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Dropshipping is an ecommerce business where you, the seller, do not have to buy inventory. Here is how it works:
You, the dropshipper, act as the intermediary between the supplier and the customer, without spending a fortune.
We here at Sell The Trend are experts in dropshipping. We built this business around dropshipping, so you can rest assured that we are the right partner that can help you succeed in it.
Today, you will learn:
We will also discuss common mistakes that dropshippers make. In the end, we are confident that you will be armed with enough knowledge to start your very own dropshipping company with us!
This supply chain method for this business model is very different from any traditional methods because, in this method, you don’t need a stocking facility.
All you have to do is create a website for receiving orders and find the suppliers who can fulfill the orders. Once the customer places an order on your online portal, you have to inform the supplier, and then the supplier will deal with delivering the order to the customer.
Pro Tip: Dropshipping is a lot easier if you use an automation software like Sell The Trend.
How does dropshipping work exactly? In the simplest sense, dropshipping is a form of e-commerce that involves shipping products directly from a dropshipping supplier or fulfillment centers to customers whenever they place an order in your store.
Let’s say you’ve decided to sell sneakers online because you noticed it’s profitable. However, you don’t have enough money to stock up your store. This is where dropshipping comes in handy.
To get started:
Did you notice we didn’t include product prices in the list of things to import? That’s because it’s all up to you to set up your pricing. So if the supplier sells the product for $50, you can sell it for $80.
When a customer orders a product from your store, all you have to do is forward the order to the supplier, who then proceeds to the fulfillment process. In the end, you’d make $30 in profits. Easy money!
As a business person, the first question that will come into your mind after learning about the dropshipping business model is its worth. As far as the question “is dropshipping legal” is concerned, yes, it is legal.
And of course, it’s totally worth your time, effort, and investment.
Have a look at the following points. They will clear out the doubts about the dropshipping business model and walk you through its perks.
When you start a new eCommerce business or any other business, investment is the foremost problem. At the initial stage, it’s difficult to attain high funding, especially when there is no surety for the positive outcomes of your dropshipping ideas.
In fact, 29% of businesses fail due to low cash problems before they get fully established.
Image Source: businessinsider.com
Fortunately, the dropshipping model can help you deal with all these critical issues. This business doesn’t need you to buy any products from dropshipping suppliers advance, employ a lot of staff members, and most of all, invest in an office.
You can start a dropshipping business right from your working desk or any other place from where you have internet access.
Moreover, you don’t have to pick or drop anything, so there is no hassle of stocking space, inventory control, or sorting products.
The only investment will be the website, store, or portal that you are using to get customer orders and any additional software (some very inexpensive options available) that you will need for coordinating with the suppliers.
Stocking requires the most considerable investment in any business. Stocking is also one of the most time-consuming processes in order fulfillment.
With dropshipping, the goods are transported directly from the dropshipping supplier to the customers, so none of the stocking investment will be required. Even the inventory will move to a virtual stage, which is easy to manage with online and real-time applications.
Warehouses have always been an issue for business. It’s not only cost-ineffective but is also a significant source of error and problems.
Dropshipping does not require a warehouse. Therefore, there will be no hassle with insurance, rental, or professional warehouse management software.
In the initial stage, you won’t even need staff members, which means you won’t be paying high salaries.
To start a dropshipping business, all you need is a tablet, laptop, or smartphone to keep an eye on the work and an internet connection to stay connected. It means that you don’t have to stick with a particular location or city to ensure the smooth running of the business. You can literally do your business on a warm beach in Miami or during a trip to some abroad country.
When you open a brick-and-mortar store, you have to select a particular source and product for your business and then stick with it.
However, with dropshipping, you have an infinite number of options. You can go for any product, whether it’s baby products, a pet product, or any other popular product. You can even work with multiple suppliers who have an automated fulfillment process.
Another good thing about dropshipping is the choice of selling medium. You can sell through a social media store, a dedicated application website, and many other sources. We will talk about those options a little bit later.
In recent times automation has become a considerable part of the business world. It allows a business owner to speed up the processes, boost productivity, and increase their market awareness.
There are a lot of applications like Sell The Trend that can help you to automate a lot of work. These applications help you to manage the virtual inventory to reduce pricing errors, improve the efficiency of the business cycle, and save a lot of time.
Dropshipping allows you to sell products from one country to another. In this supply chain, you just need to work to create coordination between your customers and the dropshipping supplier and leave the heavy lifting to the suppliers.
The thing about dropshipping is that it is not locked onto a place. There is no physical location so you can easily connect to customers in China and sell a product from Indian or any of the nearby countries. There is no limitation of borders, sellers, or customers.
