An online retailer receives customer orders and passes on the information to a wholesaler or supplier. The wholesaler packs and ships the products ordered to the customers on behalf of the retailer. The difference between the retail and wholesale price constitutes the retail merchant’s profits. He usually promotes and sells products through his own website or auction sites such as eBay.
Drop shippers charge a fee for the services they deliver which includes the packaging and shipping costs. To make profits over and above the costs incurred, the retail merchants would need to choose products carefully. Some products are more suitable to be drop shipped than others and the sooner you identify those, the better for your profit margins. It is essential for a retailer to understand this if he wants to be an important part of this supply chain.
Online selling is giving people what they want rather than telling them what to buy. So, one of the easiest ways to identify profitable products for your online business would be to choose those that are selling well. You can do an advanced search on eBay to see which products have been selling. You could also check out other auction sites such as Amazon to know more about the “in-demand” products. Then, there are the reverse keyword tools such as Ad words, where you can key in a product name or a keyword to know the exact number of people who have been searching for the same. This kind of research would tell you what people want. However, bear in mind, that if the products are popular and in demand, the markets for the same would also invite a lot of competition. There is a trade off involved between the level of competition you would want to handle and the product ideas you want to explore.
You might consider choosing a product you are passionate about and know well to serve your customers better. A detailed product understanding would enable you to comprehend your customer perspective. You might also consider selecting a demographic you want to cater to, in order to promote and sell your products well.
Another great idea would be to pick niche product categories, having a low but steady demand from a select few, but not a regular supply channel.
Reputable Trade directories such as esources.co.uk would help you know what buyers are searching for, while helping you identify reputed suppliers and wholesale dealers in different product categories. You could use some special online tools to research the selling potential of any product. The Market Research Wizard in this site is one such tool, where you can type in a keyword and know more about the selling potential of the product in UK, USA, Canada and Australian markets. You could register with the directory as a trade buyer to start using this tool as well as to access thousands of exclusive wholesale sources and websites. eBay pulse is another great tool which can be used to get updates on popular searches, stores and items.