It is a wonderful thing to look at the most profitable dropshipping niches for your store.
Profit projection is a smart move and the very first thing that a dropshipper should look at. After all, if your dropshipping business doesn’t generate any profit in the end, would it be worth your time and efforts?
Of course not.
That being said, let's first learn how to calculate profits by considering all the costs involved. This will not only help you in choosing a dropshipping niche over another, but also give you a fair idea of how your balance sheet will look like in the end.
After we have learnt how to calculate profits, we will cover the list of most profitable dropshipping niches that we recommend. If you already know how to calculate profits, you can skip this part and jump to the list now.
As the name suggests, a profitable dropshipping niche store brings in a positive net income. For a profitable dropshipping store, your revenue is more than the expenses incurred, thus in the end you will have profits that you can reinvest or use for other expenses.
Profit = Total Revenue - Total Expenses
One important thing to remember is that the profit isn’t just the difference between the selling price and the product price. When running a business, you will incur many expenses that also would need to be taken into account and thus a very good profit projection is a must have for a profitable dropshipping business.
Let us cover the top 10 expenses that you will most likely incur:
1) Product cost: When you receive an order, you will need to pay the agreed upon product cost to the dropshipping supplier.
2) Shipping cost: Unless already included in the product cost, you will need to pay the shipping charges for each of the orders you get on the store.
3) Website hosting charges: To have your store up and running, you will need to have an infrastructure cost as per the plan chosen. Most likely it is independent of the number of orders and will be a fixed cost.
4) Product Returns Cost: A cost that nobody likes, but as a part of retail, you need to pre plan for the returns shipping charges, based on projection returns percentage for the niche you have chosen.
5) Infrastructure cost: To run the store you will need to invest in infrastructure, like computers, office supplies etc.
6) Marketing cost: A major portion of the expenses that you will need to take care of will be the marketing budget. Dropshipping needs a lot of marketing investment and you definitely need to account for the same in advance.
7) HR / Customer Service Charges: You will need to have customer service set up for your store. You would need to set up both pre-sales and post-sales customer service in your store.
8) IT maintenance costs: The websites aren’t just one time setup thing. They would need maintenance and troubleshooting from time to time. Unless you yourself are tech savvy, you will need to account for such costs too.
9) Marketing collateral cost: Most of the dropshipping niche marketing is done on social media and you will need assets with wow factors. These assets in the form of videos, images and other digital assets are a must have and you will need to get them spot on on day one.
10) Overhead expenses: Other misc expenses such as rent, insurance etc that you need to shell out.
Now that you know what those expenses are ( feel free to add any that will be specific to your dropshipping business), we can write a simple math formula to calculate the profit.
Total Expenses = Total Product Cost + Shipping Costs + Website Hosting Charges + Products Return Cost + Infrastructure Cost + Marketing Cost + HR / Customer Service Charges + IT Maintenance Costs + Marketing Collateral Costs + Overhead Expenses
Total Revenue = Product Selling Price * Number of Orders
With all of the above, you can calculate the profit as the difference between total revenue and total expenses.
Choosing a profitable dropshipping niche is not as difficult as it sounds in the beginning. After looking at all possible expenses and projected revenue, you can begin on a successful dropshipping business for your chosen niche quite easily.
The selection of a dropshipping niche needs to follow a DAMP rule criteria, which to summarize is based on 4 different criteria: Demand, Availability, Marketability and Profitability.
In the context of this insight, we will cover the profitability aspect to take into account when choosing a dropshipping niche. Let us once again look at each of the expenses mentioned before and look at how it can help in choosing the right dropshipping niche.
1) Product cost: For a profitable dropshipping niche, you should have a reference to others being able to sell the product at much higher price compared to the product cost. From our research the minimum that you should be able to markup is 3.5x of the cost you will need to pay to the dropshipping supplier.
2) Shipping cost: Pick a niche with minimal shipping costs. Shipping for bulky items costs a lot, and it would be wise to choose a niche that has a negligible shipping cost. In most cases, for such niches the dropshipping supplier may get you an all inclusive price or a good shipping discount.
