The worst dropshipping niches to avoid in 2023 are copyright and trademark products, electronics, and jewelry. These niches have high levels of competition and low-profit margins. Plus, they're saturated dropshipping niches that sell products with too much emotional attachment and personalization.
Niche selection is essential to your drop shipping journey, so you need to research. Find one with high search volume and low levels of competition that offers products people want to buy right now. But you need to get it right if you don't want to fail.
In this article, we outline nine drop shipping niches to avoid and the most successful dropshipping niches in 2023. Plus, what products to avoid and why starting a lead generation business is a better way to make money online. You don't need to worry about market saturation or too much competition. Instead, the lead gen model is a proven concept and the best way to generate a passive income.
What Is The Most Successful Dropshipping Niche?
The most successful dropshipping niche is one with a passionate community. Find a group of people you can target who will spend the money to own the latest item or solution-based product. You can also focus on trending things that aren't easy to find or products with a low-turnover rate. But you want to pick the right niche with a ton of products. (Then you can offer bundles or cross-sells and increase your customer lifetime value).
The dropshipping industry is worth $196.78 billion and saw a 23.7% increase in 2022. So you can still make money with the business model. The key is finding popular niches with in-demand products you can sell now. Items people want to buy but still offer a dropshipper maximum profits. So you need to consider a few things like:
1. How do I find popular niches?
To find popular niches, you can use tools like Google Trends and search your topic. The idea is to focus on an evergreen niche with an active online community. Then pick a steady niche that has a ton of options and product category that sells consistently year after year to sell in your online store. You can also leverage platforms like Amazon or TikTok Made Me Buy It to check out top sellers or find a winning product that's going viral.
2. What can I sell that is in high demand?
You can sell items in high demand that don't have brand loyalty attached (like cell phones). But you want to find a product that either:
- Solves a problem
- It makes a person's life better
- Saves people time
- It is hard to find
Look for market gaps or things people are buying right now. For example, what is trending on TikTok? What is the top seller on Alibaba? Can you create a unique angle or invoke impulse buys with this item? Find an evergreen or trending product, create an offer better than the competition, and make sales.
3. How to price dropshipping items for maximum profits:
To price dropshipping items for maximum profits, you need to sell your items high enough to make a profit but low enough to stay competitive. Consider that the average margin for dropshippers is 10%-30%. So you want to find a product that appeals to a potential customer in the upper-middle class.
(Households with a combined income of $100,000+). Not only is this group generally happier with their products. But they typically require less customer service than low or wealthy target markets.
What Kind Of Products Should You Avoid When Dropshipping?
The kind of products you should avoid when dropshipping is illegal or counterfeit items. You should also avoid copyrighted and trademarked things. Or products that don't have a good profit margin. But you don't want to sell products people can buy at the local store. Or ones with a high return rate (like a clothing item or shoes).
So, to find good and trending products to dropship, you need to research. Find out what is selling well right now. For example, products with an online buzz or that people are talking about on social sites like Facebook, Reddit, or TikTok. You only need one product to start dropshipping. But land a winner; you can make some serious cash. So you need to be ready to test and fail and test again.
Learn the basics of the business model and jump on trends before the market becomes saturated. Then, of course, you need to pick a winner. (And which ones not to choose if you don't want to fail). Below is a list of nine dropshipping niches to avoid in 2023. So let's check it out:
1. Copyrighted & Trademarked Products
Reasons to Avoid the Copyrighted and Trademarked Products Niche
You can't advertise on any social media platform.
Risk getting shut down by Facebook and Shopify, or even your payment gateways.
You could receive a cease and desist letter. Be faced with a lawsuit and even get sued.
You'll never be able to brand this dropshipping product.
Dropshipping copyright or trademarked products is one of the quickest ways to get your store shut down. You can only sell trademarked inventory if the brand has approved you to drop ship their product. Or you opt to become one of their verified retailers. But ignorance isn't a legal defense.
So while sometimes it's obvious that products are trademarked (think goods like Lysol, Gucci purses, etc., you need to be sure. Then you save yourself legal hassles and don't waste your time on a product niche already patented. There are a few ways you can tell if a product is trademarked:
How To Tell If A Product Is Trademarked?
Make sure you're not choosing a trademark product, and you'll save yourself a ton of money and potential headaches.
Pro Tip: Find qualified individuals to do patent research for you. (Or sites like Fiverr offer low-cost options).
2. Fake & Counterfeit Products
Reasons To Avoid the Fake & Counterfeit Products Niche
You're selling sub-par inventory that is potentially unsafe, tacky, and just bad business practice.
You're going to end up with a ton of returns and negative reviews and risk getting your dropshipping store shut down.
