What is dropshipping?
Dropshipping can be said to be a form of retail business that does not follow the conventional supply chain method. In dropshipping, sellers do not keep the inventory of items. Instead, upon request for orders, it transfers the order and shipping details to the fulfillment house (a manufacturer, wholesaler, or retailer) to make the delivery. As such, the seller doesn’t need to worry about the overhead cost of maintaining a business such as warehousing, purchasing, storefront, and paying for the necessary staff to perform such functions. Thereby, focus only on marketing the product. The seller makes profits from the margin between the item wholesale and retail price.
The dropshipper’s role is salient, although very important. In fact, the buyer most times, will never know his dealing with a dropshipper. Because, the seller’s address, customer service number, and logo of the package received by the buyer are that of the dropshipper. As a result, the wholesaler is totally invisible to the buyer.
Advantages of dropshipping
LOW STARTUP COST
A huge chunk of capital needed to set up an online business usually goes into product inventory. With the dropshipping model, you don’t need to worry about stocking up product up-front. As a result, you can offer a wide range of products as long as you have a wholesaler that can make the supply.
TEST PRODUCT WITHOUT RISK
Testing a new product is very easy with the dropshipping model. In fact, you don’t have any risk to take. Unlike the conventional retail business model where you need to stock up a product before you confirm how the buyer responds. You can test the performance of a new product without making a true investment.
LOW OVERHEAD COST
In dropshipping business model, you don’t need to worry about purchasing products, warehousing, or having an office location. Thereby, reducing the overhead cost of running a retail business. At the comfort of your home. You can run your business successfully with a minimal amount of money.
EASY TO SCALE
Many people start dropshipping business as a side hustle because is less time demanding and not capital intensive. You need to inject huge capital into the business in other to scale up. In fact, the most important asset you need to scale your business is your time. As sales grow with the dropshipping business model most of all the work is done by the supplier, besides the role of interfacing with the buyer such as customer service, support, etc.
DISADVANTAGES OF DROPSHIPPING
COMPETITION IS FIERCE
Just like any other business that offers sufficient profits with little or no risk, competition is expected to be fierce. When you find a great product, many manufacturers would charge a certain amount for the fulfillment service. So, you have a little amount of room to maneuver to beat your competitor’s price.
LIMITED SHIPPING CONTROL
Dropshipping eliminates the task of handling product shipping. This can then, pose to be a problem whenever there is a glitch in the shipping process. When you receive an inquiry from the buyer on shipping status, the process of resolution can be a bit slower because you don’t have the answer at hand, and you have to contact the supplier before it can be resolved.
SHIPPING COST COMPLEXITIES
Another major issue when it comes to dropshipping is how to calculate the shipping cost. This can be straightforward when a buyer wants to order a single product. However, the complexities start to set in when the buyer wants more than one product from different suppliers. For example, a buyer makes an order for three items from a different supplier. It then implies that you have to pay for the shipping cost separately. Factoring in the varying price of shipping can be difficult. Since the buyer does not expect to pay a different price for an item bought in the same store
ERROR FROM SUPPLIERS
Sometimes an error can come from the supplier during packaging and shipping. As the interface with the buyer, you have to take responsibility for any defect or error that comes from any mediocre service from the supplier. If this is not managed properly, it can damage the business’s reputation.
How to get started?
CHOOSE A PRODUCT TO SELL
The success of your dropshipping business is anchored on selecting the right niche. Therefore, you should put adequate effort into product research. There is no perfect niche. Even the “best niche” still requires a top-notch advertisement to ensure you succeed in your dropshipping business. But picking a good product to sell reduces the hassle involved in making your business successful.
KNOW THE DEMAND FOR YOUR PRODUCT
The part of your product research is to know the demand for your product. You can do that using a keyword planner tool. One of the prominent ones available in the Google keyword planner tool. Which is available in the Google Ad dashboard. For example, the image above shows the average monthly search of waist trainers in the united states. The average monthly search of 10k-100k shows that there is a demand for the item, and a high competition shows that there is a business behind it. Other keyword tools you may consider include Ubbersuggest, Ahref keyword explorer, Moz keyword explorer, and more.
HOW IS YOUR PRODUCT TRENDING?
A good place to continue your product research and gain further insight. With the Google trend, you can determine if you are entering a niche at a time it is trending, or maybe the product/niche is undergoing a decline. For example, the snapshot above shows that the keyword posture corrector is undergoing a spike in its trend.
HOW TO FIND A WHOLESALE SUPPLIER
Finding a genuine supplier is a very important aspect involved in the setup of a dropshipping model. One of the things to watch out for is a fake supplier. Mostly, they are retailers that cloak as a wholesaler. Thereby, selling at a high price compared to the real wholesalers.