Additionally, you should consider choosing a niche which isn’t fragile. Fragile items have a lot of problems and you do not want them in your store.
3) Website hosting charges: Not a direct input cost for your dropshipping niche as such. But it does depend on the plan that you choose and thus will be something to look at.
4) Product Returns Cost: There are a few niches which have in general returns rate as high as 40%. For example, womens clothing has a very high return rate. Unless you can expect a truckload of orders that can compensate for these returns, it will be wise to not choose a niche that has a very high return rate.
5) Infrastructure cost: Also something that isn’t directly related to a dropshipping niche in general. But if you do choose a niche where a very small team itself can handle, you will surely save a lot of money in the long run.
6) Marketing cost: The most important thing to consider while choosing a niche is the cost of marketing. If you choose a niche that is easy to market, has a potential for word of mouth marketing, you can make your dropshipping store very profitable.
7) HR / Customer Service Charges: If you wish, you can surely minimize these costs in the beginning and increase your profits accordingly. Choosing a niche that you ( or a very small team ) can handle will help you save a lot in HR both in terms of costs and time.
Additionally, having a niche that doesn’t involve too much of customer service will also help you minimize the costs related to customer service representatives.
8) IT maintenance costs: You can choose a very stable platform such as Shopify and save a lot on these costs. Shopify stores are #1 choice when it comes to dropshipping and you should definitely consider them for your store.
9) Marketing collateral cost: This is one thing that you can have a zero cost, if you wish. You can actually use your phone and computer to create the assets yourself. But it all depends on the niche you have chosen. If it is a product that will need good investment and a professional’s help for the assets then so be it.
That being said, do remember that using stock photography or the ones shared by the drop shipping supplier won't be a good idea. Just like you have it, others will have it as well and thus if you choose to use them, you won't have unique marketing opportunities as such.
10) Overhead expenses: Given that dropshipping business doesn’t need inventory and other operations cost, you can leverage your existing infrastructure and save on overhead expenses. For example, you can work from home and save a ton on rent and other recurring expenses.
At Neilsberg, we want you to be able to choose the most profitable dropshipping niche with ease and utmost confidence. In the list below, we will cover the top most profitable dropshipping niches that you can consider for your dropshipping store.
Read on to discover the most profitable dropshipping niches of 2022!
It is amongst the most profitable dropshipping niches as people treat their pets as newborns and spend quite a bit of money. One thing to note is that you should pick a product that looks unique and has a wow factor.
Pro Tip: Don't go much for the functionality while considering the product from this niche. Those products are already available in plenty in big box stores and major online retailers. What you want to achieve is to get a product that looks awesome and can be marketed easily on social media via beautiful pictures and short videos.
Some products to consider: Chew toothbrush, Knit socks, LED collar, Pet leashes
Price range: $0.50 - $2.5
Selling markup: 4 - 5x
Profit Margin: High
Marketability: Easy
Even though it is highly competitive, women's accessories have so much demand that if you can find a way to do marketing on social media, you can make a very profitable business out of it.
Pro Tip: Don't pick products that are size dependent as there will be a lot of returns involved, and will eat up into your profits. Rather pick up accessories that are insta or tiktok worthy, as word of mouth and influencer marketing will be a big plus.
Some products to consider: Makeup headband, Face rollers, Makeup brushes, Sleep masks
Price range: $0.99 - $5
Selling markup: 4 - 5x
Profit Margin: Medium
Marketability: Medium
A niche that is growing year on year at an amazing rate, Home decor is a must look when choosing a profitable dropshipping niche. It is one niche that will never fade away. After all, who wouldn’t want a beautiful and organized home. And given the trend of video calling and social media sharing, people give a lot of importance to how their home looks.
Pro Tip: At any cost, stay away from bulky / fragile items. No matter how beautiful the product is, if it is bulky or fragile, it would certainly dent your profits and eat up a lot of time in customer service. Rather choose products that are light in weight and have no issues in terms of logistics.
