5 Tips for Drop Shipping Success
Drop shipping is a method of retail fulfillment where stores do not actually stock their products. When someone buys a product, the store buys it from another party and then ships it to the customer directly. The merchant neither handles nor sees the product. Drop shipping is different from the conventional retail model in that, in drop shipping the seller does not own an inventory. He or she purchases an order from a third party.
The drop shipping model, like everything else, has drawbacks and benefits. You need less capital: this is arguably the biggest advantage. You do not need thousands of dollars to start an ecommerce store. Conventional retailers need to have a huge amount of capital to build their inventory. In drop shipping, you only purchase a product once a customer has placed an order and made the payment. An initial inventory investment is not needed. Easy to start: an ecommerce business becomes much easier to run when you do not handle physical products.
You will not worry about a warehouse, packing and shipping, tracking inventory, handling returns, and much more. Low overhead: since you will not be dealing with a warehouse or purchasing inventory, expect low overhead expenses. A lot of people run a drop shipping business from their home office with their laptop and only use about $100 per month. The expenses may increase as your business grows but they will still be low. Flexible location: if you have an internet connection, you can manage your drop shipping business from anywhere.
You only need to efficiently communicate with customers and suppliers. Wide variety of products: the fact that you do not pre-purchase and stock products means that you can offer a wide variety of items to your buyers. List any item you want on your website whenever a supplier stocks it. Easy to scale, when you are running a traditional business, the amount of work you need to do increases as the business grows. You can have a less painful growth process by having drop shipping suppliers process additional orders.
Low margins: the drop shipping niche is competitive and low margins are a huge disadvantage. Starting the business is easy and there are low overhead costs. Because of this, multiple merchants can set shop then sell products at a throw-away price. These merchants may have poor customer service and low-quality websites, but customers will still compare prices. Cutthroat competition can damage the profit margin.
The wise thing to do would be to explore a niche that is ideal for drop shipping. Inventory issues: when you stock products yourself, it is easy to know what is in or out of stock. The third-party merchants you are outsourcing from have other customers and inventory keeps on changing. Shipping complexities: shipping costs get complicated because your products are sourced from multiple suppliers. Supplier error: drop shipping suppliers are not perfect, regardless of how seasoned they are.
If your supplier makes a mistake during fulfillment of an order, you must take responsibility. Sometimes, these suppliers may taint your reputation. When getting your drop shipping business off the ground, you must consider so many things. You can easily get overwhelmed and forget to prioritize the important ones. That is why you will find this list helpful. It clearly outlines the elements that will facilitate your business’s success. Come up with a solid plan for adding value to potential customers.
This is the success factor that matters most. It applies to all businesses and more so a drop shipping business. You will have to compete with a myriad of shops that are offering the same product. To stand out in the market, you need to make sure that you are not just selling a product; you are offering solutions, information, and insight. You are in the business of information as much as you are in the drop shipping business.
How do you plan to solve problems and add value to customers? If you find yourself unable to answer this question, you may want to investigate another niche. Traffic on your site is the second most crucial ingredient for success. Lack of traffic on your site is a huge problem and can be a source of frustration. In as much as driving traffic and marketing is essential, it is not easy to outsource. Most small businesses cannot afford it and you may have to do it on your own. You will need to acquire guest posting, outreach, marketing, and SEO skills.
This will matter a lot when you are starting out and no one has an idea that your business exists. 75% of your time should be dedicated to marketing. For the complete newbies, here are some helpful resources.
- Hubspot Blog
- Seth Godin’s Blog
- Burst Free Product Photos
- KissMetrics Blog
Ecommerce Marketing Resources
- Shopify Blog
Most successful drop shipping businesses specialize in a single niche or product. Do not just sell backpacks; sell backpacks specially designed for bow hunters. Narrowing down helps you stand out and you can barely go wrong with it. A drop shipping store, like all other businesses, requires great investment and commitment. You cannot build a lucrative stream of passive income in a few months. In fact, the first few months will not be easy. You will face so many obstacles and you must be mentally prepared. In this era of social media, the best thing you can do for your business is making your customers happy.
