Dropshipping has been making the ripple effect for quite a long time. It is the least expensive way to start making money online where you don’t have to worry about the inventory or product fulfillment. However, it is not as easy as you may think. Unfortunately, due to the high competition and cost of online marketing, compared to previous years it is more difficult to maintain a dropshipping business successfully. This article will provide you a complete overview of the dropshipping business.
#1 What is drop-shipping?
Drop-shipping is a form of retail delivery where you do not have to keep the items you sell in stock. Instead, when the sale is confirmed, you can order the item from a third party and delivers it directly to the customer. Hence, you never see or handle the items. For drop-shipping, all you need is an online store and basic knowledge of how to market it online. First, you have to choose the products you want to sell and list those products on your website along with a retail price you select. When someone places an order, your customer pays the price you said and so you make a profit. Next, you place an order with your supplier at a wholesale rate, and he ships the product directly to the customer. Some examples of leading drop-shipping suppliers are AliExpress, Alibaba, MegaGoods, Wholesale Central.
- It is always best for new entrepreneurs to start with dropshipping because of the low cost required and low risk. It will be good training as well.
- Simple to set up.
- The setup costs are almost zero.
- Dropshipping is best suitable for those who have low budgets but still want to do business.
- Dropshipping can be used for market research to know which products are best for online
- Marketing – You can also test new products with zero upfront risk.
- Strategic shipping systems
- As there is no need to carry inventory or ship orders out, you can focus your efforts on marketing and sales.
- As the location doesn’t matter, you can run your business from anywhere.
- Easy to expand.
- Low-profit margins. You have to do a lot of business to sustain. Unless you are a brand new entrepreneur on a budget or an online store owner who is exploring new products, it is better to avoid dropshipping
- High competition.
- You cannot build a brand
- No control over the supply chain. You cannot do anything about product quality, fulfillment speed or return policies. Hence, you can’t succeed if your suppliers are not reliable.
- Most of the time, you will not be informed if a product goes out of stock.
- Customer service is often out of your hands. Even if a single distributor turns out to be unreliable, it’ll affect the reputation of your store.
- Distributors often charge extra fees and/or tack these fees onto the quoted wholesale price. So you won’t get at the lowest price.
#4 How to get started
Does dropshipping seem to be suitable for you? Or you decide to give it a try? Here is what you have to do to get started. The first step is setting up a website as your online store. Next, you have to find out and make a deal with a dropship wholesaler or distributor that is willing to ship products direct to end consumers. You can decide on a wholesale price by further negotiation. Now, you are all set to get started.
Here’s how dropshipping works:
- The customer places an order on your site and does the payment to your account.
- You then inform the order and shipping details to your dropship supplier and pay them the rate you previously agreed upon.
- The supplier then packages and ships the order directly to the customer as if it was shipped from your online store.
- Your profit is the difference between the price you got from the customer and the wholesale price you paid to the supplier.
#5 Selecting an eCommerce platform for your dropshipping business
Regarding the website, there are so many options available today which are easy to use. Things to consider while selecting an eCommerce platform are your budget and what features you need. Some of the popular shopping cart options are,
Shopify is one of the most powerful eCommerce platforms for dropshipping. It is best suitable for you if you don’t know anything about technology. Although it is the most expensive option compared to the rest, Shopify is the easiest way to get started. Oberlo, a dropshipping plugin that helps product import and order fulfillment process work smoothly was officially acquired by Shopify in 2016. It will help you to find products to sell from Oberlo Verified suppliers, Oberlo suppliers, or AliExpress suppliers. Shopify hosts most of the top dropshipping stores such as Negative Underwear, UgMonk, Flat Spot, and Pipcorn.
Customer support: Shopify offers multiple support channels – via email, phone, live chat, forum. However, some users complained that the live chat was just an automatic robot system that can’t help to solve their issues but gathering email addresses so they can send a response later.
Set up time and Price: The main attraction of Shopify is it will take only a few hours or days to create a new store. It is a paid eCommerce platform that has three plans ranging from $29 to $299. Although there are 100 Shopify themes available, only 10 of them are free. Additionally, they charge you a certain amount per sale if you integrate an external payment gateway instead of Shopify Payments. Enterprises, interested in getting premium services, can opt for Advanced Shopify.
Woocommerce is the most commonly used platform in the world. However, it has only a few advanced eCommerce features. It would be best suitable for you if you want very basic functionality and ease of use. Woocommerce is free and it is easy to install plugins. You don’t need to have technical knowledge as users can install it with a single click. WooCommerce is more suitable for small dropshipping businesses. Because, When the number of products on your WooCommerce site increase, its performance will be affected negatively. You will have to install a third-party plugin to integrate drop shipping function to your WooCommerce website, (starting from $49). Some of the popular eCommerce websites using woocommerce are Weber Grills, Singer, All Black, and Ripley’s Believe it or not.
