Dropshipping has made it easy for aspiring entrepreneurs to ride the e-commerce wave.
This is because a dropship business requires lesser capital, is relatively easy to start, can be completely automated, and the risk-barrier is negligible.
Google trends for the United States show that an increasing number of people within the US have been searching for dropshipping terms over the last few years. To help you get started, we've outlined 10 dropshipping tips to start a dropship business for new entrepreneurs just like you.
Dropshipping tips for new entrepreneurs
In the traditional retail model, resellers buy stock from suppliers and store inventory in their warehouse. The stock ordered is based on previous demand, fast-moving products, or sales forecasts.
The resellers are then liable to sell the products, either in their physical stores or online, or sit with stock that isn't moving. There is a certain amount of risk involved and it requires large investments to buy and stock products before even making a sale.
The dropship model made it easier for new entrepreneurs to get in on the game. Here the reseller does not buy stock from the supplier. A reseller ties up with a supplier, sets up an e-commerce site and then lists the supplier's products on the site. Once a customer buys a product, the order is forwarded to the supplier, who ships the order to the customer.
The reseller gets paid a retail price before paying the supplier the wholesale price. The dropship model also takes the costs of warehousing and packaging away from the reseller. There is a low-barrier to entry to start a dropshipping business and this explains its popularity. But that does not guarantee a successful e-commerce business.
You need to have a stellar dropship business idea, a profitable product and look for dropship suppliers before you can take the plunge. We have outlined a few tips that a new entrepreneur needs to address in their dropshipping business plan to ensure that their business does not come crashing down.
1. Find the right supplier for your business
The suppliers you partner with are crucial to a successful dropship business. They are the ones who fulfill orders on your behalf, and the reputation and image of your brand are completely dependent on them delivering high-quality and well-packaged goods on time.
If the suppliers you partner with don't have strict quality standards and do not adhere to the shipping timelines promised by you to your customers, it will ultimately affect your credibility, trustworthiness and reputation.
Remember, it is you and not your suppliers who are liable and accountable to your customers. It is your brand value that will be negatively affected. Your suppliers are your key business partners, and it is vital that you take your time, research well and find the right suppliers for your business.
2. Avoid under-pricing your products
Take profit margins into consideration when you decide on which products to sell. Factor in overheads like office supplies, staff and marketing expenses. Do not undercut your prices only because your competitors are doing the same, however tempting that might be.
If you offer quality products and price them fairly, keeping within the market-value, you will find customers. Swift customer service, a hassle-free returns and refund policy, personalized packaging, and more all add to an enhanced shopping experience, and customers will not mind paying an extra buck for it.
Don't skimp on quality to increase your margins, it will get you nowhere in the long run, and you will be one of the many dropship start-ups that have disappeared into oblivion. Work on increasing the average order value to make higher profits from every order. Ensure your e-commerce platform has marketing features like upsell and cross sell suggestions.
While the norm is to go for products with a high profit margin, there are products with a low profit margin, like IT for example, that will generate profit if you sell larger volumes. Selling high-ticket IT products is also a really profitable niche and one that is not explored to its full potential.
3. Create an amazing offer
Offers and deals are what's driving people online these days, and if you want to get in the e-commerce limelight, that is what you should do. Sales and bundles motivate consumers to buy, create enticing offers, or bundle products together. Bundling is when you create a package of similar products and offer a better price for the group than you would for one.
For example, if one notepad costs $5, you can create a bundle of 10 notepads at $45. The saving motivates a customer to buy, and they associate your brand as having good bargains and promotions. Upsell, cross-sell, bundle and offer deals and promotions – anything to get the customer to pull that credit card out.
4. Order product samples
A good tip is to order samples of the products you want to sell. This will not only give you a first-hand feel of what your customers experience, but you can also assess your suppliers, their packaging and delivery time, and make any changes to improve the experience for your customers.
When you order samples, it gives you the chance to handle your products. You can click unique product pictures or make interesting product videos as marketing collateral. You’re also assured of product quality, and if you’re not satisfied you can easily change suppliers before it hurts your brand.
