What is dropshipping? The Definitive 2023 Guide
Did you know that in the year 2016, there were over 1.52 billion people who shopped digitally? If you think that it’s a lot of potential customers for starting a business, then just wait for what the statistics have to say about the coming years.
This number is set to hit a total of over 1.92 digital buyers in 2019, surpassing 2.14 billion in 2021.
Interestingly, the global value of the dropshipping market is expected to hit 476.1 billion by 2026.
These stats and studies make it pretty clear that anyone who wants a reliable and established business should invest in eCommerce.
However, with this high number of customers there can be some problems. There is a lot of competition, and you need to have inventory control software, a stocking station, keep inventory records, and perform several other tiring tasks to ensure timely order fulfillment. You even have to deal with shipping cost management, damage risks, and return issues.
Luckily, there is a way to avoid all this hassle and still get a reliable eCommerce business; it is called dropshipping! It’s so effective that more than 27% of the online sellers are already using it and of course, many more are moving towards it.
Have a look at this process and how it can help you to attain a better order fulfillment rate without affecting your investment.
What Is Dropshipping And How Is It Different?
Dropshipping is the latest trend in the eCommerce world. It’s basically a supply chain management process that involves direct delivery from the manufacturer or a third-party supplier to the customer.
This supply chain method is very different from any traditional methods because, in this method, you don’t need a stocking facility. All you have to do is to create a portal for receiving orders and find the suppliers who can fulfill the demands. Once the customer places an order on your online portal, you have to inform the supplier, and then the supplier will deal with delivering the order to the customer.
How Does Dropshipping Work?
How does dropshipping work exactly? Understanding what dropshipping actually is and how it works can give you an advantage over your competitors.
In the simplest sense, dropshipping is a form of e-commerce that involves shipping products directly from a supplier/manufacturer to customers whenever they place an order in your store.
Of course, there’s more to it than that, so a little illustration can help here.
Let’s say you’ve decided to sell sneakers online because you noticed it’s profitable. However, you don’t have enough money to stock up your store. This is where dropshipping comes in handy.
To get started, first, you have to set up a storefront online using SHOPS, our website builder tool. Alternatively, you can use Shopify, though it will cost you a lot of money.
After setting up your store, the next step is to find suppliers that sell sneakers. Aliexpress and CJ Dropshipping are excellent places to search.
When you’ve found them, the next thing you will want to do is to import products from the suppliers’ store into yours. By import, we mean copying product information, such as images, product descriptions, specs, etc., from the suppliers’ website into yours.
Did you notice we didn’t include product prices in the list of things to import? That’s because it’s all up to you to set up your pricing. So if the supplier sells the product for $50, you can sell it for $80.
When a customer orders a product from your store, all you have to do is forward the order to the supplier, who then fulfills it. In the end, you’d make $30 in profits. Easy money!
Is Dropshipping Worth The Effort?
As a business person, the first question that will come into your mind after learning about the dropshipping process is about its worth.
The answer is, yes, it’s totally worth your time, effort, and investment.
Have a look at the following points. They will clear out the doubts about the dropshipping business model and walk you through its perks.
Low Capital Investment
When you start a new eCommerce business or any other business, investment is the foremost problem. At the initial stage, it’s difficult to attain high funding, especially when there is no surety for the positive outcomes of your dropshipping business ideas. In fact, 29% of businesses fail due to low cash problems before they get fully established.
Image Source: businessinsider.com
Fortunately, the dropshipping business model can help you deal with all these critical issues. This business doesn’t need you to buy any products or inventory in advance, employ a lot of staff members, and most of all, invest in an office. You can start it right from your working desk or any other place from where you have internet access.
Moreover, you don’t have to pick or drop anything, so there is no hassle of stocking space, inventory control, or sorting products.
The only investment will be the website, store, or portal that you are using to get customer orders and any additional software (some very inexpensive options available) that you will need for coordinating with the suppliers.
Zero Stock Requirements
If you have any experience in online or offline business, you will know the importance of stock.
It is the most considerable investment and the riskiest part for any business. Stocking is also one of the most time-consuming processes in order fulfillment. You have to audit multiple suppliers, compare their quotations, select the ones who are most affordable and then place the order for required goods. Once the goods are ready, you have to hire a delivery service to transport the products from the supplier to your storage space and then spend time sorting them on shelves. You will also have to enter their records for inventory management and even face some losses due to damaged goods or transportation issues.
However, with dropshipping, the goods are transported directly from the supplier to the customers, so none of the stocking investment will be required. Even the inventory will move to a virtual stage, which is easy to manage with online and real-time applications.
