purchases or cut into your margins.
- If you can find products with a fixed minimum price (usually referred to as “Minimum Advertised Price” or MAP), it will level a playing field in which Canadians often struggle to compete. You won’t have sellers severely undercutting you in Canada or Internationally, because maintaining a price above the minimum is a requirement of the manufacturer. With price removed from the buying decision, you can step up your game to compete on other levels, such as customer service and premium content.
Know Your Enemy
- Check the prices in Canadian online stores, auctions and marketplaces like Amazon.ca.
- Check the prices in the US and do the same calculation shoppers will use:
Price + Shipping + Currency Exchange + Broker Fees and Taxes = Actual Price
If shoppers can still get it considerably cheaper across the border, you may struggle with the competition. It’s important to note, however, that Canadians have stated they prefer to shop at Canadian stores even if it is a little more expensive. Make sure your store proudly declares your Canadian location.
- Product reviews are invaluable. Visit reputable ecommerce stores and marketplaces to find out in advance what customers think of the product or brand that is under consideration.
- You don’t have to be the only one selling a product, you just have to do it better than everyone else. There’s way more to competing than price. Check out the competition’s search ranking, content, customer service, website design and security. Note your top competitors and revisit their website often. Signing up for their newsletter is a good idea too. Always aim to be better, even if you can’t beat their price.
Once you’ve compiled a list of possible products, you’ll need to take your market research a step further with a detailed market analysis. This involves researching marketplaces and ecommerce websites to determine trends, supply and demand, market saturation, and competitive pricing.
It can be a huge, perpetual task to research each product manually, but there are tools that will save you an extraordinary amount of time. For example, Google Trends is a free tool that will illustrate product popularity as determined by search volume. Since it specifically reports online search data, it’s a valuable indicator of what people are looking for and the growth potential. It can also provide additional products and content marketing ideas.
You’ll want to give a lot of thought and consideration to your product choices if you maintain a physical inventory. Drop Shipping allows for a lot more breathing room in product choices. The most you will lose by choosing the wrong product is your time. Start with a few products and begin the process of elimination, while also being open and alert to new product ideas. Eventually you’ll build a thriving ecommerce business without ever having to deal with inventory or shipping. Alternately, you can use drop shipping to test new products and then bring them into your own inventory if they do well.
Discuss this and other online business topics in the Online Business Canada Facebook group!
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Melody McKinnon's formal education is in business management, which she enhanced with more than 60 certifications revolving around business, marketing, health, general sciences and writing. In 25 years of working online, she has owned or managed both educational and ecommerce websites. Her book, 7 Recession Proof Online Businesses to Start From Home, is available on Amazon.
Melody has worked with many businesses & brands in a multitude of capacities. She can often be found on CanadiansInternet.com, CanadianFamily.net and AllNaturalPetCare.com, as well as other quality digital publications. Her content has earned reference links from highly-respected websites, magazines and university textbooks.