Counterfeit products don't usually follow Consumer Product Safety Commission (CPSC) guidelines. But they can sue you too ($1,250,000-$2 million for first-time offenders + up to 10 years in prison).
You'll run into problems with your payment gateways and social media accounts.
Fake and counterfeit products are another way to fail fast with drop shipping. Not only do you risk the legal wrath of the actual brand. (Including potential lawsuits or even bankruptcy). But you're funding an illegal business and increasing the original product's price.
"The value of total counterfeiting surpassed $1.82 trillion in 2020". Research And Markets Report
Even if you inform your customers that your products are fake, you're not protected from infringement liability. But you need to protect yourself and only purchase inventory from reliable suppliers. So, take the time to research things like:
- Product Reviews & Star Rating
- Supplier Feedback Score
- Logos & Trademarks
- Suppliers Other Products & Guarantees
- Test Orders
Many dropshippers fail because they're not careful. Or they don't take the time to find reliable suppliers and high-quality stock. But fake products and knock-offs are one of the fastest ways to get a ton of returns and bad reviews. So not only are you out of money, but you won't be among the 10% of people who succeed at dropshipping.
3. Lifestyle Products
Reasons To Avoid the Lifestyle Niche:
There's no desire because the items are so generic.
No opportunity for impulse buys.
Customers don't have an emotional connection with these types of things.
Brand loyalty is prevalent in this niche.
Avoid the lifestyle products niche if you want to make money with this online business model. Not only are general products like colanders or kitchen accessories boring, but they're also readily available. So customers don't have to wait for delivery. (They can just go to Target or Walmart).
4. Clothing & Shoes
Reasons To Avoid the Clothing & Shoes Niche:
Competition-competing against established and dominant retailers (like H&M, TGMAXX, etc.).
Countless negative reviews.
High rate of returns or refunds.
Prone to 'bracketing' (customers buy multiple sizes of the same item and then return the ones that don't fit).
A general store or even a niche store that sell woman's clothing will usually have high levels of customer service. Plus, with Asian sizing and questionable quality inventory. This is the wrong niche to choose in 2023.
"Around 50% of shoppers return clothes they have bought online because of sizing issues." Medium
But there are a few ways to build a profitable niche store that sells clothing like:
5. Watches & Jewelry
Reasons To Avoid the Watches & Jewelry Niche:
Negative reviews due to quality issues.
Numerous posts on social media platforms offer a free watch for just the cost of shipping. But many people consider these types of ads to be dropshipping scams.
Customer service issues.
Buyers want sustainability and will question where items are sourced.
Watches and/or jewelry stores are hard to run, and most end up unsuccessful. Online and digital sales comprise 5% and 10% of the global jewelry market. But you'll be competing with brand loyalty. (Trusted names like Tiffany, Mejuri, etc., that offer quality products).
Plus, because the majority of wholesale inventory is low quality, there's no chance you can charge for shipping, especially if you're trying to sell a $3 watch for $20, making this particular niche one to avoid. You'll have a higher chance of success selling hand-made watches or jewelry on Etsy and ArtFire. Sites where customers are looking for unique, one-of-a-kind, or hard-to-find pieces.
6. Vitamins & Supplements
Reasons To Avoid the Vitamins & Supplements Niche:
Unreliable suppliers (If something goes wrong, you're liable, not them).
False claims could result in advertising restrictions on Google and Facebook.
False claims are also a fast way to get your social media accounts shut down.
You need to be FDA-approved to sell in the USA
Health claims on the packaging are illegal in some countries.
Health products and supplements are other dropshipping niches to avoid. Not only do customers often have unrealistic expectations around vitamins, supplements, weight management, etc. But when your high-ticket products don't deliver the desired results, you'll have an influx of returns and negative reviews that can shut down your store.
Unfortunately, this is a big downside to drop shipping and why a lot of people ultimately quit the business model. There are ways you can make money with this particular niche, but you need to know the legal requirements. (Specifically around product descriptions, claims, and inventory standards).
How To Find Success With Your Niche Dropshipping Business:
Intensive research and capital are a must. So you should consider creating a private label or acting as a retailer for an established/trusted brand.
7. Electronics & Computer Products
Reasons To Avoid the Electronics & Computer Products Niche:
It's a scam-heavy niche.
Customers return/swap your product for a defective item.
Lose money covering the cost of the product plus shipping.
Negative reviews around poor-quality products.
Electronics and computer products are an expensive niche. So you need considerable capital to buy and test products for quality assurance. But you'll also face pushback from USA buyers reluctant to pay for products made in China.
"The global consumer electronics industry is expected to reach USD 989.37 billion by 2027". Fortune Business Insights
But dropshipping electronics can be lucrative. The secret is to secure profitable dropshipping products and a reliable supplier.
