Updated: Apr 22
Dropshipping is a retail method where a store does not keep the products it sells in stock. Instead, when a store sells a product using the dropshipping model, it immediately buys the item from a third party and has it shipped directly to the customer from that third party. As a result, the seller does not have to deal with the product directly.
The biggest difference between dropshipping and the standard retail model is that the seller does not produce or store. Instead, the seller buys stock as needed from a third party - usually a wholesaler or manufacturer - to fulfill orders.
10 GOOD ADVICES TO SUCCESS WITH DROP SHIPPING
1. Do not try to compete on price alone
The most common beginner mistake in dropshipping (and perhaps retailing in general), is to compete solely on price. If the only thing that sets you apart from your competitors is price, you will lose all your business, and all your profits the moment someone else prices below you again, and you are at the losing end of a price war.
The only companies that can really afford to maintain a "lowest price" strategy are Top 100 retail gorillas with, for example, Norgesgruppen's purchasing power that can get the absolute best wholesale price for a given product by simply buying huge quantities.
Does price matter? Yes.
Is price all that matters? No.
If this were the case, Norgesgruppen would have a monopoly on the entire retail sector.
So instead of trying to offer something at a lower price, look for ways to offer more, and justify a higher price. Whether it's product knowledge and expertise, service, packaged deals, free shipping or anything else, there are countless ways to charge a higher price while still getting sales.
2. Do not sell the same as everyone else
The fastest way to fail in online retailing is to try to sell the same "hot products" as everyone else - like consumer electronics or branded clothing.
When a large number of companies and sellers try to sell the same product, competition drives prices down - often to the point where the only companies that make money are those who get big discounts for buying in huge quantities, such as large bookstores and others. who has been around for a very long time and has a lot of capital in the background to run a shop both in very good and very bad times. And even then, the profit margin is incredibly slim, which entails a great risk if you do not have mechanisms to be sure of selling all the products.
As you will discover in the next section, choosing a niche is to concentrate on a much more sustainable strategy, and so is developing product knowledge and expertise in that particular niche.
3. Focus on niche products
One of the biggest benefits of working with a drop-ship supplier is the freedom it gives you to experiment with selling all kinds of goods. In a traditional retail business where products are purchased in advance, and in bulk, and then stocked internally, retailers will not risk buying inventory unless they are reasonably confident that they will be able to sell at a profit within a short period of time.
Therefore, you will often have a hard time finding truly specialized items that - let's say an automatic shrimp shell machine - on the shelves of your local Coop OBS Store. They do not know how well the product will sell, so they are not willing to risk their money to have it in their warehouse. But what about online retailers like dropshippers? Because online retailers who work with wholesalers directly do not buy into their own warehouse in advance, and only pay for the product after it is sold, they do not have to worry about the same risk.
You can list an automatic shrimp shell machine on your site, and if it does not sell, the only thing you lost was the time you spent building it. As a result, merchants like dropshippers have a unique position to offer all kinds of products that chain stores do not try to sell because they are considered too risky.
The smart online retailer understands that one can not compete directly with Norgesgruppen, Coop or Rema 1000, and therefore focuses on selling niche and special products that those mentioned are not willing to risk having in their range.
4. Make good money on seasonal items
Seasonal items can be a seriously good source of income for online retailers such as dropshippers because typical retailers usually do not have enough available for fear of being left with overlays. For example, they do not want to risk the remaining summer goods taking up valuable storage space in December, not to mention that their money is tied up in "inventory" which may not be salable until next Summer again.
This means that there is a huge opportunity for online retailers as dropshippers because they do not have to care about overhead, because they do not have stock in the first place!
Seasonal products include everything from holiday products (Christmas, Easter, May 17, Mother's Day, Oktoberfest, etc.), special spring / summer / autumn / winter weather products, school accessories and so on.
Do yourself a big favor and set up a sales plan with important anniversaries and special seasonal activities for the whole year, when you plan to offer specific products. That way, you can be sure that you have them listed in your online store well in advance of the current season or holiday begins.
5. Offer product packages
A basic good trading strategy is to sell related products together, and offer them as a package deal. This is especially true for drop-ship dealers because packing can significantly reduce shipping costs if all products come from the same warehouse. And it gives you a huge price advantage over the competition.
