It’s a fact that today’s retail industry is vastly different than 100 years ago, especially with the advent of the dropshipping business model. Even comparing it to 20 years ago will show remarkable changes. Did societies ever think their monthly shopping will happen in front of shiny screens and that ordering something from the other side of the globe is possible for almost anyone?
While consumers enjoy the luxuries that today’s technology brings them, it’s up to retailers to keep up with the times. If you’re not part of the latest trends you may lose customers to those who stay updated.
What is Drop Shipping?
While many consumers partake in the process of drop shipping, they may not even know what this term means. In short, drop shipping refers to the process of a retailer—such as an eCommerce company—managing a delivery process straight from the manufacturer to the client, other retailers or a shipment company. In this flow of actions the retail entity itself does not stock the merchandise and may never even handle the goods.
Why Consider Drop Shipping for Your Business?
So, why is this so remarkable? Should you be doing this more in your business?
First off, it’s clear that you can save costs if you don’t have to own premises or storage space in order to sell goods. That means even with relatively low capital you can start a business as long as you can organize distribution channels for your products.
Apart from the monetary advantages for startups or business owners who want to expand, drop shipping also carries these benefits:
- You save money in comparison to other types of retail because you don’t have to purchase large amount of stock in advance. The added bonus is that you won’t get stuck with items nobody wants once a trend blows over.
- The product doesn’t change hands as many times as with conventional ordering, so items get damaged less.
- You don’t spend time or effort on packaging goods.
- It opens up more options as you can sell items you may find difficult to store under normal circumstances. You may want to sell perishables. Keeping these items fresh and cool will be up to the manufacturer & those in the distribution line, not you.
You can see this is a more effortless way to do business in many regards. And thanks to today’s fast, efficient communication it’s easier to manage such a system compared to a few decades ago.
For up and coming entrepreneurs it’s the ideal solution when they have innovative product ideas but limited capital. Younger generations—such as millennials—also tend to have in depth knowledge of internet marketing skills since they were raised at a time when this medium played such an important role in society. With these skills in hand they have all they require to successfully launch and manage businesses, such as eCommerce sites, where drop shipping is the ideal distribution solution & business model.
Is this what your business needs to optimize sales and serve a larger audience? This is how you can get it right.
5 Vital Steps to Get Drop Shipping Right
There are many benefits to this type of distribution, but as with all other aspects of business, planning is vital to enjoy success. We discuss the main factors you need to have in place to experience growth with a drop shipping business model.
1. Do You Know What You’re Selling and Who You’re Selling it to?
Perhaps you already have an idea of what you want to sell. Our suggestion is to revisit this aspect multiple times as there are many factors at play in finding a niche that will work and to cater for that niche’s preferences.
2. Be Passionate
When people mention that you need to love what you do, those aren’t naïve words. In business it’s important to do what you’re naturally interested in.
Firstly, you’ll quickly get bored—and therefore have no work satisfaction—if you don’t really like what you’re doing every day. Even if you’re simply selling products to make a living it’s wise to pick product types you find attractive. It will be effortless to do research to find additional products that fit your niche or even go so far as developing your own.
Secondly, business rarely runs smoothly 24/7. When your business experiences a drop in sales or a new competitor starts attracting your clients, you need passion and commitment to deal with those challenges. If you love your product, you’ll believe everyone needs to have one. That passion will motivate you to keep going. If you don’t have any drive, you may give up very easily once the going gets tough.
3. Be Practical
While you must consider you personal passions, you also need to be realistic. Not all products you find interesting will make business sense. If some of these characteristics also apply to the niche you consider, you may have a winning business idea:
- Products that aren’t easily available in your local community will gain traction of you sell it online and find a way to quickly transport it to buyers.
- You need to be found online to make a sale, so distribute items that people are already searching for. It only takes some research on Google Trends or its Keyword Planner app to determine what consumers want. Especially if you’re still a start up, don’t opt for something no one is searching for yet. You can always launch new products later on when you already have a customer base to showcase it to.
- Does your product appear on shopping lists of those who have cash available? The niche audience you target must have the financial means to pay for the product. If you have a high asking price for items that low income consumers find valuable, you’ll never make a sale.
- Research whether your product is something impulse buyers will find interesting. This is the best type of customer.
- Can you distribute your product without spending too much? Low packaging and shipping costs are vital. If shipping escalates the overall cost, customers will lose interest. If you can keep it low you can even opt for free shipping, which will boost sales.