Ease of use: Its GUI interface is very simple and intuitive that any non-technical users can understand. WooCommerce is built on WordPress. WordPress is a favorite platform among bloggers that allows users to add multiple add-ons for free. Users can easily install WooCommerce on WordPress and launch their business with just a few clicks. Their user guide is also very comprehensive.
Customer support: If any problems arise, you can either contact Woo support or find a solution on Woo documentation. They have a widespread community of designers and developers, who are actively working to promote this platform. You can easily find lots of material on installation and other support on the internet.
Setup time and price: WooCommerce is a free plugin, but there are additional yearly hosting and domain fees. As it is based on WordPress, you will need to develop a WordPress website first and then install the WooCommerce plugin on your store. If you are a developer, it is easier to build a WooCommerce website than building a magneto website. Otherwise, you might need the help of website programmers. For a basic WooCommerce website cost is often in the range of $1,500-3,500.
Magento is the second most used eCommerce platform which provides online merchants with a flexible shopping cart system, as well as control over the look, content, and functionality of their online store. It offers search engine optimization, powerful marketing, and catalog-management tools. There are two versions for Magento namely Magento 1 and Magento 2 and two editions (Magento Open Source – free and Magento Commerce –premium) to choose from. Magento is a powerful, developer-friendly platform that may not be suitable for newbies and non-technical users. For using this, either you should know about Magento or hire a developer. Examples of eCommerce websites using Magento are Selco BW, JCB, and Dufry. Basic features are fastest page load speed, easy and smooth checkout, nice product and catalog page, allows for various discounts and promotions during check-out, SEO and marketing tools, comprehensive site management, high security and provides more than 50 payment gateways.
Ease of use: Magento is an advanced eCommerce platform that is easy to install and add additional layouts and plug-ins. It uses open-source technology that offers flexible, scalable eCommerce solutions. However, it is not advisable to complete beginners as they will require additional help from developers for updating and solving errors.
Customer support: Magento also has an official forum where Magento officials, developers, and designers are available to help newcomers. Also, you can find information on Youtube channels, blogs, and forums. Magento also offers multiple plugins for dropshippers.
Setup time and price: Magento is an effective and cost-sensitive program. Among the two editions, the free version is enough for a dropshipping business. As mentioned above, you may have to hire a developer for building the website. It often takes 1-3 months for this and it may cost $3000-5000.
There are a lot of other eCommerce platforms out there such as OpenCart and BigCommerce. I have listed only a few leading platforms. For getting a better picture, the market share of the best eCommerce platforms are given below:
#6 Choosing profitable products to sell
Below are some tips for you to selecting the right product for dropshipping.
- Avoid products that go outdated within a short period.
- Sell products that are trending if you can make it unique to your store in some way.
- Find products that have demand.
- Implement marketing techniques such as storytelling.
- Do not sell the products that are popular on Amazon and eBay. You can’t beat their branding, reputation, and offers. Also, popular products always have high competition.
- Do not apply the trick of ” selling at lower prices than your competitors”. You will eventually fail. Because dropshipping is, first of all, a business with a low-profit margin. You can’t find thousands of customers like Amazon. Competing with giants is just not practical. Also, at some point, you will not be able to sell at such low prices without a loss.
- Add value. It is one of the best and easy strategies to use. You may add value using high-quality pictures, buyer’s guide, uploading customers review and fast reply. This will help you to improve your product branding and sales. Still, it is necessary to address all the areas thoroughly before making a decision.
- Select a niche with a lot of relatable products. There was a funny story about a salesman who sold a boat to a man who came to buy just a fishing rod. Just like that If a customer buys an oven, sell them oven-safe cookware and oven gloves. You can even sell other baking materials such as electric beater and measuring spoons and cups. Repeat business is key.
- If possible, try customization as people are willing to pay more for personalized products.
- Sell consumable products such as food products, makeup products, cleansers, etc. as it leads to repeat business.
#6 Finding suppliers
You should be alert here and take a step very cautiously. As dropshipping is very famous these days, the internet is full of scammers. A wholesaler will neither charge a monthly fee nor they sell their products to end customers at wholesale prices. One method to find the right distributors is to directly call and collect their information from the manufacturers. Otherwise, you can select from dropshipping companies such as AliExpress, SaleHoo, Wholesale 2b, Doba, etc. All dropshipping companies have their advantages and disadvantages. It is important to evaluate the various dropshippers based on your own specific needs and use cases. You can also use various dropshipping directories available on the internet that provide a credible database of suppliers that are often organized by niche.
Now as you got a clear insight about dropshipping it is time to take action. Things to keep in mind are, dropshipping is not as easy as it sounds, and it’s not something for making more money in less time. But still, it’s worth trying if you are a complete beginner, you’re on a budget, want to sell multiple product niches, or as a side business. And some of the mistakes you should avoid are expecting easy money on fewer efforts, relying too much on a vendor, not trying to attract visibility or not paying attention to promotional activities, not giving utmost priority to the customers, and not having a proper return policy. And remember, the experience is the best way to learn.