Tips and Tricks and Basics of Drop Shipping

1. THE DOS &
DONT’S OF
DROPSHIPPING
10 Tips to Dropshipping Success
a doba insider’s
GUIDE

2. 10 Tips to Drop Shipping Success
In just about any endeavor — whether you’re coaching someone in the intricacies of golf, fishing or in
this case, online retailing that employs drop shipping for fulfillment — there are time-tested tips that
always work if the student is willing.
In golf, it’s “Keep your head down.” In fishing, it’s “Keep your rod tip up.” In online retailing that uses
drop shipping, well, let’s explore some of the techniques that work best with our Top 10 Tips for
Success list.
The Dos and Don’ts of Drop Shipping
10 Tips to Drop Shipping Success

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1. Don’t Try to Compete on Price Alone
The most common beginner’s mistake in drop shipping (and
perhaps retailing in general), is competing based solely
on price. If the only thing that differentiates you from the
competition is price, you’re going to lose all your business
and all your profits the moment someone else undercuts
you and you find yourself on the losing end of a price war.
The only businesses that can truly afford to sustain a
“lowest-price” strategy are the 800-pound retail gorillas
with the buying power of Walmart who can get the absolute
best wholesale pricing on any given product by simply
purchasing enormous quantities up front.
Does price matter? Yes.
Is price all that matters? No. If it were, Walmart would have
a monopoly over the entire retail sector.
So instead of trying to offer something for a lower price, look
for ways to offer more and justify a higher price. Whether
it’s product knowledge and expertise, service, packaged
deals, free shipping, or something else, there are plenty of
ways to command a higher price while still getting the sale.
2. Don’t Sell the Same Thing as Everyone Else
The fastest way to fail in online retailing is to try and sell
the same “hot products” as everyone else — like consumer
electronics or name-brand clothing.
When a large number of businesses and sellers try to sell
the same product, competition drives prices down — often
to the point where the only businesses making a profit are
those who receive steep discounts for buying in enormous
quantities, like big box retailers (the aforementioned
800-pound gorillas of retail). And even then, the profit
margins are incredibly slim.
How Much Do Big Electronics Retailers Really
Make?
In 2009, Newegg.com — an online retailer that sells
consumer electronics — revealed that although they
had generated well over $2 billion in annual sales the
previous year, they only managed to clear a razor thin
1.4% net profit margin on that revenue.
At that margin, one would have to sell nearly $3.6 million
worth of electronics in order to make a relatively measly
$50,000 in net profit. The money from electronics is in
manufacturing, not in retailing.
Instead of trying to offer
something for a lower
price, look for ways to
offer more and justify a
higher price.
The fastest way to fail as
a drop shipper is to try
and sell the same “hot
products” as everyone
else.

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As you’ll discover over the next few sections, picking a
niche to sell in is a much more sustainable strategy, as is
developing product knowledge and expertise in your niche.
3. Do Focus on Specialized Product
One of the greatest advantages of working with a drop-
ship supplier is the freedom it gives you to experiment
with selling all sorts of merchandise. In a traditional retail
operation where products are purchased up front and in
bulk quantities and then inventoried in-house, retailers
aren’t going to risk purchasing inventory unless they are
reasonably certain they’ll be able to sell at a profit within a
short period of time. That’s why you’ll often have a hard time
finding really specialized merchandise like — let’s say an
automatic shrimp-peeling machine— on the shelves of your
local Walmart. Walmart doesn’t know how well that product
is going to sell so they’re not about to risk their money to
stock it.
But what about online retailers who drop ship? Because
online retailers who work with drop-ship suppliers aren’t
buying any inventory up front and only pay for the product
after it sells, they don’t have to worry about that same risk.
You can list an automatic shrimp-peeling machine on your
website and if it doesn’t sell, the only thing you’ve lost was
the time spent listing it. As a result, merchants who drop
ship are in a unique position to offer all sorts of products
that the big-box retailers aren’t trying to sell because they’re
deemed too risky.
The smart online merchant understands that she can’t go
head-to-head against Walmart or Best Buy, which is why
she focuses on selling niche and specialty products that
Walmart and Best Buy won’t risk carrying.
4. Do Cash in on Seasonal Merchandise
Seasonal merchandise can be a serious cash cow for
online retailers who drop ship because typical retailers
don’t usually carry enough of it for fear of overstocking. For
example, they don’t want to run the risk of having leftover
summer merchandise taking up valuable warehouse space
in December, not to mention having their money tied up
in “hibernating” inventory that isn’t selling. This means
there’s a huge opportunity for online retailers who drop
The smart drop
shipper…focuses on
selling the niche and
specialty products that
Walmart and Best Buy
won’t risk carrying.