Some products to consider: Wall stickers, Scratch maps, Childrens room decals, Mirror stickers
Price range: $0.5 - $2
Selling markup: 5 - 10x
Profit Margin: High
Marketability: Easy
A hobbyist niche is a gold mine in dropshipping as people generally don't think much about money when it comes to supporting something related to their hobbies. It has a big probability of repeat order and also in built word of mouth marketing, as there is a very high chance of someone showing off your product at a club or hobby meeting or on their social media vlogs.
Pro Tip: As a rule of thumb, don't pick products that the customers can get from garden centers at the nearby home depot or a big box store. Remember that you are trying to cater to a niche market where the customer is looking for a unique way to accentuate their hobby.
Some products to consider: Fruit plucker, Anti-mosquito bracelet, Seed drill
Price range: $0.25 - $8
Selling markup: 4 - 8x
Profit Margin: High
Marketability: Difficult
It is a wonderful niche as it also can be classified as a hobbyist niche. Once they get started on sprucing their car, they won't step at anything. If you can market to this niche and show them how cool this product is, they will surely come again and again to your store.
Pro Tip: Once again, don't pick products that they can find at nearby stores and ones that affect the running of the car. As you can’t vouch for the products safety rating and compatibility, stay away from products that change the working of the car. We are not targeting mechanical parts but accessories.
Some products to consider: Interior detailing vinyl, Anti fog films, Scratch removers
Price range: $0.75 - $20
Selling markup: 6 - 10x
Profit Margin: High
Marketability: Medium
The best and the most profitable niche that you could ever find. The only catch is that you should choose the products wisely and have great customer service, as you will be dealing with moms that will be too attached to the products that they are purchasing for their babies. No matter what the price is, anything less than the best won't do.
Pro Tip: Many tips actually. Firstly in the newborn niches, don't pick products that have longer shipping timelines. Babies grow up very fast and if the product takes 6 weeks to arrive, the baby might have already outgrown it. Secondly, this niche comes in with an amazing scaling opportunity. If you have a great product and provide good customer service, the moms will come back to you as their babies keep outgrowing the previous purchase. So take it as a subscription, as long as you can achieve their trust.
Some products to consider: Suspenders, Onesies, Party dress, Shoes, Baby room decor, Room slippers
Price range: $3 - $20
Selling markup: 4 - 10x
Profit Margin: Medium
Marketability: Medium
A niche that is difficult to get into, but once you are in, you can make a very big and profitable dropshipping business. Even though the product selection may not be as much as women's clothing, the cross selling and repeat purchases are a big plus in mens clothing.
Additionally, the return rate on the mens clothing is a fraction of the one in womens clothing and thus in the long run, your net profits will be higher even though the number of orders may be less comparatively.
Pro Tip: Don't pick products that are basic accessories and something that they can purchase from nearby stores. Pick something that gives them a belonging of being into a cool thing or something that is very low maintenance. For example, a shirt with a cool slogan about something they identify themselves with, or a jogging pants with unique anti sweat fabric or a 72 hour tshirt.
Some products to consider: Cool hoodies, Anti sweat jogging pants, 72 hour tshirts
Price range: $10 - $20
Selling markup: 4 - 7x
Profit Margin: Medium
Marketability: Medium
Each dropshipping niche is unique, and the profitability depends on many factors. There is no one way to easily pick a profitable dropshipping niche. You would need to do a lot of trials and testing in your store until you get to an optimized dropshipping store.
This is the reason, we recommend that the beginners should not aim directly at getting to a profitable dropshipping business, as it needs a very different kind of testing.
Even though we have listed the top 7 drop shipping profitable niches, don't mistake this insight as a recommendation to target only these 7 and avoid everything else. We just wanted to give you an idea as to how you can choose a profitable drop shipping niche and what parameters to look at. You can very well use this methodology to find products within the drop shipping niche that you are already targeting and have some success with.
As always, if you have any questions or need any help, just drop us a line and we will be glad to help.