Here is the following path to find a supplier for your business:
USE A SUPPLIER DIRECTORY
A supplier’s directory contains various supplier’s details. Often times, they are organized by niche or product to ensure easy accessibility. Please note, some of these directories ask for a monthly fee to access their database. However, it provides an avenue to access a plethora of suppliers on a single database.
Some of the popular directories include Salehoo, WorldWide brands, Doba, GoGo Dropship Directory, and more.
CONTACT MANUFACTURER DIRECTLY
Contacting the manufacturer directly is a method that always works in the business supply chain method. Request for the list of its distributors. Through that means, you can be confident you are dealing with a genuine wholesaler. You can then ask if the wholesaler dropship, and ask how you can set up an account.
GOOGLE IS YOUR FRIEND
I cannot over-emphasize the importance of search engines in getting information on the internet. Using the right keyword, you can get a list of wholesalers in your niche. Then, you can make a request to know if they dropship.
CREATING YOUR STORE
After you are done selecting a niche, and you have contacted a wholesaler that does dropshipping. Then, you need to create an online store.
There are two ways you can go about this. It is either you set up an online store from scratch or use e-commerce solutions platforms such as Shopify, BigCommerce, and more. These two routes have both advantages and disadvantages. For example, when you create an online store from scratch, you are at liberty to choose the web hosting of your choice, and you have full freedom to customize the interface to your choice, and sometimes even create an additional function if you wish.
In the case of e-commerce solution platform, especially the ones that operate a SAAS model like Shopify and BigCommerce. You do not need to search for a web hosting platform differently. Everything you need to get your e-commerce store running is available at a go. However, there might be a few limitations when it comes to customizing. But if you’re not tech-savvy and you just need to get your store running as fast as possible. Then these e-commerce platforms are suitable.
BUILDING YOUR STORE FROM SCRATCH
Building your site from scratch gives you un-restrain control on the look of your website, and you can avoid subscription fees. What you need to build an online store from scratch include the following:
- Get a domain name
- Choose a web hosting platform
- Determine the platform you want to develop your website with
Before you make a choice, your decision should be on the time available to manage it. Open CMS like OpenCart or WordPress is a very good choice to get started. While OpenCart is an e-commerce open-source CMS. WordPress can be extended to meet your e-commerce need by extending its functionality plugin like WooCommerce. They are both effectively to get your online store up and running. Also, it is supported by most hosting platforms. WordPress can be installed with a few clicks on most web hosting platforms.
How do I use an e-commerce solution platform for Dropshipping?
This quite straightforward. You still have to choose a domain name. However, this platform provides every other thing you need to get your store running such as templates, shopping cart solution to manage and ship your products.
Dropship with Aliexpress?
AliExpress is one of the leading e-commerce platforms, with millions of items offered at a competitive price. You can either purchase items in wholesale packages or pay per unit. Although AliExpress operates as a retail marketplace, most sellers understand that their customers dropship. As a result, dropshipping is very easy because sellers are very open to such options. In addition, you don’t need to pay any upfront fee to start dropshipping on Alibaba. Hence, it is easy to buy a product and test before making any decision on the seller to buy from. Products on AliExpress have good pictures and elaborate. product descriptions that you can make use of immediately just by making a few changes.
ADD PRODUCT TO YOUR STORE
To dropship with AliExpress is straight-forward. Most sellers on the platform dropship. All you need is to tell the seller you are dropshipping. When selecting the product to sell on AliExpress, there are some important things you need in making your choice.
Firstly, you need to avoid branded product. Since you are not an accredited supplier, it is important to avoid such products to avoid selling fakes. Secondly, focus on products that have good customer reviews and a high quantity of sales. These are pointers that the product is good and the seller meets the buyer’s expectation. In addition, because most AliExpress sellers are from China. Therefore, shipping can take a longer time. When deciding on the product to sell, choose a product that has ePacket as part of their delivery method. It is one of the fastest delivery methods when shipping from China. Epacket shipping method is mostly free thereby saving you money.
How do I handle delay in shipping?
What leads to distrust mostly when dropshipping from China is the delivery time. Some customers are not satisfied with the delivery time. Products from China will take an average of 20-30 days before it arrives in the United States or most European countries. A way to mitigate this by offering free shipping on all your products. Also, it is good you indicate on your order page that products will take long before delivery. Most buyers are comfortable with that as long as they are not paying for shipping. You can also share the tracking number with your customer so they can track the shipping progress of their item.
DROPSHIP WITH SHOPIFY
Dropshipping with Shopify is quite easy. Shopify operates a SAAS (Software as a Service) model. They offer a cocktail of service to get your e-commerce store running. If you don’t want to go through the hurdle of setting up an online store from scratch. Then, you can easily set up one on Shopify by paying the monthly subscription fee.