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ship because they don’t have a care in the world about
overstocking because they’re not carrying inventory in the
first place!
Seasonal products include everything from holiday
merchandise (Christmas, Easter, Mother’s Day, etc.), fan
gear for sports teams, spring/summer/fall/winter weather
products, back to school accessories, and so forth. Do
yourself a favor and set up a year-round merchandising
schedule for when you plan to offer specific products. That
way you can be sure to have them available well before the
season or holiday in question.
5. Do Offer Product Bundles
A fundamental merchandising strategy is bundling related
products together and offering them as a package deal.
This especially holds true for drop-ship retailers because
bundling can significantly reduce shipping costs if all
the products are coming from the same warehouse. And
that provides you with a huge price advantage over the
competition.
If you see that a particular product is selling well, but you
don’t have a great margin on it, look around at what people
might want in conjunction with that product and bundle
them together. Then use the extra margin from the add-on
products to offset the low margin from the big product. This
strategy is especially common in selling electronics, where
retailers often make a bigger margin on the cables sold with
a big-screen TV than the television itself.
Inspiration for Product Bundles
If you’re struggling to find ideas for products to bundle,
two great sources of information are the “Frequently
Bought Together” and “Customers Who Bought This
Item Also Bought” sections of any product page on
Amazon.com.
Seasonal items can be
serious a cash cow for
drop shippers because
typical retailers don’t
usually carry enough of
them.
Package deals can
significantly reduce
shipping costs, providing
you a huge price
advantage over the
competition

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6. Do Sell What You Know
One of the greatest ways to secure higher profit margins is
to be an expert on the products you sell. This means you
know the product itself, but more importantly, you know what
people are looking for in that kind of product based on your
own firsthand experience. This knowledge enables you to
write more compelling product descriptions, offer superior
customer service, and create more attractive package deals
based on which products you recommend buying together.
You don’t need to be certified or formally recognized as a
wizard or an expert. All that’s necessary is that you know
more about the product than the average buyer or seller. So
reflect on the lifetime of personal experience you’ve gained
from your hobbies, passions, and interests. What kinds of
products have you used the most? What have you learned
from using these kinds of products that most sellers don’t
know about?
Real World Example – Crutchfield.com
Crutchfield.com has positioned itself as an expert on
car stereos. If you contact them and tell them what kind
of vehicle you drive, not only will they be able to tell you
what devices fit your car, they’ll even provide printed,
step-by-step installation instructions for your specific
vehicle.
Crutchfield’s expertise has been credited as a major
factor in why they’re able to charge significantly more
than a typical online electronics store. As a result, the
company — which was founded in 1974 — has grown
into one of the largest retailers on the Web with an
estimated $149 million in annual revenue at time of
writing.
7. Do Try Different Marketplaces
Many of the most successful drop-ship merchants are
what we call multi-channel merchants, meaning they sell
their products at more than one location online. Some
products sell more often or at a higher price on Amazon.
com than they do on eBay.com. Others do especially well
on your own website or Facebook storefront because each
marketplace attracts a different demographic and calls for
different marketing techniques.
Ultimately however, the biggest reason to experiment with
different marketplaces is because when you limit yourself to
Selling what you know
enables you to write better
product listings, provide better
customer service, and make
better recommendations
based on your own firsthand
experience.
When you limit yourself to
selling on just one site, you
miss out on all the customers
who are looking for your
product elsewhere.

