Cost and complexity are two of the biggest barriers to starting a business. If you are looking for a business model that circumvents these two headaches, dropshipping could be just the path for you. It is a method of selling online that does not require you to hold an inventory of items you sell. No physical store, no warehouse and none of the overheads you would otherwise incur if you were running a conventional retail store.
Instead, customers submit their orders through your online shop front. You relay these orders to the supplier (a wholesaler or manufacturer) who in turn ships the product directly to your customer. Dropshipping is not just beneficial to budding entrepreneurs. It is a positive for the supplier too as it allows both parties to concentrate on what they do best.
As with anything though, success is not guaranteed. If you are going to build a thriving dropshipping business, pay attention to the following.
Don’t Be a Jack of all Trades
Creating an online store that deals in multiple types of products may seem like a smart way to appeal to a wider section of the population. Going general however brings you up against ecommerce giants like Amazon, a contest you are extremely unlikely to win. Dealing with too many products also forces you to work with many different suppliers which only adds to your business’ complexity.
Instead, focus on one product or one class of product. Look at things from the average shopper’s perspective. For example, if you are looking for running shoes, you will probably be more inclined to visit a Nike store than go to a general-purpose shop where shoes are just one of many categories. As a small business, you stand out by gaining a reputation for selling a particular product. Product focus also makes it easier to run a targeted marketing campaign.
Work with a Reliable Supplier
Suppliers are the epicenter of a dropshipping business. They can accelerate your success or ruin your reputation. Your customers expect you to resolve any problems they run into — from order initiation to product delivery to after-sales support. Yet, it is the supplier that moves the product from their warehouse to the customer.
Reliability is critical. Evaluate different dropshipping suppliers. Settle on one that demonstrates exceptional quality, consistency, scale, speed and price. Check out reviews from drop shippers that have used the supplier in the past. As long as the supplier has been in business for a while, there will be reviews. Pay most attention to negative reviews to see how the supplier handles their worst of times.
Do Not Depend on One Supplier
The best supplier can go out of business or have their operations disrupted by a disaster. If you do not have an alternate supplier on standby, your dropshipping business could collapse as you struggle to accept customer orders for a hot-selling item. The damage to your reputation could take months or years to repair.
As a contingency, have at least two suppliers for every product you sell. If one fails, you can immediately start sending your orders to the backup supplier. Alternatively, split your orders between two and three suppliers. When one fails, move the slack to the remaining suppliers. This strategy has the advantage of building a relationship with other suppliers and prepares them to step in as soon as they are needed.
Choose the Right Ecommerce Platform
As a dropshipper, the most important investment is in your online store. It connects you to potential customers allowing you to receive and process orders. For this reason, your choice of ecommerce platform is important.
Ecommerce platforms help you create, launch, customize and run your dropshipping shop front. They offer a means to conveniently receive orders, accept payment and initiate product shipment. Available features will vary from one platform to the next. Identify the one that will best support your dropshipping goals.
There are dozens of ecommerce platforms you could choose from. Some like WooCommerce are free. Many others will levy a fee. Cost should not be your primary consideration though. For example, reviews on Shopify are overwhelmingly positive so it might be your best bet even though it costs more than many of its peers.
SEO and PPC Vital for Growth
Dropshipping has a low barrier to entry. That is its greatest strength and also its primary drawback. From the get-go, you are up against hundreds or thousands of websites selling the same product as you. This is compounded by some suppliers offering the product directly to their consumers. Competition is intense. Search engine optimization (SEO) is central to your business’s online visibility.
Most traffic to your site will originate from major search engines like Google and Bing. The higher your pages appear on search engine results pages (SERPs) for relevant keywords, the more visitors to your website. This could translate to higher sales. Complement your organic SEO efforts with pay-per-click (PPC) advertising. Tap into large ad networks such as Google Ads, Meta Ads and Microsoft Advertising.
Get Customer Service Right
Dropshipping is a service business. Find out what the customer wants then have the supplier or print-on-demand product service send it to them. You do not hold any inventory yourself. Expect to receive inquiries, requests, complaints and suggestions via email, social media, live chat and over the phone.
Establish a support team that deals with customer questions. The relationship with your customers does not end with order receipt and product delivery. Stay engaged and ensure your customers can reach you when they need to. Respond promptly. Address complaints. Resolve issues conclusively. Keep customers updated on progress. Listen to and adopt useful suggestions.
Dropshipping is one of the quickest means of getting on the entrepreneur bandwagon. The low costs of establishing and running the business are the primary selling point. A low barrier for entry also means you face more intense competition.
The more you know about dropshipping, the better prepared you will be and the more likely you are to succeed. Learning through trial and error is an integral part of running any business but having some foundational knowledge beforehand will help avoid the more common mistakes.