- A higher priced product is a better option than low priced goods. You’ll put in more or less the same amount of work to market them, but from a $10 item you’ll make very little profit compared to selling a $1000 product. Optimize your profits from the start and enjoy better cashflow with which you can grow your business fast.
Find a product that represents a balance between all these factors and then move to the next step.
4. Did You Study the Competition?
Once again, the competition aspect of drop shipping is all about balance.
You may think you need to find a product that not many other entities sell. Then you don’t have to compete with the big names such as Amazon. But have you thought about why they’re not selling it? Chances are they’ve tried and failed. Perhaps the need for the item isn’t as big as you think. Or alternatively this may not be something consumers order online. What if they prefer testing it out in a brick and mortar shop first?
Of course it’s ideal to be the only distributor of an item and if you’re selling a brand new item guaranteed to become a trend, you’re set for success. But with existing products, take other drop shippers’ actions as advice on what really works.
5. Suppliers are Essential to Success
Once you’re sure you have the right product in mind, take your time in finding the ideal drop shipping supplier. By ideal we mean:
- The company communicates well, responding to your messages quickly.
- The entity has the production capacity you require now, and if your business grows they will still cope with supplying all your orders.
- You can find reviews about them online so you have other companies’ confirmation about their ability
Chances are your supplier won’t be in the same country as you. You won’t be able to visit them, so finding out whether they’re dependable is essential to keeping clients happy and protecting your future reputation.
Your Website—Your Door to the World
Your product is ready and now you have to showcase it to the masses. The modern way: a website.
You’re luckily doing business in a time where it’s easy to create your own eCommerce website. You don’t even need a developer these days as platforms such as Wix and WordPress allow for relevant plugins that will support the drop shipping business model.
Be smart and add an app to your company’s list of features. It’s a popular trend and worth investing time in. Once again, there are platforms that allow you to do this by yourself. It’s how you stay one step ahead of the rest and make your customers feel they’re part of the latest trend.
Tip: Today’s available templates for first time website owners are modern, stylish and user friendly. Even if you doubt your own skills, simply get started with a basic website and employ a developer later on—when you have to cash—to improve it.
How to Connect with Your Future Customers
Having a stylish virtual store front isn’t enough unfortunately. How will you draw people to it?
While marketing is a complex process, you’re lucky because the platforms that are the most effective for marketing are the ones most people use on a daily basis:
All the social media platforms can showcase your products to a worldwide audience. And if you already have a list of friends you have an audience to market to.
The next step would be to use the dynamic tools Facebook created for businesses. You can boost your ads to a relevant audience in terms of:
- Geographic location
Since your website is a prime role player in your business you need to do everything in your power to get it to the top of SERPs (Search Engine Results Page). That requires SEO (Search Engine Optimization). We talked about this in our drop shipping secrets to improve conversions post.
In short you need to impress search engines’—such as Google—algorithms by proving you have a quality site that should be showcased to keep online browsers happy. You can do a lot to improve your value and rating:
- Use keywords relevant to the niche so search engine crawlers notice your content.
- Add quality content that is free of grammatical errors.
- Upload product images that quickly load on visitors’ pages.
- Create user friendly content with many images and videos.
- Ensure your website is mobile friendly. In 2019 this has become more important as consumers browse the web more via their phones than their computers.
No, this is not an outdated marketing tool. Email should still form part of your marketing campaigns, especially because most people have email addresses. In an email you can easily share images, videos and in depth information; all important when you’re trying to prove your product’s value.
Remember to add a feature to your marketing to collect consumers’ emails so you’re able to send past customers information about new products.
Measuring Your Progress—the Key to Stay One Step Ahead
That paints a dynamic picture of how to get started. But how will you fare in a few months’ time? Markets change constantly so what is popular today may not be trending next week. To make sure your marketing, product selection and overall image stay aligned with consumer preferences you need to measure your performance throughout.
There are handy tools in the form of:
- Google Analytics that help you measure if you get noticed online.
- Measuring hot spots on your website shows you which features attract attention and lead to conversions.
- Activating online reviews will give you feedback from consumers so you know what to change to impress them more.
With a drop shipping model your customers are often far away from you, so you need to find ways to understand them better all the time.
You do business in an exciting world. With a drop shipping business model you utilize some of the best tech features ever created such as communicating in real time with someone on the other side of our planet.
Are you going to do dropshipping right and leave a legacy in this world?