4 tips you must know before starting a dropshipping business

With its origins dating to the 1960s (even before the Internet was invented!), dropshipping has evolved from simple mail-order catalogs to a booming e-commerce business model.

But first, what is dropshipping?

Dropshipping is an order fulfillment method where your product stock is stored at the supplier’s warehouse instead of your own.

You act as the intermediary and receive orders from customers. Products are sent directly to the customer instead of yourself, removing logistics and warehouse costs from your expenses.

Put simply; this is the process of dropshipping:

Some e-commerce stores also use dropshipping to expand their fulfillment methods, when or to test product viability in the market before purchasing more stock.

Profits will come from the difference between the product price charged to your customer and the wholesale price you enjoy from the supplier, minus additional costs such as marketing, advertising, and website setup.

The dropshipping business model has seen a rise in adoption rate due to its ease of set up and low overhead costs, with multiple success stories and dropshipping guides flooding the Internet.

However, don’t be mistaken — dropshipping is NOT a get-rich-quick scheme. Don’t forget that low startup cost also means more significant competition. In addition, aspects such as product quality and packaging are out of your control as the supplier handles the logistics.

Some people start dropshipping but are unable to sustain it due to various reasons such as misconstrued expectations, selling a product in the wrong market, or unreliable suppliers.

To excel at dropshipping (or any business as a matter-of-fact), one needs to dedicate time, effort, and money.

Here are 4 tips that you should read before jumping into dropshipping.

Don’t just sell products you love, sell products that make sense. With a low-profit margin as compared to other business models, your product could make or break the business.

Start by researching your potential products in the current market. Use keyword ranking tools to understand your products’ demand and seasonality, and choose a product that closest fits the traits of high demand and low competition.

Listing trending products is the path with the least resistance as demand is already established. However, try to avoid heavily saturated markets, or you will face fierce competition from other stores.

You can also consider selling niche products. The demand for said products will definitely be smaller, but you will face less competition and possibly have a higher conversion rate. Just make sure that you’re well-informed of the niche products you’re selling, as it might be hard to convince your customers to buy a product you know nothing about.

Lastly, you can ensure repeat purchases by selling consumables, or by listing a base product with various accompanying accessories.

2. Source for a reliable supplier

When searching for a dropship supplier, you should consider the following:

a) The supplier’s experience with dropshipping orders
b) How long it takes to ship an order to the customer
c) Your potential profit margin (choosing a supplier that manufactures their products might result in a more favorable profit margin for you)
d) The supplier’s damaged goods/returns policy
e) The supplier’s ability to scale with your business
f) The quality of your supplier’s customer support
g) Whether there is any insurance or warranty on their products

If possible, test their products so that you can ensure its quality. It’s better to pay for some products upfront for testing than to process refunds for dissatisfied customers when they receive a less-than-satisfactory product and negatively impact your brand.

3. Differentiate yourself from competitors and give customer reasons to pick your store

Add value to your listings with product demonstration videos or guides. Customers react better to a listing with details and a product video, instead of just stock images of the product and generic product description.

Check out your competitors and find out why they’re so successful. Read their customer reviews and identify the points where they can improve on. Carry these points forward to improving your own business.

4. Use reliable software tools to help you manage your business

Many dropshippers turn to Shopify or WooCommerce to start dropshipping, depending on their budget and level of customization required for their website.

Another tool you can consider is to use software with a dropshipping feature, such as Deskera Books. Deskera Books is primarily an ERP (enterprise resource planning) solution, but it also offers dropshipping capabilities. This might be a more economical route if you are also in the market for a reliable ERP solution.

In summary:

To be successful in dropshipping, patience and discipline are key. You must identify reliable suppliers and list viable products with sustained demand, while marketing and differentiating your product from similar products available in the market.

Related posts:

This is the story of a man who cannot speak.

Have you ever wondered, what makes an article great? Are there specific areas in data science world readers more interested in? I certainly did! I am aiming to find answers to these questions by…

Struggling to find a budgeting template that actually is easy to use and understand? Look no further because I am providing you with my favorite and FREE budgeting template that helps me to track my…