No warehouse Issues
Warehouses have always been an issue for business. It’s not only cost ineffective but is also a significant source of error and problems.
Even if you have a standard size warehouse, you will need warehouse management software, a team of people to manage it, invest in the insurance, and a lot more. You might also have to spend on electrical fitting and cooling system in the warehouse.
Dropshipping, on the other hand, doesn’t need any warehouse on your end. Therefore, there will be no hassle with insurance, rental, or professional warehouse management software. In the initial stage, you won’t even need staff members, which means you won’t be paying high salaries.
Ability to Work From Anywhere
Unlike other businesses, dropshipping doesn’t need a considerable investment, a particular office space, or a team full of people at the initial stage. All you need is a tablet, laptop, or smartphone to keep an eye on the work and an internet connection to stay connected. It means that you don’t have to stick with a particular location or city to ensure the smooth running of the business.
You can literally regulate the workflow sitting at a warm beach in Miami or during a trip to some abroad country. Frankly, it’s an excellent option for anyone who wants to live an independent life or loves traveling.
When you open a brick-and-mortar store, you have to select a particular source and product for your business and then stick with it.
However, with the dropshipping business, you have an infinite number of options. You can go for any product, whether it’s baby products, a pet product, or any other popular product. You will always have a wide choice of suppliers.
The best part of it all is that you can add to the product and supplier list whenever you want. There is no pre-investment which means you are free for experimentation.
Another good thing about the dropshipping business is the choice of selling medium. You can sell through a social media store, dedicated application website, and many other sources. We will talk about those options a little bit later.
In recent times automation has become a considerable part of the business world. It let the business owners speed up the processes, boost productivity, and increase their market awareness. About 51% of companies are even using automation for getting better results out of their marketing campaign. No wonder, dropshipping business also offers you excellent options for automation.
There are a lot of applications like Oberlo that can help you to automate a lot of aspects. These applications help you to manage the virtual inventory to reduce pricing errors, improve the efficiency of the business cycle, and save a lot of time. These apps can even automate the supplier order placing process. All you will have to do is click one button, and the application will fill in all the customer details.
In long-term usage, the automation of your business also plays a vital role in improving your bottom line, keeping up with the competition, and saving you money.
Cross Border opportunities
According to Statista, about 28% of the total online buyers in America are using cross-border retailers to fulfill their needs. 7% of American buyers are using only international websites or eCommerce for online purchases. So, it is clear that to attain the highest returns in eCommerce; you have to work beyond the border.
Image Source: invespcro.com
However, to deliver internationally, you will need offices, delivery person and have to pay the high cost of transportation of the goods. Moreover, take a lot of time to transport a product from one country and then deliver it to another.
Dropshipping can come in handy in this case as well. It can’t eliminate the time or investment, but it can decrease it significantly.
In this supply chain, you just need to work to create coordination between your customers and the supplier and leave the heavy lifting to the suppliers.
Image Source: shopify.com
The thing about dropshipping is that it is not locked onto a place. There is no physical location so you can easily connect to customers in China and sell a product from Indian or any of the nearby countries. There is no limitation of border, sellers, or customers.
The most challenging part of any eCommerce business is to select products. You have to think about the customer demands, past stats, analyze the competition, and manage the expenses. The process is not only long and tedious, but it is also risky. The customer choices keep on changing, which means it is not necessary that the product you sell has a guarantee of attaining profits.
A lot of eCommerce owners avoid adding a less known product to their stores due to this risk.
However, you, as a dropshipping business owner, will not have to think of this fact that much. The lack of actual investment comes in handy in this case. It will give you the freedom to upload data of any product you like. If the product gets purchased, you will earn profits, but if it doesn’t, the product is still with the supplier and you lose nothing. You see it’s a win in both cases.
This feature of dropshipping is also practical for starting a full-scale online store. You can start a dropshipping business with the products you like, and in a short time, you will have a rough estimate of their success rate. You can then use this data to find the products that are more potent and focus on selling these products.
Who Should Adopt Dropshipping?
Dropshipping is a flexible, low-risk, and low investment opportunity that can help you to create a base for a reliable business. But, it’s no genie that can make you a billionaire overnight. It will take time, patience, and of course, some work to attain a good level of success in this field.
So, if you are looking to dropshipping for quick success or a quick buck, it may be a bit disappointing.
The entrepreneurs who can get the best results from it are the following:
The capital you need for starting a dropshipping business is very low. All you will need to start this business is an application or website and some software. Moreover, you don’t have to lease an office, stock products, or any other thing that can hold you from changing products or your plan midstream.
