There are many ways to start selling products online nowadays as e-commerce has given rise to a wide variety of business models. Anyone can start an online business without having to buy any products in advance.
The online selling that Chris mentioned is dropshipping. What is dropshipping? Let’s find out what dropshipping meaning!
Chris has outlined the pros and cons, and a few tips that online sellers need to know before starting dropshipping business to boost their sales effectively.
What is Dropshipping?
Dropshipping meaning: dropshipping is a business model which you can use to run your online selling shop without ever holding any inventory. It is also known as a distributorship. Once you’ve made a sale your supplier will ship your products from their warehouse, directly to your customer’s address. You’ll never need to worry about storing, packaging, or shipping your merchandise. You can start promoting them on your social media platforms such as Facebook, Viber, Instagram, or Twitter.
What are the Pros of Dropshipping?
It’s cheap to start It’s really cheap to start dropshipping business mainly because you don’t need to own the inventory. All you have to do is to take care of marketing the product.
Easy to start with no complicated process You don’t need to purchase in bulk, find a place to store your products, pack, and ship your merchandise. You just need one laptop and a management system for the online store to get started.
Product Variety, Wider Product Selection You can purchase a product one at a time and select some trending products to sell on your platform. You only pay for products when someone places an order on your online selling shop. If you can’t sell the product, then you can move on to new products without worrying about having any leftover stock in your warehouse.
Work anywhere, anytime You can work from anywhere; you just need a good internet connection and a laptop or smartphone. As long as you can communicate with customers and suppliers, you can still sell in online marketplaces.
What are the Cons of Dropshipping?
A lot of competition Because dropshipping requires very little capital to start, many players can easily enter, which causes high competition, especially on pricing.
Less profit Because of the fierce competition, sellers set a lower price than their competitors to attract customers at the fact that shoppers are always looking for the best deals.
Unknown product amount For online sellers, they deal with inventory management themselves so they have product records and product amounts in their hands. But in dropshipping, you don’t know the product amount so you have to update the information with suppliers regularly.
Complicated delivery This happens mostly when you have multiple suppliers for different products. If a customer order multiple products and you have different suppliers for these products, then the products will be shipped from two different places which cause complication in calculating the shipping fee for a customer. Some sellers solve this problem by setting a fixed shipping fee rate or including it in the product price.
Almost no control You have no control over product quality or any issues on a supplier side. If your customer has a complaint about an ordering process, refunds, and shipping speed, it’s hard to address and fix it because it’s from the supplier.
How to start drop shipping business?
1.Product research : You should first investigate niche of product you're interested in, and evaluate if that niche/product has potential or how profitable it can be. You can use trend analysis tools (such as google trends, keyword everywhere) in order to read the upcoming trend and understand social media interest.
2.Market research : You should understand the overall landscape of the market of your niche and the way it works. This step includes competitor research, customer insight, marketing method, and much more. You can use a basic tools like google search, browse social media to see your competitors and understand the way they do business.
3.Choose supplier : This is a crucial step of your dropshipping business. You have to make sure that you choose the right supplier which provide a high-quality product and service. A good supplier will let you run your business smoothly.
4.Build online store : After everything in the back-end is set up, now you should build online storefront for welcoming your customer. A good online store should be good-looking, informative, and do well in overall user experience.
5.Marketing activity : Once your dropshipping business is ready, you should market them to the right audiences and target customers, and start gaining sales!
Tips & Tricks to Increase Dropshipping Sales!
Do Market Research Before Start Dropshipping Conduct market research on specific products that you are going to sell, for example; where are you going to sell this product, what platforms do online sellers use, how much is the product price compared to competitors, product reviews and feedback from buyers, etc. Choose dropshipping products that will attract your audience; along with a good marketing strategy that will help you reach your audience more efficiently.
Monitor Your Competition Another dropshipping tip to make you stand out from your competitors is product presentation. By monitoring your competitors, you’ll know which products you should be selling, and what type of content people like, and this helps adapt the knowledge for your marketing plan.
Manage your inventory levels Check on suppliers’ capability to provide sufficient products. The assessment helps prevent problems in the future and reassures that retailer has a well-functioning management system and sufficient inventory.
For instance, you promoted your dropshipping products and spent 200 Pesos on Facebook Ads. That ended up resulting positive profit margin. Later, you decided to increase your ad spend to get more orders from customers. But suppliers cannot provide you the products in time because of insufficient products in stock, unable to manufacture products in time, and reserved inventory for other dropshippers. Failure to provide customers’ products can lead to losing deals and unprofitable Facebook ad spending.
Order Product Samples Before Selling If you decide to dropship some items, a good tip is to order samples from your suppliers to test the ordering process, item condition, delivery speed, etc. Take note of your comments or some issues that you experienced to use when you’re helping customers to track their orders.
Set Fair Price for Your Products You don’t want to set the price too high to scare customers away. Overpricing a product can be fatal as buyers are likely to buy from your competitors instead. On the other hand, avoid underpricing your products and maintain a reasonable profit margin. Set your product prices within market value and fair.
Starting a dropshipping business is a great way into e-commerce entrepreneurship for those who want to start online selling but don’t want to pay big capital for inventory and store their products. Dropshipping allows you to sell different product categories based on your interest. Pick your products wisely, learn how to deal with suppliers, and do market research. More importantly, a successful business takes active work and dedication to grow.
With selling on various social media platforms, it can be hard to keep track of all customer messages, look for an assistant that helps you chat with your customers from one unified inbox like Page365. With a unified inbox, you’ll never have to switch apps again.