Do you want to start an ecommerce business with low overhead and no warehouse and still make a profit? Then dropshipping is the business model you’re looking for.
What is dropshipping?
Dropshipping is a supply chain management method in which the retailer does not keep goods in stock but instead transfers the customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.
The biggest benefit of dropshipping is you don’t have to worry about fulfillment or inventory issues. Since private label shipping lets you ship from the wholesaler with a return address and invoice customized to your ecommerce store, you’re still able to build a distinct brand while dropshipping.
Dropshipping is an online business trend that is catching on very fast. In fact, it is estimated that about 20 to 30% of online retailers make use of this technique, even the big ones like Amazon. I guess what I’m saying is that, it’s a business model that has been proven to work. There are three fundamental problems associated with traditional retail business which you avoid when you’re dropshipping. These are;
1- Product storage issues.
2- Product packaging and shipping.
3- Upfront payment for products that may not sell.
In other for you to fully understand how you can make money through dropshipping, you need to know how it works. The first thing you need to do is, find a wholesaler or distributor that offers the service. Note that it’s not offered by a few. However, when you find one that does, you need to set up your website with a shopping cart and create a marketing strategy. Another possible option is for you to set up a virtual store front on Amazon.
Your marketing strategies to help you make money from dropshipping can include;
– Writing product reviews on your blog
– Advertising via social media
– Doing email marketing
Basically, anything that can get you in contact with prospective buyers. You need to be able to explain in clear terms how the product can improve their lives.
Here is what actually makes dropshipping interesting. After you have gotten an order, you’ll transfer it to the dropshipper who delivers the product. Of course, you would be paying the wholesale price, keeping a tidy profit for yourself. So, while you are counting your profit, the dropshipper would be putting the order together to ship to the customer.
Pros of dropshipping business
1) Low Startup Costs
It requires a lot of capital to stock a warehouse. You can eliminate the risk of going into debt to start your business by using dropshipping.
Instead of purchasing an extensive inventory and hoping that it sells, you can start a dropshipping business with zero inventory and immediately start making money.
2) Low Cost of inventory
The cost of inventory is one of the highest costs you’ll have if you own and warehouse stock.
You may end up with obsolete inventory forcing you to find ways to reduce your stock or you’ll end up with too little inventory leading to stockouts and lost revenue.
Dropshipping allows you to avoid these issues and focus on growing your customer base and building your brand.
3) Low Order Fulfillment Costs
Order fulfillment usually requires you to warehouse, organize, track, label, pick and pack, and ship your stock.
Dropshipping lets a 3rd party take care of all of that.
Your only job in this arrangement is to make sure they get your customer orders. Everything else will be handled by them.
4) Sell and Test More Products with Less Risk
Without the constraints of a physical inventory and the costs associated with it, dropshipping allows you to update your inventory quickly, easily, and cheaply.
If you know a product is doing well for another retailer or reseller, you can immediately offer it to your customers without waiting for it to arrive in your warehouse.
Dropshipping allows you to test new items without the risk of carrying obsolete inventory. You only pay for what you sell.
Picking a Dropshipper is very important
Picking a dropshipper is not that difficult. Go through the order process from the customer’s point of view. This should give you an insight into how good their customer service is. This also gives you the chance to check out the quality of the products. Below are some of the top dropshippers you want to consider.
1- Sunshine Wholesale
2- Dropship direct
3- Worldwide Brands
What You Need to Start a Dropshipping Business
Other than a positive attitude, a good work ethic, and genuine motivation to commit to your new business venture, there are only a few essentials required to start a dropshipping business.
- A product to sell
- A supplier of that product
- A platform to sell on
Guidelines to starting a drop shipping business
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. Here are some points to consider when selecting your niche:
1) Seek attractive profits. When you are running a drop shipping business model, your focus is on marketing and customer acquisition, so the amount of work required to sell a $20 item is essentially the same as it would be to sell a $1,500 item. Select a niche with higher-priced products.
2) Low shipping costs are very important. Even though your supplier or manufacturer will handle the shipping, if the cost is too high, it will act as customer repellant. Find something that is inexpensive to ship, as this also gives you the option of offering free shipping to your customers and absorbing that cost as a business expense in order to attract more sales.
3) Make sure your product appeals to impulse buyers with disposable income. When you are focused on driving traffic to your website, you want to experience the highest conversion rate possible because most visitors will never return. The products you are selling should trigger impulse buys and appeal to those with the financial ability to make a purchase on the spot. For more check my past on guidelines on how to select a niche
Create your own brand.