Therefore, it presents an excellent opportunity to test your eCommerce idea or a new product. You can simply upload the product details on your portal or website and check for its conversion rate. It will give you an idea of whether investing in that particular line of products is profitable or not.
First Timers or Budget Entrepreneur
You may have a Master’s Degree in Business or have read every business magazine; it will never be enough. The on-the-ground experience is a lot different from what you will hear or see anywhere. Whether you talk of advertisement, promotion, customer acquisition, or any other business aspect, the numbers on paper and the result, in reality, will always differ. You can learn about the current trend, but they will change. The only way you can keep up with the changing market is by learning and gaining experience.
Dropshipping business can help you with both of these aspects.
When you start dropshipping, you will be free from the worries of extra paperwork, high investments, and direct customer interaction. It offers you the exposure and flexibility you need in the business without the risk of losing high investments.
You can also use dropshipping as a tool to gain experience and develop a full-scale branded business in the future.
A lot of entrepreneurs are interested in selling more than one type of product or model. If you too are one of these entrepreneurs, dropshipping is something that can help you.
Unless you have a contract with a particular brand, you can use it to sell several different products without any problems.
What’s even better is that there is no particular shop, store, or contract, so you even have the flexibility to add any product or niche of products according to your wishes.
Getting Started With The Dropshipping Model
Dropshipping may be a low-budget business, but it is still a business which means you have to plan every move you make. It also means that you need to know the competition, have clarity about your audience, and find the right tools for the job.
Have a look at the following points. They will guide you on how to start a dropshipping business and also walk you through the steps you will need to ensure its success.
1. Select A Niche
Dropshipping is a potent tool for both establishing a new business and scaling it for the future. Almost 23% of the online sales in 2017 were through dropshipping, that’s nearly 85.1 billion. Even the eCommerce giants like Amazon and eBay are using dropshipping.
Therefore, when you start a dropshipping business, you have to compete not only with the startups but also with established brands and businesses.
So, it is crucial that you divert all your attention to one particular product category rather than an all-rounder market. Preferably, a product category that you can relate to your hobbies or interests. It will help you to understand the product demand from the customers’ perspective and also prevent you from getting discouraged.
Here’s how you can find a niche for your startup.
2. Start with a general store
It might seem counterintuitive, but the best method to finding a profitable niche could be not having one at all – at least to start. See one of the best methods of figuring out which niche to build your store around is to start with a general store. This method allows you to test a lot of different products and figure out which niche you are best at promoting. Once you find a few products that are working in that niche, you are then ready to build a niche-focused store.
3. Identify your interest
Check your purchases from recent times and make a list of the products that you buy a lot. Examine how you like to spend your free time and make a list of your hobbies. This list will help you to identify your passions and your areas of expertise. Hence it will give you clarity of the type of products that you can sell.
Let’s say you are a fitness freak, selling gym products will seem a lot easier than selling something like a grilling set.
4. Research Customers
Draft some questions related to your identified niche or product and set out for a survey. Have a conversation with some customers and note the common problem faced in their day-to-day life. It will let you know their preferences and find the product categories which have more selling potential.
For instance, the biggest problem that the majority of the present population is facing is pollution. So, selling items that promote green earth to an audience that cares about the environment could be a very potent option to base a business around.
5. Check Out the Trends
There are a lot of eCommerce websites that are already using dropshipping; you can use those to your advantage. You can visit some of the popular online sites like Aliexpress and Amazon and identify the most sought-after top-selling products. Using Sell The Trend’s AliExpress or Amazon Explorers, it’s really easy to find such products in no time at all. Combine that with the Nexus Research Machine which aggregates the highest performing products from multiple eCommerce platforms and it should be a snap finding highly converting money-making products for your new dropshipping store.
It might be beneficial to also check out competing dropshipping stores and get product ideas from them. This is where the Sell The Trend Shopify Store Explorer comes in showing you the top dropshipping stores around the world and the products they’re selling. Using any of these sources, you will have a list of some of the most potent dropshipping products. You can then organize these products according to their categories and compare the products under each category. It will provide you with an overview of the most profitable and highest-earning product category, which you can then use as your niche.
6. Find The Perfect Products For Dropshipping?
Now that you are sure of the product category or niche that you want to sell, it’s time you shortlist the products from that category. You may think it’s an unnecessary step, but it’s actually the most crucial aspect of the dropshipping business. It is the part that will decide the overall profit that you will be earning, which means it will determine the success of your dropshipping business.