ADD PRODUCT TO YOUR STORE
You can add products to your store in two ways:
To add manually, all you need to do is to go to the product page, copy the image, and product details. Then add them to your Shopify store. Before you add the product details to your site, make sure you re-write the product details to make it clear and SEO friendly. Because some product details on AliExpress are not clearly written. Besides, you are no the only merchant selling the product. So, there is the likelihood that another merchant is using the same product details. That is not good for your SEO because Google ignores duplicate content.
Oberlo is an app available on Shopify app centers that makes managing dropshipping inventories seamless. It operates a SAAS model where you pay a subscription fee on a monthly basis. However, if you set up a store on Shopify, you can gain access to Oberlo starter plan. There are two ways you can add products:
To add products from the Oberlo dashboard. Search for the product on the dashboard and add it to your import list
Download the Oberlo Chrome extension. Using the Chrome browser, open the link to the AliExpress product and click add product from the Oberlo chrome extension to add products to the import list on the dashboard. The best practice is to make sure you edit product details before importing to your Shopify store.
How do I manage inventories with multiple stores?
It is a fact that most drop shippers have more than one store. Managing inventories across this platform can be complicated, if not properly managed. There is nothing as frustrating as a customer paying for an item, only for you to find out that the product is out of stock. Therefore, if you want to manage multiple dropshipping stores and sales pages on the major e-commerce platforms. Then, you need to be able to automate the process. One of the popular software to automate this process are Orderhive, Ordrodo, and more.
How do I go about marketing?
EMPLOY EMAIL MARKETING
After spending so much money and time on converting prospects into customers. Then, you need to look for ways to ensure your customers remain within your reach. One way is to have newsletters and encourage visitors to sign up. Also, you can offer a discount or giveaway to encourage visitors to drop their email. This way you can convert more customers and have a way of contacting them for future business.
ADD CUSTOMER REVIEW TO YOUR WEBSITE
Always encourage satisfied customers to drop reviews and also ask for testimonials. This is very important because it helps prospects make decisions quickly. A good product review and rating will motivate prospects to complete a purchase.
BE DELIBERATE ABOUT YOUR SOCIAL MEDIA STRATEGY
Social media marketing is another way to market a product to your target audience. You have to be very active on social media platforms that are relevant to the kind of product you sell. For instance, if you sell a product like Makeup Kits. Instagram is a social media platform you can be active on.
PARTNER WITH INDUSTRY EXPERT
Also, you can send free samples of your product to industry experts and hope to get a shout-out on any of their platforms. This gives you legitimacy in an industry you are new too. Thereby, increase your social media influence. In like manner, you can conduct an interview. This is an important strategy in content marketing. The person interviewed feels appreciated and get more exposure, and the interviewer gets content to share on their social media platform.
As a new store. Don’t forget to factor paid advertisement into your social media strategy. With billions of active users on social media, it is difficult to get the kind of attention you need without using ads.
Facebook ad, is a good way for you to start from. With numerous data points, it is very easy to start advertising on Facebook and Instagram. You can start small, and scale as long as you can measure your ROI (Return on Investment).
Adopt Cross-selling Technique
This is a very important strategy for maximizing your marketing effort. For example, a memory card can be cross-sold with a mobile phone. Adopting this method helps you get a better return on investment. For instance, if the cost of bringing a prospect to your page is $3. The profit from the product is $10. Therefore, your ROI is $7. Cross-selling helps you to increase your ROI without investing any extra amount into marketing.
How do I deal with returns and refunds?
It is important that your store has a return and refund policy. It helps your prospective customers quickly make the decision to buy. Customers want to know if they can return a product if they are not satisfied with it. Your return policy should be as clear as possible, so as to not lead to any form of a dispute later. Before you write your return policy, it is important to understand your supplier’s return policies to know how to better frame yours. Also, take note if you have multiple suppliers. You need to optimize your return policies in a way that suits all your suppliers.
What do I do if there is a return?
Whenever a customer wants to return an item in line with your policy. All you need to is to request for RMA (Return Management Authorization) from your supplier. If the request is granted, you can then issue the RMA to your customer. It is this RMA that the customer will add to the return address while returning the item. Upon receipt of the item, the supplier then issues you a refund of the wholesale price.
This post shows how to get started with a dropshipping business. It contains a step-by-step approach on how to create a successful dropshipping business. However, the most important part never mentioned in this post is getting started. That is a decision you will have to take on your own. You may not have all the answers at the beginning. Trust me, nobody does. But, if you never start, you will never know the success that awaits you.