If you see that a particular product sells well, but you do not have a large margin on it, you can look at what people might want in connection with that product, and offer it in a package with it.
Then use the extra margin from the additional products to compensate for the low margin from the large product. This strategy is particularly common in the sale of electronics, where dealers often have a larger profit margin on the cables sold with large-screen TVs than the television itself.
6. Sell what you know well
One of the best ways to ensure higher profit margins is to be an expert on the products you sell. This means that you know the product itself, but more importantly, you know what people are looking for in that type of product range based on your own experiences.
This knowledge allows you to write more compelling product descriptions, offer superior customer service and create more attractive package deals based on which products you recommend buying together.
You do not have to be certified or formally recognized as a kind of guru or expert. All that is required is that you know more about the product than the average buyer or seller. Then reflect on your life and what personal experience you have gained from your hobbies, passions and interests. What kind of products have you used the most? What have you learned from using such products that most other sellers do not know about?
7. Try different marketplaces
Many of the most successful drop-ship sellers are what we call multi-channel retailers, which means they sell their products in more than one place online.
Some products are sold more often or at a higher price on Amazon.com than they do on eBay.com. Others do particularly well on your own website, Finn.no, Prisjakt.no or Facebook store because each marketplace attracts a different demographic and requires different marketing techniques.
Ultimately, however, the biggest and best reason to experiment with different marketplaces is that when you limit yourself to just one point of sale, you miss out on customers looking for your product in all the other marketplaces. So why leave all this money on the table?
8. Provide outstanding customer service
One of the biggest concerns consumers feel when shopping online - especially on sites like eBay.com - is being scammed. With all the time you save by working with a dropship wholesaler who keeps track of all your items, there's no reason why you can not offer the best customer service available.
If a customer sends you an email or sends a direct chat message, a quick and personal response will allay any concerns and encourage them to continue shopping with you. Make sure to keep the customer continuously informed about what is happening with their order every step of the way, confirm receipt, delivery dates, etc.
The important word here is trust, and top-level customer service is the very best way to get positive feedback, reviews and ratings. Furthermore, any interaction with a customer should be used as an opportunity to demonstrate your expertise, and encourage more repeat shopping with your store than compared to a competitor, even if they should have lower prices than you.
9. Do shipping price experiments
A study conducted by Amazon found that 46 percent of customers will leave the shopping cart if free shipping is not offered. On the other hand, 75 percent will buy more when free shipping is offered to them. These are some compelling figures that confirm the power of free shipping, and the psychological effect that shipping prices can have on consumers' buying patterns.
Even if your dropship wholesaler deducts shipping fees when they ship out the goods, you do not necessarily have to charge it to your own customers directly. Instead, you can build the shipping cost into the price you charge, and then advertise free shipping. Although the total dollar amount may be the same, the psychological effect of free shipping can in no way be underestimated.
Enticing with free shipping is especially effective when you offer packages and package deals (No. 5). If your customer is already somewhat interested in a related product, why not offer it to them in a package with the original product at a slightly higher price, and then snag the deal by offering free shipping? You may be surprised at how many people go for this option because it gives a feeling that they are stretching the maximum out of their money.
10. Optimize your product descriptions
From the words you use in the product descriptions to the background of the images you upload, the quality of your product listings makes it huge, regardless of whether you sell on your own website, on Finn.no, Amazon.com or eBay.com. Many retailers will simply copy the manufacturer's product descriptions and images, which is the fastest way to be overlooked in a crowded marketplace. It is far better to write your own detailed descriptions and use your own photos. It may take you longer, but it does attract attention, and that's the whole point. Even if you do not need to stock a product to sell it - you may want to consider ordering in a selection of products you are seriously considering selling. That way, you can take your own unique photos of the product and get a better feel for describing this product. Your images alone will ensure that your listings stand out in a crowded marketplace, providing more views than the generic images from the manufacturer.
Just like with golfing and fishing, you learn the best ways to market your product line through trial and error, with both ups and downs along the way. But by following these 10 tips, the chances of success with dropshipping will increase significantly.