For example, let’s say that you selected to sell hair products for men in your new store. Now you will have a wide variety of merchandise, like the typical gel which costs only a few dollars, and then there are the heat protector gels which will cost hundreds of dollars.
The high price will seem tempting, but what makes you think that a person will spend a hundred dollars when he can get a similar look with a few dollars.
Therefore, you have to research the products of your chosen niche and choose the most potent one amongst them. Using a platform like Sell The Trend with Store Intelligence and Dropshipping Product Research tools you can see which products are popular on Facebook and which products would be good to sell in your store as well.
Criteria For That Perfect Dropshipping Product
The following are the things that you have to consider before selecting any product for your dropshipping business.
1. Retail Prices And The Wholesale Prices
In dropshipping, retail product price plays a critical role. If your product is too costly, customers will rarely buy it while if it is too cheap, the profit margin will not be enough for you. Considering the profit margin of 15%-45%, you have to aim for a product that can balance both the price and the selling rate. You have to find the products that can work for your startup as well as fulfill the customers’ expectations. Sell The Trend’s NEXUS Product Research page allows you to quickly check a product’s profit margin as well as see the average price that it’s being sold for in stores around the world. it’s also a great way to gauge the popularity and earning potation of a product.
2. Weight and dimensions
The supplier who delivers the product will deduct any shipping price from the total sales price of the product. That means heavier items affect your bottom line as more money goes towards shipping.
One obvious way to mitigate this is by managing the size and weight of the products you pick for your store. So, go for a product that has good market value but is lighter in weight. It will be cheaper to ship and will boost your profit.
As for the heavy products, you can add them after your business reach a stable state and other parts of your business are firing on all cylinders.
3. Turnover Rates of the Product
As an online retailer, a lot of your time will be spent researching and adding new products to your store. If you go for a product that keeps on changing or upgrading, you will have to keep changing this content. It will be costly, time-consuming, and eat up a sum from your profit. You may also have to undergo the stress of keeping up with changing product pages.
Therefore, consider the turnover rate of your product before choosing it.
4. Usability and Durability of the product
20% of the eCommerce products return to the supplier due to damage. It may not cost you investment, but it will cost you time and decrease your brand value. So search for the products that are more durable and have less chance of damages during the delivery. Sell The Trend’s Product Research Page is also a great way to see if a product is experiencing a lot of returns from customers. Make sure to avoid those products otherwise you could end up losing money as returns eat up not only your profits but your time and even your patience.
As for the usage part, prefer selling more disposable or renewable goods. It is possible that the customer will turn towards your service to repeat the order. You can also provide some options or discounts for regular customers. It will encourage them to repeat purchases and even spread the word about your business.
5. That WOW Factor
Another important aspect to consider when choosing a product for your store is whether it has a WOW factor that is able to entice a prospective buyer. Products that have that special quality will fly off the virtual shelf a lot faster than common or boring products. If you encounter a product that makes you think “huh… that’s a really cool product” then you might have located such a product.
6. Is It a Passion Product?
People are more likely to purchase a product from you if it connects deeply with them. Passion products are ones that appeal to consumers on a more personal level than a common product. For example, dog products, hiking products, fishing products are passion products because the people who would consider buying such products have a real passion for that niche.
You know the profit you want to earn and the products you want to sell, so the next thing you need is a supplier that offers these products at a low price.
Frankly, this part is a lot more difficult than the previous one. In fact, it won’t be wrong to say that it will be the hardest part of your dropshipping business.
Therefore to get this right means you don’t just need suppliers, you need quality suppliers, which means you will have to put in the effort.
The following are the more common ways to find the best dropshipping suppliers for your business. You can use them to prepare a list of potential retailers and then evaluate them to identify the ones that suit your needs.
Open up your web browser, and type your product’s name with “supplier” at the end. You can then gather the contact information of some supplier from there and then contact them through email or phone. Most of the businesses also have online forums for queries and services on their website.
Contact a Manufacturer
If you are planning on selling branded goods, find the contact of its manufacturers, and contact them directly. Some of the manufacturers will readily provide you with the services you need, and if they don’t, you can ask them for their outlets or wholesale dealers.
It may be a bit more work, but as the wholesale products are coming directly from the manufacturer, the prices will be lower than that of a supplier found through a standard Google search.
Contact some shop owners, delivery services, and find out about the wholesale dealers who work in your area. You can then directly visit them with your idea and ask for their support. If your proposal is good enough and the wholesaler finds it profitable, you will get your product in no time.
