Drop shipping is a simple enough concept: You set up an
ecommerce store and use suppliers to fulfil your orders and
ship them out to your customers.
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2. Drop shipping is a simple enough concept: You set up an
ecommerce store and use suppliers to fulfil your orders and
ship them out to your customers.
This retail fulfilment method means that the merchant does
not have to handle or deal with the product.
Drop shipping is designed so the merchant does not have to
store any inventory and there is no worrying about any
logistics or shipping costs
UNDERSTAND THE MEANING OF
DROP SHIPPING
3.
4.
5. 1. Low barrier to entry
Both traditional and online stores often require a hefty financial investment to
develop, manufacture, and source products. Additional costs associated with
stocking inventory, maintaining a physical presence, staffing locations, and
marketing to new customers can really add up!
Drop shipping has a much lower barrier to entry because you don’t have to
worry about developing new products or purchasing and storing inventory.
2. No inventory management
Traditionally, retailers pay upfront production costs, wait for delivery, and then
stock products in a shop or warehouse. If a product isn’t available for
customers when they want to make a purchase, sales are lost.
3. No need for a physical storefront or warehouse
Drop shipping nixes the need for a physical storefront — which means no
lease, no mortgage, no construction costs, no upkeep.
PROS OF DROP SHIPPING
6. 4. Improved cash flow
Typically, retailers purchase products, wait for them to arrive, and then sell
them to customers. For a period of time, they’ve spent a significant amount of
money without the ability to make it back.
With drop shipping, you receive payment for the products at the same time you
pay your providers — or before. This frees up cash for marketing and growth.
5. Test new products with minimal risk
Innovation is critical for keeping customers engaged, but fear of investing
money into new products with unproven track records prevents many business
owners from moving forward.
Drop shipping lets you test new product lines without spending lots of money. If
customers don’t respond to a new item, simply remove it from your store!
6. Create passive income
Passive income is earned with little to no daily effort (though it does require
upfront work and consistent monitoring). With drop shipping, it’s very possible
for you to be working on other aspects of your business (or even be asleep!)
while orders are placed and fulfilled automatically. With a traditional retail
model, products couldn’t go out without your involvement.
7. CONS OF DROP SHIPPING
1. High competition
The same low barrier to entry that makes drop shipping attractive creates
heavy competition. Other stores aren’t selling similar products — they’re
selling the same products from the same third-party manufacturers. You’ll
have to find other ways to stand out in order to compete.
2. Lack of control
When drop shipping, inventory rarely passes through your hands, so you
don’t have the chance to ensure that products are in top condition. Without
quality control, you’re putting your store’s reputation in the hands of a third
party. One bad batch of products could lead to unhappy customers and lost
sales.
8. 3. Bulk discounts
One of the reasons big box retailers can sell products at such low prices is
economies of scale. They get major discounts on products because they
purchase such a large volume, and they pass those discounts on to shoppers.
With drop shipping, you can say goodbye to bulk discounts, since you’re
essentially purchasing products one at a time. Until you generate enough sales
to give you some negotiation leverage, you’re paying what the suppliers ask.
4. Disjointed orders
If you have a variety of products listed on your store, they may come from
different suppliers. Customers may receive multiple packages for the same
order, which can lead to high shipping costs, wasteful packaging, confusing
branding, and annoyed customers.
5. Race to the bottom
Differentiating your store can be difficult. Many stores try to compete on price
but, with so much competition, find themselves setting lower and lower
prices. If you’re not careful, you’ll sell lots of inventory, but at prices so low
that you end up losing money.
9. PICKING YOUR MARKET AND FIND THE
SUPPLIERS
A common misconceptions that by having a drop shipping business
you can work within any niche you want and you will turn profits. This
is not just true. No matter, which market you decide to sell , there will
be competitors with a more established presence and customers
loyalty.
A common mistake is picking a product based on personal interest.
This won’t necessarily guarantee your business success. If your goal
is to build a profitable drop shipping site, consider putting personal
passion aside when researching your market niche.