Should you start a dropshipping business? Dropshipping is a flexible, low-risk, and low investment opportunity that can help you create a base for a reliable business. But, it’s no genie that can make you a billionaire overnight. It will take time, patience, and of course, some work to attain a good level of success in this field.
The entrepreneurs who can get the best results from it are the following:
Unless you have a dropshipping agreement contract with a particular brand, you can use it to sell products of different types without any problems.
What’s even better is that there is no particular shop, store, or dropshipping agreement contract, so you even have the flexibility to add any product or niche of products according to your wishes.
Dropshipping may be a low-budget business, but it is still a business which means you have to plan every move you make. It also means that you need to know the competition, have clarity about your audience, and find the right tools for the job.
Have a look at the following points. They will guide you on how to start a dropshipping business and also walk you through the steps you will need to ensure its success.
1. Select A Niche
What is a niche? A niche is a product category. “Kitchen” is a niche. “Shoes” is a niche. Then, there are sub-niches. For example, “woman’s shoes” is a sub-niche of shoes. “sports shoes” is also a sub-niche of shoes.
Choosing a niche means building a store for that niche only. So, if you build a shoe store, you will sell nothing but shoes.
The reason we recommend this is simple: specialization. You cannot be a jack of all trades. Just imagine if you have a store that sells shoes and power drills—they do not match and your site visitors will get confused.
Choosing a niche gives you these benefits:
Many dropshippers fail at this step. What they usually do is sell everything, which is fundamentally wrong. If you think about it, successful companies have a niche. Nike’s niche is sportswear. Bosche is about power tools. As such, it would us good to do what they do—be specialists in something.
PRO TIP: Sell The Trend offers NEXUS, a product selection tool that helps you decide what niches and products have the most demand.
2. Research Customer Purchases
Draft some questions related to your identified niche or product and set out for a survey. Have a conversation with some customers and note the common problems faced in their day-to-day lives. It will let you know their preferences, drive customer loyalty, and find the product categories that have more selling potential.
For instance, the biggest problem that the majority of the present population is facing is pollution. So, selling items that promote green earth to an audience that cares about the environment could be a very potent option to base a business around.
3. Check Out the Trends
There are a lot of eCommerce websites that are already using dropshipping; you can use those to your advantage. You can visit some of the popular online sites like Aliexpress and Amazon and identify the most sought-after top-selling products.
Using Sell The Trend’s AliExpress or Amazon Explorers, it’s really easy to find such products in no time at all.
Combine that with the Nexus Research Machine which aggregates the highest-performing products from multiple eCommerce platforms and it should be a snap to find highly converting money-making products for your new dropshipping store.
4. Find The Perfect Products For Dropshipping Business Model
You have to research the products of your chosen niche and choose the most potent one among them. Using a platform like Sell The Trend with Store Intelligence and Dropshipping Product Research tools you can see which products are popular on Facebook and which products would be good to sell in your store as well.
Pro Tip: One of the most important aspects of dropshipping is niche selection. Do not sell something that you do not understand.
The following are the things that you have to consider before selecting any product for your dropshipping store.
1. Retail Prices And The Wholesale Prices
In dropshipping, retail product price plays a critical role. If your product is too costly, customers will rarely buy it while if it is too cheap, the profit margin will not be enough for you.
Considering the profit margin of 15%-45%, you have to aim for a product that can balance both the price and the selling rate. You have to find the products that can work for your startup as well as fulfill the customers’ expectations.
Sell The Trend’s NEXUS Product Research page allows you to quickly check a product’s profit margin as well as see the average price that it’s being sold for in stores around the world. it’s also a great way to gauge the popularity and profit margins of a product.
2. Weight and dimensions
The dropshipping supplier who delivers the product will deduct any shipping price from the total sales price of the product. That means heavier items affect your bottom line as more money goes towards shipping.
One obvious way to mitigate this is by managing the size and weight of the products you pick for your store. So, go for a product that has good market value but is lighter in weight. It will be cheaper to ship and will boost your profit.
3. Turnover Rates of the Product
As an online retailer, a lot of your time will be spent researching and adding new products to your store. If you go for a product that keeps on changing or upgrading, you will have to keep changing this content. It will be costly, time-consuming, and eat up a sum from your profit. You may also have to undergo the stress of keeping up with changing product pages.
4. Usability and Durability of the product
20% of the eCommerce products return to the supplier due to damage. It may not cost you investment, but it will cost you time and decrease your brand value. So search for the products that are more durable and have less chance of damage during the delivery.