Attend Trade Shows
Trade shows are the blessing of heaven for both the retailers and the sellers. It is this event that allows them to talk face-to-face without the plague of the internet or the hassle of third-party people. Attending some of these trade shows will help you to acquire knowledge about the dealers who can help you with your dropshipping business. This method is a little more time and money-intensive, but if you are looking for unique items it might be the best method.
On the bright side, you will also meet some startup owners who can walk you through the difficulties they faced and share a piece of mind with you.
This is by far the easiest and most immediate method. There are a lot of supplier directories that show you millions of products with their associated suppliers. Website such as AliExpress and DHGate provide a convenient way to connect with suppliers selling the exact products you are interested in. All you have to do is search for the product you need, find a supplier that is selling it, add that product to your store, and use an dropshipping order fulfillment software to automate the whole process. Sell the Trend automatically connects you with low-cost Aliexpress suppliers for the exact product you are considering using the convenient “Source from Aliexpress” button Located on product pages.
How to select a supplier
You have to rely upon the supplier for stock keeping, upholding product quality, order fulfillment, timely delivery, and almost all the primary aspect of the product management of your business.
The choices you make at this work will have a direct effect on your business reputation and profit. Therefore, even a slight mistake in this step is not tolerable.
So, don’t panic and take time to research the suppliers before you settle on one.
The following are the things that you should consider when selecting a supplier:
Not all manufacturers or wholesale sellers are open to dropshipping. Making contact with a supplier will mean time wastage and disappointment. Therefore, before visiting any supplier or manufacturers check their background and make sure that they are dropshippers.
As a startup business, the last thing you will need is a supplier with a lack of experience. It will make your business more complicated and might cause it to fail. You cannot rely on anyone who is not a pro to handle this essential aspect of your business. So, if you suspect that the supplier is not experienced go elsewhere.
Keep searching until you find the seller with a record in dropshipping and can ensure the smooth flow of the business. It may take some time, but it’s vital.
Dropshippers will handle all the functionality of the work from packing to delivery. So it’s pretty apparent that they will charge you a small part of your profit for their services. They have to pay the rent and stocking charges after all.
However, this fee is usually limited to a few dollars (depending upon the product price). If the supplier costs you more than that say 50% of your profit, just let them go.
Even with the most competitive prices or range of products, they won’t do you any good.
When you are signing in for business with a supplier, identifying the validation of their promises and claims is a must. You have to make sure that the supplier has what it takes for your dropshipping business.
A genuine supplier will always be ready to provide you with that confirmation. They will willingly provide you with contact information or connect you to previous clients. It will help you to establish trust and ensure stability in your business.
According to studies, 95% of the eCommerce shoppers stated that the shipping prices are a significant point for making a purchase. Another survey by Walker Sands also revealed that 79% of US customers are more likely to buy products with free shipping.
53% of the US customer even said that they wouldn’t buy a product if they don’t know about its exact arrival.
Image Source: walkersands.com
The stats make it pretty clear that a majority of your orders will be impacted by your shipping policy and prices. So you have to ensure that the supplier you choose is up to standards for this aspect of the business. The supplier should offer an exact estimate of the delivery time and keep the customer informed with real-time data.
It is also a great idea to go for a supplier who has multiple deliveries and payment options.
Moreover, the supplier should also have clear policies for product return. About 68% of online shoppers consider it before buying a product.
Image Source: marketingland.com
Product and Photo Quality
In online business, there is no physical testing or interaction with the product. The customer has to depend on the picture and trust the supplier for fulfilling their need.
Therefore, the pictures you place on your site need to be clear and real. About 22% of the total products that return to the dealer are because of the difference in the real-life product and its photographs.
Image Source: cdn.business2community.com
According to an article on internet retailing, 47% of respondents said they have to return products because they did not match their expectations.
So, it’s pretty clear that a supplier who cannot produce quality images and ensure product quality isn’t a good option for your business. You need a committed, professional who is dedicated to customer satisfaction to grow in the dropshipping market.
Evaluating Sales Channels
After you have learned the necessary steps on how to start dropshipping and have completed the initial work, it’s time to face the market. It’s time to find a platform to upload the product picture and start selling your products.
There are lots of available platforms that you can use. Here are the most preferred options available.
If you want to sell hassle-free and quickly, Amazon is a must for you. The store is by far, one of the largest eCommerce businesses in the world. Studies have revealed that this giant in the industry, single-handedly acquires over 45% of the total eCommerce market in the United States.
Image Source: statista.com
The net worth of the company is approximately 232 billion US dollars, and its annual earnings in the previous year (2018) closed to 10.07 Billion US dollars.