Treat them badly and they will announce it to the world. Treat them well and they may do the same. Your business’ theme, logo, or name are not the determinants of your success. The above five factors are what matter the most. The most difficult and important step is building the business. If you have everything set and you are serious about this, start now. Ecommerce is growing at a rapid pace.
Every entrepreneur and business are trying to use digital salesmanship to make money, one way or another. Some ecommerce strategies will give you better results than others. Drop shipping is one of the tactics that are less popular than they were some time back. This can be attributed to new constraints that have rendered it less profitable. 2019 is a confusing and disruptive year. It is a good time to ask whether drop shipping is still a profitable venture or not.
Drop shipping, like any other business venture, will only succeed if you make your customers a top priority. Many newbies think that drop shipping is an effective way of making easy and quick money. On the contrary, it is a complicated process and you must be constantly on your toes. While your work is made easier because you do not have to stock goods, this creates a new set of challenges (think ensuring customers’ satisfaction and issuing refunds).
Many people who dived into drop shipping thinking that it is a quick way to attain business success realized that they were mistaken, and they suffered the consequences. There are good ecommerce veterans that will truthfully tell you what mistakes they made while starting out. However, some beginners will still ignore the advice and fall into the same pit. A great number of them fail to understand the essentials needed to make this venture successful. Some of the obstacles you will face involve quality control and high shipping costs.
Contrary to popular belief, drop shipping is not quite secure. Neither you nor your customers will be interacting with the supplier face to face and this makes it easy for you to get scammed. A supplier can also deliver low quality goods to your customers causing dissatisfaction and irritation. Due to this, you must get drop shipping training first and look for trustworthy suppliers. They are not easy to find, and they can be expensive too. However, a supplier can be the reason your business fails or succeeds.
Do not let suppliers lure you with lower prices. Do your due diligence and make sure they can be trusted first. It is better to have happy repeat customers than one-time angry ones. The drop shipping model requires extra homework on your end. You or your workers should be constantly researching to find new engagement models, products, and suppliers. There are aspects of drop shipping that you can only prepare yourself for. Quality control, for instance, is out of your hands.
You will just have to come up with a way to make sure that your customers get what they pay for. Efficient customer care is also crucial. Although the challenges are many, some entrepreneurs still try out drop shipping because the startup costs are low. If you are keen enough, do your research and master the industry, you will be immensely successful. When shoppers are visiting a new online store, they look for customer reviews. They want to know whether they will have a great experience.
But what if your store is completely new, you have not made any sales and, therefore, have no reviews? How do you get customers to trust you and make purchases? This is a problem that every entrepreneur must face. Fortunately for you, there is something you can do about it. The nine strategies outlined below will help you win the trust of potential customers. Consumers barely trust brands—they are all out to make money.
However, they easily trust people. Introduce the person behind your online store. This tactic works even better if you make your own products. The About Us page is the perfect space for this. Focus more on yourself and less on your product. Content helps you connect with new users. It offers a perfect chance to introduce yourself. Regular blogging shows that you care about your business and customers.
Content also allows consumers to familiarize themselves with your brand and your voice. Even as you try to show customers that they can trust your business, your site should also look trustworthy. With cyber security being a huge issue, customers do not easily give out their financial information. A good return policy shows that the customer experience is important to you and you are confident about what you sell.
People are more likely to buy if they are assured, they can return the item if they do not like it. When customers are confused, they may try to contact you through social media, email, or your contact form. Be available and answer their questions quickly and clearly. The chances of making a sale increase when customers know more about the product. Here are some things that you may want to add to your descriptions:
- Detailed measurements of the product
- Exact weight of your product
- Manufacturing materials or ingredients
- Warranty information
- Specific product features
Product samples may make people more interested in your store and they also inspire trust. This method may not be applicable to all businesses. Consider giving the samples to a specific number of people then ask for reviews. Alternatively, send the items to bloggers or influencers who will, in turn, help you reach your target audience. An FAQ page is instrumental in answering user questions.
Through the page, you can explain how you run the store, offer product information, demonstrate your knowledge and give more information about your products and brand. Preview your store both on mobile and desktop to see how the experience is like from the homepage to checkout. Take care of any mistakes, even the small ones.