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just one selling venue, you miss out on customers who are
looking for your product on all the other marketplaces. So
why leave all that money lying on the table?
8. Do Provide Superior Customer Service
One of the biggest fears consumers face when shopping
online — especially on sites like eBay.com — is getting
ripped off. With all the time you’re saving by working with
drop-ship suppliers, there’s no reason you can’t offer the
best customer service available.
If a customer emails or messages you, a swift and personal
response will quell their concern and encourage them to
continue shopping with you. Be sure to keep the customer
in the loop with what’s going on with their order every step
of the way, confirming receipt, shipping dates, etc.
The name of the game here is trust, and top-tier customer
service is by far the best way to obtain positive feedback,
reviews and ratings. Furthermore, every interaction with a
customer should be taken as an opportunity to demonstrate
your expertise (No. 6) and encourage repeat business to
your store over that of a competitor, even if they have lower
prices than you.
9. Do Experiment with Shipping Rates
A study conducted by Amazon found that 46 percent of
customers will abandon their shopping cart if free shipping
is not offered. On the other hand, 75 percent will purchase
more when free shipping is offered to them. Those are some
compelling numbers that attest to the power of free shipping
and the psychological impact that shipping rates can have
on consumer buying patterns. Even if your drop shipper is
charging you shipping drop-ship fee, you don’t necessarily
have to pass that on to your own customers. Instead, you
can simply build the shipping cost into the price you charge,
and then advertise free shipping. Although the total dollar
amount may be the same, the psychological impact of free
shipping cannot to be underestimated.
The lure of free shipping is especially potent when offering
bundles and package deals (No. 5). If your customer is
already somewhat interested in a related product, why not
offer it to them in a bundle with the original product at a
Top-tier customer service is
far and away the best way
to obtain positive feedback,
reviews, and ratings.
46% of customers will cancel
their online order if free
shipping is not offered to them.
75% of customers will
purchase more when free
shipping is offered to them.

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slightly higher cost and then seal the deal by offering free
shipping? You may be surprised at how many people go
for this option, because it provides a sense that they are
stretching their dollars for the maximum value.
10. Do Optimize Your Product Descriptions
From the words you use in your product descriptions to
the background of the photos you upload, the quality of
your product listings make a huge difference, regardless of
whether you’re selling on your own website or on Amazon.
com or eBay.com. Many retailers will simply copy the
manufacturer’s product descriptions and photos, which is
thequickestwaytobeoverlookedinacrowdedmarketplace.
It is far better to write your own detailed description and
use your own photos. It may take you longer, but it draws
attention, and that’s the whole point.
Better yet — and even though you don’t have to stock a
product to sell it — you might want to consider ordering in a
sample of any product you are seriously considering selling.
That way, you can take your own unique photographs of the
product and get a better feel for describing that product.
Your photos alone will ensure your listings stand out in a
crowded marketplace, garnering more views than those
generic photos provided by the manufacturer.
Conclusion
Like golf and fishing, learning the best ways to market
your product line comes with trial and error, with some
pretty embarrassing miscues and some disappointments
along the way. But by adhering to these 10 dos and don’ts,
your chances of success are substantially increased. And
once you’ve begun to get a handle on it, Doba has dozens
of educational articles, tutorials, webinars and product
research tools so you can continue to hone your skills and
reach and surpass your business-related goals.
Try Doba Now for Free
Ready to get started?
Try Doba now by signing
up for a free 7-day trial
and see for yourself just
how easy drop shipping
can be!
Your unique product pictures
alone will ensure your listings
stand out in a crowded
marketplace and get more
views than the competition.

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