Dropshipping is a retail fulfillment method, in which you can sell things without having to stock up inventory. If you are reading about dropshipping for the first time, you may think it can not be true! But, the fact is that you can very well start your e-commerce business without investing a single penny in inventory management. Read on to know more.
What is dropshipping?
Dropshipping refers to the process of selling a product online when you don’t have the product in reality and then fulfilling the order by buying the product from another vendor and getting it shipped directly to the customer’s address. This method of online retail business is gaining popularity in recent times. Many suppliers and wholesalers take up orders from drop shippers and deliver them to the given customer’s address.
Benefits of dropshipping
There are numerous benefits of dropshipping, that make it an attractive venture for both amateurs and established online retail shops.
Low investment: There is no need of buying/manufacturing products in bulk and stocking them in a warehouse. Thanks to this advantage of dropshipping, it takes very less capital investment. If you have a laptop and time to manage products and orders, then you can start your dropshipping business right away.
Low overhead: Just like capital investment, the daily expenses (overhead) are also very less in dropshipping, when compared to the conventional way of doing retail business, be it online or from a brick-and-mortar store. Most drop shippers start their venture on their own, without any full-time employee or teammate. They work for a few hours every day to manage orders, customer queries, and marketing. Once the retail platform grows and starts giving handsome money, they move out of their 9 to 5 jobs and take up dropshipping as their main job.
Ease of expanding your range of products: Dropshipping is as attractive a venture for an established e-commerce business, as it is for new entrants. When you have a thriving e-commerce platform with good traffic and leading search engine rank, then you may consider expanding your range of products. But, you may not know whether people will be interested in buying those new products. Moreover, even if you know that there is a definite demand for those products, it is essential to get an idea of the quantity of demand, before you start stocking it up in your inventory. Dropshipping comes to your rescue here, by letting you test the waters without making a huge investment.
Ease of entering new markets: Let us say you have an e-commerce website with good traffic from one region. If you want to expand your business to newer territories, then dropshipping is the way to go. If you have to ship products from your inventory to distant places, the cost of shipping will be too high. It may either eat up your margin or if you decide to pass on the additional cost to your customer, then you may lose your competitive price advantage. On the other hand, securing a warehouse in a new place and stocking up products is not an easy task. In such scenarios, dropshipping is the ideal way of expanding your business.
Ability to meet unexpected demands: Many consumer products experience huge ups and downs in demand. Some products may be in high demand during certain seasons of the year. Or, demand may surge suddenly due to unpredictable factors like governmental policies, macroeconomic factors, etc. In such a market, it is wiser to keep a minimum quantity of inventory in hand, and do dropshipping for the extra orders. This way, you don't burn your cash by investing heavily in warehousing, while still being able to fulfill your customer’s order in time.
Some tips to ace dropshipping
While dropshipping looks like a dream-come-true venture, it has its share of disadvantages too. But, if you plan your business strategically, you can avoid those pitfalls, and emerge as a successful drop shipper. Here are a few dropshipping tips that you will find handy along the way.
Dropshipping is a very competitive business, owing to its low-investment beginning. There are many small players and also a few big players in the dropshipping sector. In this circumstance, you need to strategically market your product to capture market share. Choose your niche segment and promote your product targeting the selected audience.
Pricing plays an important role in dropshipping. Your supplier won’t be exclusively delivering for your customers. He will be taking orders from multiple drop shippers like you. Customers are also aware of this fact. Most online buyers compare prices on at least three websites before deciding where to buy the product from. Though customer care, speed of delivery, packaging, etc. matters, mostly it is the price that ultimately influences the customers’ decisions. Therefore, you need to price your products comparable to other retailers.
Profit margin is closely linked to price. Since your price needs to be competitive, you cannot enjoy big profit margins. You will have to slash your profit to improve sales. Being a low-risk venture, the return is also low. But, this is not as bad as it sounds. Once you gain traffic and your sales volume goes up, you will start making considerable money.
Marketing is the golden key to open up all the opportunities in dropshipping. It is what differentiates you from other players in the industry. Do your initial legwork sincerely to take your retail website to the attention of all possible buyers. You can use advertisements, SEO, SEM, social media marketing, affiliate marketing, and so on.
Offer discounts, if you can afford to do so. You may have to forego your profit margin entirely, but this is only for a short duration. This strategy will help you to initiate the traffic to your website by pulling the buyers who usually buy from your competitors. Once you have established a steady stream of buyers, convert them into your loyal customers. Send them newsletters regularly, or show recommendations for buying next. Having a group of loyal customers will make your life easy in dropshipping. Over time, you will be able to enjoy a passive income from these customers.
The most difficult part of running a dropshipping business is having to take the blame for what is not in your control. We are talking about issues in shipment or defective products. In the dropshipping method of retail, it is the responsibility of the supplier to make sure that the product is tested and delivered on time without any damages. But still, it is the retailer who actively communicates to the customers, about the product and delivery. If there is any issue in dropshipping fulfillment, it will be you who will face the heat. There may be times when you will have to reassure the customer about resolving an issue, while you have no idea when the supplier is going to resolve it. You need to be extremely good at customer engagement to handle such difficult situations.
You can avoid the majority of customer grievance issues if you do some research before selecting your suppliers. Go for those suppliers, who have a good track record, and have got a good rating online.
How to start a dropshipping business with Strikingly?
Strikingly helps you to launch your drop ship program at no cost. Our free web hosting platform allows you to build your online store in a matter of minutes. You can set up your store all by yourself without having to take the help of any third-party software developer. Follow these simple steps and get started now.
Strikingly gives you a headstart in building your website, by providing boilerplate templates. From the list of ready-made store templates, select the one that you want to use for your website. Take a look at the site template, and if you are happy with the layout, click ‘Create a site with this template’. Don’t worry if the template doesn’t match exactly with what you have in your mind for your store. You can customize your website using any template.
Once your site is live, remember to integrate online payment options such as PayPal or Stripe with your website. Also, promote your site on social media and other platforms. When you get your order, all you need to do is to transfer the order to your supplier and keep up the communication with your customer regarding the status of shipping.
Start your venture of dropshipping with Strikingly today, and enjoy free hosting!