Fortunately, 34% of the sales by Amazon are through third-party dealers. It means you too can become a part of this large company and earn a profit by selling through its platform.
Some other benefits of starting a dropshipping business with Amazon are:
Image Source: emstatic.com
Connecting with Amazon would mean you will be getting an application, website, and all the other resources you will need. You have to sign up for the Amazon seller account, and you are ready to sell.
Less promotional work
Amazon is the largest name in the world of eCommerce. It means you don’t have to make ads, banners, or run a campaign to promote your product. Once you have uploaded the pictures of the product, Amazon will take care of finding the relevant users, emailing them, tracking progress, and all other aspects. There is absolutely no need for promotional work from your end.
Getting traffic on a new startup business is a difficult task. The customers are more reluctant to shop with an unknown user and often avoid them. However, with Amazon, you won’t face any such problems. The website currently has over 310 million active users, which means it is trusted. So connecting with it will make you look more trustworthy. Hence you can sell without any problem.
Image Source: statista.com
Cons of using Amazon
Every good thing always has some flaws, and Amazon services are no exception. While most of them are not deal breakers, it is a must that you know everything before you dive into being an Amazon seller.
So, have a look at the cons of using Amazon dropshipping:
Amazon is providing you with a marketing app and a lot of other services. However, they all come at a price. The commission fees are usually somewhat between 10-15% of the total cost of your product. It is not that high but can cause a lot of trouble if your profit margins are low.
2. Data Leak
When you are selling on a third-party app, you can’t expect much privacy on it. Amazon app lets you do business freely, but all your sales data is accessible. If Amazon wants it can use the data to find best sellers and use it to strengthen their involvement in that niche (no one is saying that Amazon will do it, it’s just a possibility).
3 Lack Of Connectivity With Customer
The consumer who purchases your product through Amazon will not know about your business. It will give you sales, but will not help you with growing long-term relations with your customers. Besides, Amazon has a lot on its plate than worrying about its third-party sellers.
4. No personalization
Amazon has its logo, web design, application interface, and marketing techniques. It means that you don’t have the right to customize or personalize anything for your customer. Without personalization, your store will look almost the same as the others, which means you can’t expect to earn a market name or reputation with it.
eBay started as an auction website for selling old products but has now become one of the biggest eCommerce websites. It has over 180 million active users and stands as the second-largest eCommerce store, right next to Amazon.
According to some studies, the website earned revenue of 10.746 billion in 2018. The following are the reasons that will help you with your choice regarding choosing eBay as a selling channel.
eBay is pretty much similar to the Amazon store. It may be a bit smaller in scale, but all its policies are almost the same. Therefore, the pros of these two stores are also identical. Here are the benefits that you will get with eBay:
- Head start for your dropshipping business
- Access to more potential consumers and a larger audience
- Robust and active marketing
- No hassle of creating and running a website
eBay may be useful, but it’s still a third-party store, so you will face some additional hurdles operating within its guidelines.
Here are the few cons that come with dropshipping on eBay:
1. Listing Fees
The biggest downside of selling on a known application or eCommerce website is the listing fees. eBay charges you 10% of the product cost as the charges for selling with them. With products that have a lower profit margin, this fee can quickly eat up all your profits.
2. Constant monitoring
eBay may be known for selling products, but it’s an auction website. Therefore, you will have to constantly monitor and re-list the product you want to sell. There are some automation tools for it, but it’s still a hassle.
eBay lets you run your dropshipping business, but it does not give you any right to create value-adding pages. The app has some templates of pre-prepared designs, and you have to stick with them.
4. No Long term Connections
There are a lot of sellers on eBay, which means that the majority of your customer will be one-time buyers. You don’t have a brand name, customer communication, design, or any other thing to shine a light on your business.
Therefore, selling on this platform will benefit its reputation and do nothing for your brand name.
With your Own Store
The best way to start and run a profitable dropshipping business is to build your own store. You can use the websites like Shopify, BigCommerce, and many more to create a customizable store for your eCommerce.
Selling through Facebook or Instagram stores is also an excellent option for a startup. Facebook single handily acquires over 2.38 billion monthly users around the world. If you manage to divert even a fraction of these users to your Facebook store, the profits will be much more than you can expect. More than 50 million businesses are already using Facebook to sell their product and are getting approximately 2.5 billion comments per month.
Here are the pros and cons of selling with your own stores:
You are designing a store so you will have the right to customize every aspect according to your needs. It is a very great thing for adding value to your products, optimizing looks, making the page informative, and doing a lot of things. These things, in the long term, will not only build an active business but also help you to attain a market reputation, which is a must for establishing a business.