5. Monitor your competitors
Competition is always good. It indicates that a niche is profitable, keeps all the sellers in that niche on their toes, and constantly motivates everyone to push the envelope. Monitor what your competition is doing on social media, in their blog articles, on their website. Doing this will also give you a fair indication of the demographic that engages with their content and it will aid you in identifying your target market.
Keeping a thumb on your competitors' online profiles will help you assess what works in your niche and what drives consumer engagement. The reviews and ratings they get are a great indicator of where their weaknesses lie, and you can capitalize on the gaps left.
6. Use a proper e-commerce platform for your dropshipping store
The e-commerce platform you choose will determine whether your dropship business will be smooth-sailing or run through choppy waters. There are innumerable e-commerce platforms at your disposal, each offering more or less similar features and capabilities.
Choosing one out of the many will depend on the products you want to sell and the market you want to target. There are some features that you cannot compromise on. Stick to your guns, and you will find an e-commerce platform that will cater to all your needs.
A few things that are a must-have in a good e-commerce platform are:
Integrations with distributors' product feed: Direct integrations with distributors’ product feeds will make your life a lot easier. This takes away the effort and time required to manually upload products, click images and write product description.
Integrations with popular CRMs, ERPs, and accounting software: Ensures a seamless and smooth workflow and eliminates repetition of processes.
Automation of freight and taxes: Automating freight calculations on pre-set rules makes checkout a lot quicker, which, to be honest, is the end game. Taxation laws differ in different countries and states. You do not want legal repercussions for defaulting on taxes. Automation ensures that you’re always in the clear, and customers trust your brand as there is transparency.
Scalability: The e-commerce platform you choose should grow as your business grows. Many e-commerce platforms have charges as you scale, take these into account as you build the road-map for your business. The ideal would be an e-commerce platform that allows you to scale without additional costs. Research well and you will find one that suits your niche and product.
Mobile friendliness: Mobile shopping is on the rise and your e-commerce store should adapt and be responsive on various devices.
Security: A lot of data is online these days and data security is a concern when shopping online. Add trust badges to your e-commerce store and ensure that it is PCI compliant.
7. Make shipping times very clear
Consumers buy online for the convenience it offers. But there are various factors that mar the online shopping experience for a consumer. Uncertainty over shipping and delivery times is one. Always be clear about the delivery times and offer tracking information to customers. It will enhance the buying experience for them and increase the trust they have in your brand.
8. Go for multiple payment options
Make checkout easy for customers by offering them multiple ways to pay. Multiple payment gateways will also reduce cart abandonments. When customers see familiar payment gateways, they are assured of security, and it expedites the buying process. For example, PayPal is trusted in many countries. If you are a global entity, offer local payment gateways as well.
9. Create an FAQ Page
A comprehensive FAQ page eliminates the need for customers to contact your customer care service for trivial queries. Make it easy for customers to find answers on your website without having to pull out their phones and dial. An FAQ page will build trust in your brand and speed up buying decisions.
10. SEO is the key to success
Having a beautiful store and great deals is of no use if there is no visiting traffic. AdWords and paid campaigns do ensure traffic, but they come at a cost, and the traffic will stop once your budgets run out.
A cost-effective and long-lasting method to ensure that your store ranks well on search engines is to apply SEO best practices. Search engine optimization will ensure organic and relevant traffic to your store. Invest in an experienced professional if you don't know how seo works. Believe us it will pay in the long run.
Stop, drop, and ship!
The benefits of dropshipping are many, and it is the simplest way to start your entrepreneurial journey. Don't cut corners – follow the tips above and reap the benefits of having your own online business!
If you need help getting started, invest in the right dropshipping software to get your business off the ground running.
Shane is an American writer for various digital news publications. After being in the eCommerce industry for more than 15 years, Shane has a good understanding of what it takes to make an ecommerce business successful. He likes to cover newsworthy events related to business management software, eCommerce platform, customer relationship management (CRM) and Quoting software and Value Added Resellers. His articles give insights into the latest trends in the B2C and B2B ecommerce industry. His ecommerce coverage is robust and provides everything from best ecommerce platform to improving your website site.