Strategies For Dropshipping Electronics:
8. Fragile & Heavy/Bulky Items
Reasons To Avoid the Fragile & Heavy/Bulky Items Niche:
Competitors undercutting price points.
Long shipping times and risks of damaged goods.
High level of returns and negative reviews.
Reliance on your supplier to ensure products are packaged correctly.
Fragile and heavy/bulky items are best avoided based on profit margins alone. But, then, consider the high cost of inventory and outrageous shipping costs. So when you calculate your expenses, you'll be lucky if you break even—making it one of the dropshipping niche options to avoid in 2023. The other issue is what if it damages on the way? Again, you or your supplier are on the hook and will either need to replace or refund the customer.
So you need to have a detailed return policy on your site and trust that your supplier can package items correctly. A prime example of heavy or fragile items is furniture. It's possible to make a lot of money with this niche market (Dropship Lifestyle sells an entire course around it). But it's competitive. So you need to know a few things before you start, including:
How To Dropship Furniture And Make A Profit:
9. Seasonal Products
Reasons To Avoid the Seasonal Products Niche:
Short selling period (10 days-2 months).
Unstable sales volume.
Requires a high level of management.
Seasonal products don't result in consistent profit margins and aren't the best niche idea. You need to constantly source new inventory and find a winning drop shipping product over and over. You might also have to find new suppliers for different items.
You also have to stay on top of shipping times and fluctuating demands. You can make money with seasonal products, but you need to know how to run and automate your processes effectively.
How to make money with seasonal products:
- Use seasonal products as supplemental items in your store.
- Create a toy version of your product (for example: tool kits and children's tool kits).
- Create a festival/party version of your product (for example: candles).
- Find year-round and seasonal keywords being searched together (run PPC campaigns on seasonal items all year).
How To Find Out If A Dropshipping Niche Could Be Profitable?
To find out if a dropshipping niche could be profitable, you need to do some research. First, check out what the competition is doing and where you could do better. For example;
- Where they're getting their traffic?
- What are they doing well?
- Can you capitalize on a gap in the market?
The goal is to see what's working a do better. Dropshipping is all about being a better marketer. So don't copy the competition. But find a way to stand out, create a unique angle or develop a better offer.
Of course, you also need a reliable US dropshipping supplier who can offer high-quality inventory and fast shipping times. And you need to pick a niche with enough search volume to make it worth your time. But there are a few tools you can use to determine if your choice is a saturated dropshipping niche, like:
How To Check If A Dropshipping Niche Is Saturated
Take advantage of high search volume and find niches with a lot of accessories or products that need to be reordered (to secure recurring customers) because these are some of the best products to sell. You also want to pick niches with lots of customer demand and room for expansion. (Then you have a better chance at choosing a profitable drop shipping niche).
Why are saturated niches not a good idea?
Saturated niches aren't a good idea for dropshippers in 2023. First, consider that the industry is super competitive. Plus, hundreds of new people enter the market every day. Add that the business model already has razor-thin profit margins. So, picking a saturated niche is usually a fast race to the bottom.
Not only do you need to have a better offer, shorter shipping times, and a high-quality item. But if you pick a saturated market, you compete against even more people. Plus, saturated niches are challenging. So they're good ones to avoid unless you are a master at video ads, ad copy, and marketing. But even then, you're up against a ton of competition, and it might not be worth it.
It's not too late to get into drop shipping, and the business model isn't too saturated. In fact, sales from global drop shipping stores are expected to hit $1655.15 billion by 2030. But it's competitive and old ways won't work. So dropshipping is still worth it in 2023, but you need to find new ways to create a buzz around your winning item. And you need to pick the best dropshipping niche- one with a passionate group of people willing to spend money on the latest fad or winning product.
You need about $500-$3000 to start dropshipping in 2023. But if you have a hot-ticket seller and know what saturated dropshipping niches to avoid, dropshippers can realistically make $1000-$5000+/month. However, this is not a get-rich-quick scheme, and it takes 4-6 months at least to become successful in dropshipping. You need to take the time to learn the basics and hone your skills. Then, you need to be ready to test products until you land a winner. So be prepared to hustle and do the hard work. Learn how to find items before they start trending to stay ahead of the curve.
Dropshipping takes time and patience, so a lot of people quit before making any money because they lack the patience and drive you need to succeed with the business model. Others quit because the model isn't sustainable long term or it's too competitive. That's why I prefer the local lead generation business model. Not only is it a proven concept, but it's how I could leave my 9-5 and secure a passive income of $52K/month.
Consider that natural barriers like location and learned skills minimize the competition. Plus, with over 41,683 ZIP codes in the USA, there's no risk of saturation. (Each ZIP code presents a market full of sub-niches and untapped opportunities). The hardest part of dropshipping is niche selection. But if you get it right, you can succeed in the business in 2023.