With the presence of platforms like Shopify, Bigcommerce, Wix, and others, you have hundreds of design options. There is no limitation and it’s super time-saving. You don’t need to wait for approval or anything, just sign in, drag the design elements you want, set up the products and you are all set to sell.
3. Mobile Ready
Creating your store using recognized software or platform gives you the flexibility to optimize it according to the latest trend. You can make even make it responsive to smartphones and considering that 47.96% of the consumers are using their phone to make the purchase, this optimization is highly profitable.
Image Source: gs.statcounter.com
4. Low Expenses
Owning a store cuts the most significant profit eater factor, the listing charges. Most platforms like Shopify have some fee for creating stores, but it’s peanuts compared to the listing charges. As for the social media selling, it’s free (except for any service charges from credit card payment systems or PayPal).
The only con of developing a store is traffic acquisition. The customers are unaware of your new store, which means you will have to put in extra effort in promoting your business. It is also possible that you don’t get much attention in the initial phase of your dropshipping business which might lead to disappointment – but don’t despair in the following section we will discuss how to bring in a flood of customers to your new eCommerce store.
Customer Acquisition Campaigns You Will Need
The most substantial aspect of any startup is marketing. It is critical because you can’t earn if consumers don’t have a reason to trust your service or even know about your existence. You have to tell them about the benefits of your services and give them a reason to shift from trusted eCommerce giants and buy from you instead.
Studies reveal that 14% of startup fails because the owner doesn’t pay much attention to marketing.
So, if you don’t want to become a statistic, do consider a few balanced and robust marketing strategies. The following are some customer acquisition techniques that you can use:
One thing that every business person knows is that money attracts money. It means that the more wise investment you make, the more profit you will earn. The same thing applies to the dropshipping business. You can attain fast recognition and much more profit if you are ready to invest more finances in it.
Here are the investments you can make:
Social Media Ads
One article says that 70% of customer expects brands to have a presence on social media. Facebook alone accounts for one in every six-minute spend online. As for other apps, Twitter creates a business following hub for the majority of customers, and 93% of pinners on Pinterest use it for future purchase planning.
Therefore, you can attain a lot of engagement on your dropshipping store with social media. It can help you to target specific genders, ages, hobbies, and likes based on their profile and presents excellent opportunities.
Image Source: bluecorona.com
Google is the most trusted search engine around. It accounts for about 71% of the total online searches made in the world. Advertising on this platform will not only ensure that your visibility but also create a sense of trust for the customer. Stats say that the consumers on Google are 50% more likely to make purchases than on any other organic platform.
Social Media Influencers
Celebrities, bloggers, leaders, sportsperson, and other recognized personalities always derive a tremendous amount of fan following; you can use these fans to your advantage. You can connect with these personalities and offer them a sample of your services.
You can also ask them to upload reviews about your business on their social media channel and share it with others. They may charge you for the promotion, but it will pay for itself if you connect with the right influencer.
Even the brands like Nike are using this paid promotion technique for ensuring continued business growth.
Image Source: noisyarena.com
In case you want to keep things less complicated and avoid high investment in the initial stages, there are some free promotion methods that you can use. These methods are not very fast, but they are effective.
Have a look:
About 59% of the marketers say that content marketing is a top priority for their business and 24% of marketers are planning on increasing their investment in content. It is easy to construct and help them to educate their customers about their products. You can also use the content to create awareness about your business, its benefits, and the quality services you can offer. It will promote your business and can also increase its conversion rate by six times.
Social Media Marketing
Social media marketing is the little brother of social media ads. It’s absolutely free and has almost every advantage of the ads but with far fewer engagement rates. In this case, the ads you create don’t get posted as an advertisement on the site but instead become a post on your social media accounts. Only the people following you will have access to view them unless you are lucky enough to get a flood of social shares.
Image Source: statista.com
However, the post stays in your profile forever, which means that you may keep getting engagement from the post even after a few years of its posting.
There are around 5.6 billion active email accounts in the world, which means billions of potential customers for your business. You can use email marketing campaigns to find about these customers and send them personalized emails to promote your business. Stats reveal that 99% of the send email gets accessed, and about 59% even have an effect on the customer’s purchase decisions.
Uploading a video of your product or services is an excellent way of teaching the customer about your offerings. It is quick, easy, and with platforms like YouTube, has become pretty engaging for dropshipping. 81-87% of the marketers are already using this promotional work to enhance their sales. Even giants like Amazon prefer it.