Sell The Trend’s Product Research Page is also a great way to see if a product is experiencing a lot of returns from customers. Make sure to avoid those products otherwise, you could end up losing money as returns eat up not only your profits but your time and even your patience.
5. That WOW Factor
Another important aspect to consider when choosing a product for your store is whether it has a WOW factor that can entice a prospective buyer.
Products that have that special quality will fly off the virtual shelf a lot faster than common or boring products. If you encounter a product that makes you think “huh… that’s a really cool product” then you might have located such a product.
You know the profit margins you want to earn and the products you want to sell, so the next thing you need is a supplier that offers these products at a low price.
The following are the more common ways to find the best dropshipping suppliers for your business. You can use them to prepare a list of potential retailers and then evaluate them to identify the ones that suit your needs.
Open up your web browser, and type your product’s name with “supplier” at the end. You can then gather the contact information of some suppliers from there and then contact them through email or phone. Most businesses also have online forums for queries and services on their website.
If you are planning on selling branded goods, find the contact of its manufacturers, and contact them directly. Some of the manufacturers will readily provide you with the services you need, and if they don’t, you can ask them for their outlets or wholesale dealers.
Contact some shop owners, and delivery services, and find out about the wholesale dealers who work in your area. You can then directly visit them with your idea and ask for their support. If your proposal is good enough and the wholesaler finds it profitable, you will get your product in no time.
This is by far the easiest and most immediate method. There are a lot of supplier directories that show you millions of products with their associated suppliers.
Websites such as AliExpress and DHGate provide a convenient way to connect with suppliers selling the exact products you are interested in.
All you have to do is search for the product you need, find a supplier that is selling it, add that product to your store, and use an dropshipping order fulfillment software to automate the whole process.
Sell the Trend automatically connects you with low-cost Aliexpress suppliers for the exact product you are considering using the convenient “Source from Aliexpress” button Located on product pages.
You have to rely upon the supplier for stock keeping, upholding product quality, order fulfillment, timely delivery, and almost all the primary aspects of the product management of your business.
The choices you make at this work will have a direct effect on your business reputation and profit. Therefore, even a slight mistake in this step is not tolerable.
The following are the things that you should consider when selecting a supplier:
Not all manufacturers or wholesale sellers are open to dropshipping. Making contact with a supplier will mean time wastage and disappointment. Therefore, before visiting any supplier or manufacturer check their background and make sure that they are dropshippers.
As a startup business, the last thing you will need is a supplier with a lack of experience. It will make your business more complicated and might cause it to fail. You cannot rely on anyone who is not a pro to handle this essential aspect of your business. So, if you suspect that the supplier is not experienced go elsewhere.
Keep searching until you find the seller with a record in dropshipping and can ensure the smooth flow of the business. It may take some time, but it’s vital.
Dropshippers will handle all the functionality of the work from packing to delivery. So it’s pretty apparent that they will charge you a small part of your profit for their services. They have to pay the rent and stocking charges after all.
However, this fee is usually limited to a few dollars (depending upon the product price). If the supplier costs you more than that say 50% of your profit, just let them go.
Even with the most competitive prices or range of products, they won’t do you any good.
According to studies, 95% of e-commerce shoppers stated that the shipping prices are a significant point for making a purchase. Another survey by Walker Sands also revealed that 79% of US customers are more likely to buy products with free shipping.
53% of the US customers even said that they wouldn’t buy a product if they didn’t know about its exact arrival.
Image Source: walkersands.com
The stats make it pretty clear that a majority of your orders will be impacted by your shipping policy and prices. So you have to ensure that the supplier you choose is up to standards for this aspect of the business. The supplier should offer an exact estimate of the delivery time and keep the customer informed with real-time data.
Moreover, the supplier should also have clear policies for product return. About 68% of online shoppers consider it before buying a product.
Image Source: marketingland.com
The pictures you place on your site need to be clear and real. About 22% of the total products that are returned to the dealer are because of the difference in the real-life product and its photographs.
Image Source: cdn.business2community.com
According to an article on internet retailing, 47% of respondents said they had to return products because they did not match their expectations.
So, it’s pretty clear that a supplier who cannot produce quality images and ensure product quality isn’t a good option for your business. You need a committed, professional who is dedicated to customer expectations to grow in the dropshipping market.
Pro Tip: Your supplier and your product can make or break your dropshipping business.
After you have learned the necessary steps on how to start dropshipping and have completed the initial work, it’s time to face the market. It’s time to find a platform to upload the product picture and start selling your products.
There are lots of available platforms that you can use. Here are the most preferred options available.
If you want to sell hassle-free and quickly, Amazon is a must for you. The store is by far, one of the largest eCommerce businesses in the world. Studies have revealed that this giant in the industry, single-handedly acquires over 45% of the total eCommerce market in the United States.
