Top 5 Types of Products Best For Dropshipping and Ecommerce | From a supply chain perspective

Introduction

When it comes to dropshipping or e-commerce, selecting the right product is pivotal. A couple of weeks ago, I shared a video detailing the top five products to avoid when sourcing from China, and today we'll explore the opposite—product types that are particularly well-suited for dropshipping from China. Understanding the fulfillment supply chain is essential, as it can significantly impact your ability to scale your business efficiently.

Key Considerations

To effectively manage your product sourcing and fulfillment, focus on the following key considerations:

1. Minimize Fulfillment Costs: The goal is to select products that help keep your shipping expenses low while maximizing delivery efficiency.
2. Easy Inventory Management: Look for products that simplify inventory tracking and stock management.
3. Efficient Packaging: The packing process should be streamlined for your fulfillment agent or center to ensure quick and damage-free shipping.
4. High Perceived Value: Even if you're optimizing for cost-efficiency, ensure that the product retains a high perceived value and offers a great unboxing experience.

With that in mind, here are five types of products that excel in the dropshipping model from a supply chain perspective.

1. Single SKU Products

Opt for products with one SKU or as few SKUs as possible. Managing multiple variants (colors, sizes) increases complexity and risk of stock shortages. Businesses will struggle when a specific SKU becomes out of stock, potentially leading to missed sales and customer dissatisfaction. For example, products like a standard Logitech mouse typically come in limited color options, making them ideal for inventory management.

2. Products That Don’t Require Boxes

Look for products that don't need extra packaging or boxes, as this can inflate shipping costs. Instead, aim for items that can be delivered in basic, protective packaging, such as fabric items that can be wrapped in bags rather than boxed. A prime example is high-quality towels that are delivered in a simple bag, minimizing added weight and cost.

3. Small, Light, and Dense Products

Focus on items that are light and small, as shipping costs are typically calculated based on weight. Avoid products that might be light but bulky relative to their weight, as they can incur volume-based shipping charges. Dense products not only tend to cost less to ship but also have higher perceived value, appealing more to customers.

4. Stackable and Bundle-Friendly Products

Initiatives that allow easy bundling or stacking of products not only streamline the fulfillment process but can also result in cost savings. When products fit together neatly, they can be packaged together in a way that enhances overall efficiency. Pre-defined package deals such as five-pack or ten-pack offers can drive up average order values and make inventory planning much simpler.

5. Consumable Add-Ons

Products that have consumable add-ons or upsell opportunities can create significant recurring revenue. These add-ons should ideally be small, light, and easy to bundle. For instance, razors and their blades provide a classic example; the initial purchase is the razor handle, and ongoing purchases involve consumable blades, driving repeat sales effectively.

Conclusion

Finding products that meet these criteria may not always be straightforward, but being mindful of supply chain efficiencies will pay dividends, particularly as you scale your e-commerce business. If you're serious about growing your enterprise, take the time to evaluate your product options based on these attributes.

Keywords

• Dropshipping
• Supply Chain
• Product Types
• Inventory Management
• SKU
• Shipping Costs
• Consumable Products
• Bundling

FAQ

1. What types of products should I avoid for dropshipping?

It’s best to avoid products with multiple SKUs, fragile items requiring extensive packaging, and products that are heavy or bulky. Check our earlier video for a detailed list.

2. How do shipping costs affect product selection?

Shipping costs can significantly impact your profit margins. Products that are heavy or require excessive packaging will increase these costs, making them less viable for a dropshipping model.

3. What does SKU stand for?

SKU stands for Stock Keeping Unit. It represents a unique identifier for each distinct product and service that can be purchased.

4. Why are consumable add-ons important?

Consumable add-ons provide recurring sales opportunities as customers will need to repurchase them once they run out. This can lead to increased customer lifetime value.

5. Can I scale my business with products that have many SKUs?

While it's possible, managing many SKUs complicates inventory and fulfillment processes. It's advisable to minimize SKUs for easier scaling.