What is Dropshipping?
Dropshipping is a retail execution model where the store does not store any products it sells. Instead, the order is sent to an external supplier who sends the order to the buyer. The buyer pays the retailer (e-commerce store) a part of the retail price of which the retailer pays the supplier as a wholesale price.
The prominent difference between a dropshipping model and the standard retail trade is that the dropshipping seller has the stock. A dropship inventory is only the product data feed from the supplier that is synchronized via XML or CSV files with the e-commerce store of the drop shipper. With the best e-commerce platforms you can effortlessly synchronize products with your supplier.
How to build a successful online drop shipping company?
- Choose a dropshipping niche
Deciding on the niche is your first step to start a dropshipping
company. A niche is a segment of the market, and the more specialized the
niche, the better your dropshipping business idea. For example, servers are one
niche in the broader market of IT products.
Find a niche that is not yet saturated. Drop shipping is becoming
popular, and it is becoming increasingly difficult to find unsaturated niches. The good news
is, new products and niches are coming up every week! Find a niche that
you are interested in keeping you motivated and helping you to understand
You also want products with higher profit margins. As a dropshipper,
it takes the same amount of work to sell a $ 20 product or a $ 1
The main focus will be on customer acquisition and marketing. Go for a higher price
products that give you good margins on sales quantities.
Shipping cost factor while you decide which product you want
to sell. You do not want to reject customers because of the high shipping costs.
If the shipping costs are not high, you can also offer free shipping to attract
customers and absorb shipping costs as marketing costs. Execute
Analysis and investigation of competitors
the backbone of a good drop shipping business plan. You will not compete
only with other small or medium-sized e-commerce companies, but also with retail
giants. Do not make the mistake of finding a product that has little to no
contest. That is a sign that there is no demand for it
High shipping costs, supplier
and / or production problems or poor profit margins can be some of the reasons
why a certain product has no competition. Products that have competition
means that there is a lot of demand for it and the drop shipping business model
For a drop shipper, their supplier
is their most important business partner. Finding a reliable supplier can be
The hardest part of starting your dropshipping business, but one that is from
of the utmost importance.
As a drop shipper you trust your
suppliers to have the products in stock, to guarantee quality controls and product
quality and to send your orders on time.
A poor supplier will hamper your credibility
just as good as a good one, will improve your brand value. Perform thoroughly
research your suppliers, read reviews, inquire about their sourcing,
delivery times etc.
your e-commerce website
After you have chosen a product and have found a reliable supplier, you
must start selling! The first step to building your e-commerce website is
choose the best e-commerce platform for your company. Here's an article that
will help you to limit your choices.
Your e-commerce website is
usually your first point of contact with potential customers. You want it
make a great first impression! You can choose from popular e-commerce platforms
available or build an e-commerce website and brand that is all yours. Note
that most popular e-commerce platforms cost a percentage of your sales or more
has no functions that your company may need.
For example, if you are a value-added reseller and offer IT products from multiple distributors, you may need a dedicated e-commerce platform to address all of your basic business processes.  Do your research well
before you start building your e-commerce website.
Follow all your data and statistics regularly. You must follow
every conversion to know where your customers come from and their
browsing behavior that eventually led to a sale. This will help you improve
what works and eliminates what doesn't.
Set up Google Analytics and Facebook Conversion Pixel Data, if you
generate a lot of traffic via Facebook. Check this regularly to define
patterns or observe changes therein to adjust your marketing efforts.
It is not a "set-and-forget" solution, you have to be continuous
analyze and optimize your ads, test new opportunities and campaigns or
tweak your current campaigns.
Characteristics of Dropshipping
This is THE main differentiator
between a traditional retail company and a drop shipping company. The
dropshipper does not hold stock. There is no hassle with inventory management, storage
or ensure that products are in stock.
Dropshipping as a business model has
a low entry threshold. You must identify a product to sell and find it reliably
suppliers. With the number of available e-commerce platforms, everything you need is one
solid dropshipping business idea and the right e-commerce platform.
First costs for starting a drop shipping
things are low. There are no costs associated with inventory, storage,
packaging or retail space. This allows you to focus your efforts on marketing your
e-commerce store and creating a good shopping experience for your customers.
No stock and yet an extensive drop shipping inventory! As a drop shipper you have no products in stock that you sell. You don't have to worry about inventory, storage, etc. And yet you have access to an unlimited inventory to add to your store. You can choose from a million products to sell and test the popularity of new products without worrying about capital loss in the event of failure.
Dropshipping is a lucrative venture if you do good research, have a solid dropshipping business idea, and avoid these biggest mistakes as he started.
Author & # 39; s Bio:
Shane is an American writer for various digital news publications. After working in the eCommerce industry for more than 15 years, Shane has a good understanding of what it takes to make an e-commerce business successful. He likes to discuss newsworthy events related to business management software, customer relationship management (CRM) and quotation software and Value Added Resellers.
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