Image Source: statista.com
The net worth of the company is approximately 232 billion US dollars, and its annual earnings in the previous year (2018) closed to 10.07 Billion US dollars.
Fortunately, 34% of the sales by Amazon are through third-party dealers. It means you too can become a part of this large company and earn a profit by selling through its platform.
Some other benefits of starting dropshipping with Amazon are:
Image Source: emstatic.com
Connecting with Amazon would mean you will be getting an application, website, and all the other resources you will need. You have to sign up for the Amazon seller account, and you are ready to sell.
Amazon is the largest name in the world of eCommerce. It means you don’t have to make ads, banners, or run a campaign to promote your product. Once you have uploaded the pictures of the product, Amazon will take care of finding the relevant users, emailing them, tracking progress, and all other aspects. There is absolutely no need for promotional work from your end.
Getting traffic on a new startup business is a difficult task. The customers are more reluctant to shop with an unknown user and often avoid them. However, with Amazon, you won’t face any such problems. The website currently has over 310 million active users, which means it is trusted. So connecting with it will make you look more trustworthy. Hence you can sell without any problem.
Every good thing always has some flaws, and Amazon services are no exception. While most of them are not deal breakers, it is a must that you know everything before you dive into being an Amazon seller.
So, have a look at the cons of using Amazon dropshipping:
1. Fees
Amazon is providing you with a marketing app and a lot of other services. However, they all come at a price. The commission fees are usually somewhat between 10-15% of the total cost of your product. It is not that high but can cause a lot of trouble if your profit margins are low.
2. Data Leak
When you are selling on a third-party app, you can’t expect much privacy on it. Amazon app lets you do business freely, but all your sales data is accessible. If Amazon wants it can use the data to find best sellers and use it to strengthen their involvement in that niche (no one is saying that Amazon will do it, it’s just a possibility).
3 Lack Of Connectivity With Customer
The consumer who purchases your product through Amazon will not know about your business. It will give you sales, but will not help you with growing long-term relations with your customers. Besides, Amazon has a lot on its plate than worrying about its third-party sellers.
4. No personalization
Amazon has its logo, web design, application interface, and marketing techniques. It means that you don’t have the right to customize or personalize anything for your customers. Without personalization, your store will look almost the same as the others, which means you can’t expect to earn a market name or reputation with it.
eBay started as an auction website for selling old products but has now become one of the biggest eCommerce websites. It has over 180 million active users and stands as the second-largest eCommerce store, right next to Amazon.
According to some studies, the website earned revenue of 10.746 billion in 2018. The following are the reasons that will help you with your choice regarding choosing eBay as a selling channel.
eBay is pretty much similar to the Amazon store. It may be a bit smaller in scale, but all its policies are almost the same. Therefore, the pros of these two stores are also identical. Here are the benefits that you will get with eBay:
eBay may be useful, but it’s still a third-party store, so you will face some additional hurdles operating within its guidelines.
Here are a few cons that come with dropshipping on eBay:
1. Listing Fees
The biggest downside of selling on a known application or eCommerce website is the listing fees. eBay charges you 10% of the product cost as the charges for selling with them. With products that have a lower profit margin, this fee can quickly eat up all your profits.
2. Constant monitoring
eBay may be known for selling products, but it’s an auction website. Therefore, you will have to constantly monitor and re-list the product you want to sell. There are some automation tools for it, but it’s still a hassle.
3. Non-Customizable
eBay lets you run your retail business, but it does not give you any right to create value-adding pages. The app has some templates of pre-prepared designs, and you have to stick with them.
4. No Long term Connections
There are a lot of sellers on eBay, which means that the majority of your customers will be one-time buyers. You don’t have a brand name, customer communication, design, or any other thing to shine a light on your business.
Therefore, selling on this platform will benefit its reputation and do nothing for your brand name.
The best way to start and run a profitable dropshipping business is to build your own store. You can use websites like Shopify, BigCommerce, and many more to create a customizable store for your eCommerce.
Selling through Facebook or Instagram stores is also an excellent option for a startup. Facebook single-handedly acquires over 2.38 billion monthly users around the world. If you manage to divert even a fraction of these users to your Facebook store, the profits will be much more than you can expect. More than 50 million businesses are already using Facebook to sell their product and are getting approximately 2.5 billion comments per month.
Here are the pros and cons of selling with your own stores:
1. Control
You are designing a store so you will have the right to customize every aspect according to your needs. It is a very great thing for adding value to your products, optimizing looks, making the page informative, and doing a lot of things.