10. 1. Are you a consumer of that niche? Do you understand the
product and how they improve thing? Having a first hand
understanding of a target audience can you an instant edge in
market efforts.
2. If you have a professional or academic expertise in the product
this can help you a bigger advocate for how the products can
enrich and help people.
3. You have seen other business attempt to sell in the same niche
and you know their success and failures, allowing you the
foresight to avoid or follow them.
WHEN RESEARCHING PRODUCTS
CONSIDER THE FOLLOWING:
11. 1. Select a niche.
The niche you select needs to be laser-focused and something you are genuinely
interested in. A product range that isn’t focused will be difficult to market. If you
aren’t passionate about the niche you select, you will be more apt to becoming
discouraged, because it takes a lot of work to successfully scale a drop shipping
business.
2. Perform competition research.
Remember, you will be competing with other drop shipping operations as well as
retail giants such as Walmart and Amazon. This is where a lot of potential drop
shippers go wrong, because they look for a product that has little to no
competition. That’s a sign there isn’t demand for that particular product.
STEPS TO FOLLOW FOR DROP
SHIPPING
12. 3. Secure a supplier.
Partnering with the wrong supplier can ruin your business, so it’s important that
you don’t rush this step. Conduct proper due diligence. Most drop shipping
suppliers are located overseas, making communication extremely important,
both in terms of response speed and the ability to understand each other. If you
are not 100 percent confident in the communication abilities of a potential
supplier, move on and continue your search.
4. Build your ecommerce website.
The fastest way to launch a website that supports a drop shipping business
model is to use a simple Ecommerce platform. You don’t need a tech
background to get up and running, and it has plenty of apps to help increase
sales.
5. Create a customer acquisition plan.
Having a great product and a website is great, but without customers looking to
buy, you don’t have a business. There are several ways to attract potential
customers, but the most effective option is to start a Facebook ad campaign.
13. 6. Analyze and optimize.
You need to track all of the data and metrics available to grow your business.
This includes Google Analytics traffic and Facebook conversion pixel data, if that
is your main customer acquisition channel. When you are able to track every
single conversion -- to know where the customer originated from and what path
they took on your website that eventually led to a sale -- it enables you to scale
what works and eliminate what doesn’t.
14. WHAT ARE THE TOP ECOMMERCE
PLATFORMS FOR DROPSHIPPING
BUSINESSES?
1. Magento
Needless to say, Magento has become one of the most powerful ecommerce
platforms for dropshipping up to now. There are two versions (Magento 1 and
Magento 2 – highly recommended) and two editions (Magento Open Source –
free and Magento Commerce – premium) for the owner to choose from.
15. 2. WooCommerce
Another popular ecommerce platform for drop shipping is WooCommerce. If
what you expect for your store is just very basic functionality and ease of use,
WooCommerce might be an ideal solution.
Compared to Magento, WooCommerce has fewer advanced ecommerce
features; in return for that, it is more user-friendly for the beginners. However,
from the developers’ point of view, this platform is difficult to customize and
most of its functionalities must be acquired by third-party plugins.
3. Shopify
The third name on the list of best ecommerce platforms for drop shipping is
Shopify. Up to now, Shopify has empowered nearly 600,000 ecommerce stores
around the world, included drop shipping businesses. Especially, Oberlo, a drop
shipping plugin works exclusively on Shopify, will help you to find products to
sell from Oberlo Verified suppliers, Oberlo suppliers, or AliExpress suppliers.
16. 4. OpenCart
OpenCart is a free ecommerce platform for dropshipping that you should take
into consideration. Magento and OpenCart also share many similarities – free,
open source, powerful, and more appropriate for tech savvies than the
beginners. However, since Magento community is larger and far more robust
than that of OpenCart, and there are more themes and extensions for Magento,
OpenCart is less popular.
5. BigCommerce
The last suggestion in the list of ecommerce platforms for dropshipping is
BigCommerce. Up to now, there are over 50,000 ecommerce websites running
on BigCommerce worldwide. Like Shopify, BigCommerce provides several
monthly options, ranging from $29.95 to $249.95 with acceptable transaction
fees.