After you are all set with the promotional campaigns and know how to start dropshipping, it’s time for the day-to-day tasks that you have to perform. These tasks are essential to ensure that your store stays online and is up to the market demands. The various tasks that you will be doing are
- Upgrading or editing the product list and content
- Deal with refunds, replacement, and return issues
- Managing restocking fees and defective items
- Deal with customer queries, problems, and out-of-stock problems.
- Learn and apply changes according to the market development
- Analyze the competition and develop strategies to combat it.
- Researching new products and adding them to your store
- Managing and regulating emails and other marketing processes
It is also an excellent idea to create product pages for your business on social media platforms like Facebook and Instagram. It will increase your workload, but it is essential to obtain new customers, get user-generated content, and increase word of mouth about your store.
Scaling Your Store
Settling the business and earning profits is the initial steps for the dropshipping business. The next step is to increase the sales of your store with the least possible investment. It is essential to expand the business and make it more efficient so that you can get the results that you expect and eventually retire to a beautiful island!
For this stage, you will have to buy some management software for virtual assistance and expand the product list. You can also hire some professionals or contact some freelancers to help you with this phase.
The various tasks you will do in this step are:
- Processing and sending invoices
- Create blogs, articles, and newsletters for your eCommerce
- Maintain and upgrade a website and perform SEO optimization
- Design templates and new graphics for your website and app
- Increase the investment and scale of your marketing strategies
- Maximize the email and customer contact list
- Gather customer data and personalize their searches
In simple words, once you have set the goal you want to achieve, you are at the stage of finding the best methods to attain this goal.
Elements That Lead To A Successful Dropshipping Business
After knowing all about how to start a dropshipping store and promote your business, it’s time you learn about the secrets of making it successful.
Here are the critical elements of a profitable dropshipping business that you should know and must always employ in your startup.
1. Personalize And Specialization
To beat the competition you have to personalize every element of your business. You have to add value to the whole dropshipping startup. What makes you unique? why should someone choose you over another?
2. Focus On Seo
The results on the first page of the Google search engine get 91% of the traffic, and 32.5% of the clicks are on the first link itself. Therefore, use SEO techniques to increase your ranking on Google.
Image Source: searchenginewatch.com
3. Keep It Near To Your Passion
If you try to sell a product that you use or are passionate about it will give you clarity in all its aspects. You will find it easier to see it from the customer’s perspective, which will increase your chances of selling it much more comfortably. Moreover, the passion for the product will help you to focus on the work and will make it more interesting and enjoyable.
4. Try Light And Durable Then Heavy And Fragile
It is ideal if you try to stick with products that don’t break that easily. It will help you to attain more straightforward delivery options and also prevent the hassle of product returns.
5. Use Multiple Platforms
Don’t stick with only one or two selling platforms, go for multiple platforms. It will help you to attain more traffic and more options. You can also prefer to sell through regional sellers. It makes the customer more satisfied than orders from an international dealer as the shipping times will be much more reasonable.
6. Work On Your Content
The customers don’t have a physical way to feel your product; the images and descriptions are the only way to check it. Therefore try to provide them with high-quality and clear pictures.
7. Establish Relationships
In dropshipping, you have to integrate with a lot of suppliers and connect them with the customer. Therefore, it is crucial that you have to maintain a healthy relationship with all your suppliers. You need to have excellent communication skills and pressure handling capability.
Ask your supplier for a sample product to ensure its quality and durability. You should also prefer to attend events related to your business. They will let you know about the trends and discover new ways to ensure customer satisfaction and acquisition.
Deadly Mistakes That Can Kill Your Dropshipping Business
Often when a person steps into the world of business, they are unaware of the reality of this field. Even if you know how to start a dropshipping and master all aspects of marketing, there are still some pitfalls you have to be aware of. There are inevitable mistakes that you have to avoid to ensure the survival of your business. The common and destructive mistakes for a dropshipping business are:
- Communication gaps between you, your supplier, and the customers
- Expecting quick results and easy money from dropshipping
- Complicated, challenging to access, and unorganized way of recording sales data or order information
- Lack of brand promotion
- Complicated and haste return process with non-flexible return options
- Lack of professionalism while handling a customer or a problematic situation
We have come a long way with our dropshipping business, haven’t we! By now, you have gained complete knowledge of starting, running, promoting, and scaling a brand new business.
Dropshipping is certainly a great way to set up a passive income source. After enough practice and hard work, you can expect to find products that can make you $1000/Day and you can focus on building your brand.
So the only thing left for you is to just suit up, follow the steps in this article, and dive into the wide world of dropshipping.