These things, in the long term, will not only build an active business but also help you attain a market reputation, which is a must for establishing a business.
2. Design
With the presence of platforms like Shopify, Bigcommerce, Wix, and others, you have hundreds of design options. There is no limitation and it’s super time-saving. You don’t need to wait for approval or anything, just sign in, drag the design elements you want, set up the products and you are all set to sell.
3. Mobile Ready
Creating your store using recognized software or platforms gives you the flexibility to optimize it according to the latest trends.
You can even make it responsive to smartphones and considering that 76% of the consumers in the US are using their phone to make purchases, this optimization is highly profitable.
Image Source: https://www.pewresearch.org/
4. Low Expenses
Owning a store cuts the most significant profit eater factor, the listing charges. Most platforms like Shopify have some fee for creating stores, but it’s peanuts compared to the listing charges. As for the social media selling, it’s free (except for any service charges from credit card payment systems or PayPal).
The only con of developing a store is traffic acquisition. The customers are unaware of your new store, which means you will have to put in extra effort in promoting your business.
It is also possible that you don’t get much attention in the initial phase of your business, which might lead to disappointment – but don’t despair in the following section we will discuss how to bring in a flood of customers to your new eCommerce store.
The most substantial aspect of any startup is marketing. It is critical because you can’t earn if consumers don’t have a reason to trust your service or even know about your existence.
You have to tell them about the benefits of your services and give them a reason to shift from trusted eCommerce giants and buy from you instead.
Studies reveal that 14% of startups fail because the business owner doesn’t pay much attention to marketing.
So, if you don’t want to become a statistic, consider a few balanced and robust marketing strategies. The following are some customer acquisition techniques that you can use:
One thing that every business person knows is that money attracts money. It means that the more wise investment you make, the more profit you will earn. The same thing applies to dropshipping. You can attain fast recognition and much more profit if you are ready to invest more finances in it.
Here are the investments you can make:
Finally, you can also do video marketing on YouTube or TikTok. Uploading a video of your product or services is an excellent way of teaching the customer about your offerings.
After knowing all about how to start a dropshipping store and promote your business, it’s time you learn about the secrets of making it successful.
Here are the critical elements of a profitable dropshipping online store that you should know and must always employ in your startup.
1. Personalize And Specialization
To beat the competition you have to personalize every element of your business. You have to add value to the whole dropshipping startup. What makes you unique? why should someone choose you over another?
2. Focus On Seo
The results on the first page of the Google search engine get 91% of the traffic, and 32.5% of the clicks are on the first link itself. Therefore, use SEO techniques to increase your ranking on Google.
Image Source: searchenginewatch.com
3. Keep It Near To Your Passion
If you try to sell a product that you use or are passionate about it will give you clarity in all its aspects. You will find it easier to see it from the customer’s perspective, which will increase your chances of selling it much more comfortably. Moreover, the passion for the product will help you to focus on the work and will make it more interesting and enjoyable.
4. Try Light And Durable Then Heavy And Fragile
It is ideal if you try to stick with products that don’t break that easily. It will help you to attain more straightforward delivery options and also prevent the hassle of product returns.
5. Use Multiple Platforms
Don’t stick with only one or two selling platforms, go for multiple platforms. It will help you to attain more traffic and more options. You can also prefer to sell through regional sellers. It makes the customer more satisfied than orders from an international dealer as the shipping times will be much more reasonable.
6. Work On Your Content
The customers don’t have a physical way to feel your product; the images and descriptions are the only way to check it. Therefore try to provide them with high-quality and clear pictures.
7. Establish Relationships
In dropshipping, you have to integrate with a lot of suppliers and connect them with the customer. Therefore, it is crucial that you have to maintain a healthy relationship with all your suppliers. You need to have excellent communication skills and pressure handling capability.
Bonus Tip
Ask your supplier for a sample product to ensure its quality and durability. You should also prefer to attend events related to your business. They will let you know about the trends and discover new ways to ensure customer satisfaction and acquisition.
Often when a person steps into the world of business, they are unaware of the reality of this field. Even if you know how to start a dropshipping and master all aspects of marketing, there are still some pitfalls you have to be aware of. There are inevitable mistakes that you have to avoid to ensure the survival of your business. The common and destructive mistakes that dropshippers make are:
We have come a long way with our dropshipping online store, haven’t we! By now, you have gained complete knowledge of starting, running, promoting, and scaling a brand new business.
Dropshipping is certainly a great way to set up a passive income source. After enough practice and hard work, you can expect to find products that can make you $1000/Day and you can focus on building your brand.
So the only thing left for you is to just suit up, follow the steps in this article, and dive into the wide world of dropshipping.