Your drop shipping business will have more value if you can rebrand whatever it is you are selling and pass it off as your own. Look for a product or line you can white label and sell as your own brand with custom packaging and branding.
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.
Alibaba has become one of the largest online resources to identify and communicate with potential manufacturers and suppliers. Make sure to ask a lot of questions and learn what their production capabilities are in the event that your business grows exponentially. You want to be certain they have the ability to scale with you.
Build your e-commerce website
The fastest way to launch a website that supports a drop shipping business model is to use a simple e-commerce platform like Shopify. You don’t need a tech background to get up and running, and it has plenty of apps to help increase sales.
Finding a Dropship Supplier
For many aspiring eCommerce entrepreneurs, finding a reliable supplier is the hardest part of starting a dropshipping business.
You rely on suppliers to keep your product in stock, to uphold product quality, and to ensure orders are shipped to your customers in a timely manner. As a dropshipper, your supplier is your most important business partner.
What to Look for in a Dropship Supplier
A good dropship supplier should:
1) Actually be a dropshipper: Not all product suppliers offer dropshipping as a service. Some are simply wholesalers or manufacturers. Before you make contact, make sure the supplier is a dropshipper.
2) Have experience (+ helpful staff): You want a supplier that has years of experience with dropshipping. Suppliers take on a lot of responsibility with dropshipping so you want to be sure that you can count on them at all times. A good sign is if the sales rep you’re in contact with seems helpful and well-informed. If you suspect they’re not experienced, go elsewhere.
3) Not charge huge order fees: It’s quite normal for dropship suppliers to charge a small fee for their services. After all, they’re holding onto stock and organizing packaging and shipping for you. These fees should only a few dollars ($2 to $5 usually). If a supplier charges you more than that, you should let them go.
4) Provide fast shipping: Most dropship suppliers are located in China so you can’t expect overnight shipping. However, you do want to make sure your customers will get their items as fast as possible. Check their shipping times to the countries you service. One-two weeks is acceptable for dropshipping. Any longer than that could result in negative customer feedback.
5) Have quality products (+ product photos): You should always request product samples to test quality prior to committing to a supplier. The supplier should ideally have high quality images that you can use in your product listings.
6) Provide referrals on request: A good supplier should willingly connect you with businesses that can verify their service. Ideally, you want word-of-mouth referrals, but failing that you might be able to make your mind up based on customer reviews online (although be aware that online reviews can be manipulated).
Implementing a Customer Acquisition Strategy
You need to attract customers to your store. This is where a customer acquisition strategy comes in.Customer acquisition is the art of persuasion. You can think of it as advertising and marketing. The below are pass and free methods of customer acquisation.
Facebook Ads for Dropshipping
Facebook is the world’s largest social media platform. It’s a great place to advertise your products as you can tap into a huge audience. This is how Facebook makes its money, so every customer you acquire through this method comes at a cost. Facebook ads are a good option for the following reasons:
It’s easy to get started
You control how much you spend each day
You can target highly-specific demographics (location, interests, relationship status etc)
It can yield fast results
It helps to increase brand awareness
A good ad or boosted post can go viral
Google Ads for eCommerce
Google is the world’s most popular search engine by far. If you have an online store, you want it to rank on the first page of Google. You can achieve this organically, or you can buy ads for your store to appear at the top of the page for the keywords you want to rank for. Google ads are a good option for the following reasons:
Social Media Influencer Marketing
Influencer marketing has become a huge part of customer acquisition for retail brands in recent years. It could play an important part of any customer acquisition strategy in 2018. It can be particularly effective if you are in a trendy niche. For instance, if you’re selling a new style of handbag, you could reach out to an Instagram model and ask if she will share a post of her with the bag, tagging your business. One post can result in a bunch of new fans and customers.
Blog or Forum Marketing
This involves finding blogs or forums that are related to your product/niche and actively participating in discussions. By positioning yourself as an authority in your niche and including a link to your website, you can increase traffic and acquire new customers.
This most commonly takes the form of a blog on your store website, a Youtube channel, trendy Instagram posts, or witty posts on Twitter. Content marketing is meant to involve the creation of valuable content that helps to build an audience that you can then convert into customers. It’s not as explicit as advertising and should always be more about serving your audience than your brand.
Social Media Marketing
It’s getting harder and harder to achieve organic reach on social media, but it is still possible. If you can consistently create and share great content on your social media channels you’ll eventually build a following, which you can then convert into customers.
Starting a dropshipping business in nigeria will create a very good in one streaming for you and it will also be a good learn in experience that you will enough.