There is a very popular method that has been used by big companies for years to grow their businesses and now, mostly by new entrepreneurs: dropshipping. Why is it very popular? For one simple reason: nowadays, this method outweighs online marketing skills over financial capacities. You don’t need to have a stock or handle the products you sell, therefore, you can start a business with limited funds using dropshipping.
Dropshipping is a business model based on sales of products that the store doesn’t have in stock. Instead, when the store makes a sale, it purchases the item from a third party or manufacturers and they fulfill the order instead. It is true that this reduces operational costs, because you do not need to buy the items and then resell them, but you must bear in mind that you (the merchant) don’t see or handle the product. Therefore, you must make sure to make agreements with responsible and reputable manufacturers. If you sell something without having asked for a sample, you will assume that the product looks like the image and is just as the manufacturer has described it. If it turns out that it is not, you will have to deal with the fallout of angry customers.
Dropshipping sounds like something relatively simple, all need is a computer and internet connection, but even opening an e-commerce with dropshipping requires work. No business is essentially simple, they all need time and money, plus knowledge of the commercial sector you will work in, and this case is not an exception. So what should we do to start an online store with dropshipping?
- Research and select a niche. Your niche should have certain qualities, for example: without saturation, not having massive competition, where there is a need to cover, that is profitable and that can be quickly positioned to attract traffic to e-commerce.
- Competition research. This step is important, because you can learn a lot from your competition. Investigate which products have good demand, because if you have little competition, it is because the product does not have much demand, or due to other factors such as high shipping cost, little profit margin, among others.
- Negotiate with a dropshipper provider. From this negotiation arise the conditions that will manage the operation of the business, both the prices of the products and the receipt and delivery of the orders. It is important that the retailer has reasonable sale prices, so the price at which you buy from the dropshipper must be the minimum possible to have more profits.
- Create your online store. There are many options to do this. You can hire a freelancer to do this for you, or you can do it on your own through services like Shopify, Offerer or CMS like WordPress and others. It is advisable to start with these services, since they are popular and have good search engine rankings. You can make your own website when you already have a good network of customers and a considerable popularity.
- Online Marketing strategies. You need to attract customers in order to sell, and the best way to do it is through Ads. Social media advertising is the best bet. You can use Facebook, Instagram, YouTube, AdWords and so on. Each offers different advantages and the more networks you use; the better results you will have. Do not settle for this alone, though, because in the long term you will need to invest in SEO.
- Satisfaction control. The final part of online sales, is that the retailer performs a control of customer satisfaction in order to evaluate the functioning of their service. A call, an email with a brief survey on social networks, can be examples of how to contact the customer. You must analyze and optimize the results of all the data and metrics you collect (Google analytics, Instagram insights and so on). This feedback will be useful to correct errors, focus on what works and to test different ways of advertising (you should not settle with doing the same ads and using the same methods always. “Variety is the spice of life”, and you must learn to grasp different types of clients.)
Creating a Dropshipping sales system is a cheap and interesting option if you intend to start a business and try to live of the Internet. It is quite accessible, but that doesn’t mean that it is perfect and that it doesn’t have challenges that you will have to overcome. It is a good method for beginners who are starting in the world of online sales. But, if you want to focus on making and marketing your brand, it will be more difficult since with dropshipping there are many things that you cannot manage. Likewise if what you are looking for is great profit margins.