Dropshipping is a low maintenance business model that is based on e-stores selling products without an inventory. Basically, you’d have a shop where you’d be selling products from product manufacturers who’d be responsible for creating, packaging, and shipping of the products to the customers. The store itself would earn a percentage of the sales as they’re the ones who found the customers.
Product manufacturers get the chance to sell their products across hundreds of different stores with this model, while stores are in a low-maintenance position, since running this kind of store can be pulled off with just a few people.
In this article, we’ll focus on how the store owners can improve their sales once they are in the dropshipping business.
Only Amazing Offers Sell
One of the common mistake dropshipping store owners tend to make is that they don’t invest enough time and effort into making the products look good. More often than not I see a product description from the product manufacturer, which is one of the worst things you can do to your business. Not only will the same product description likely be on dozens of websites, but these descriptions are often generic and don’t contribute to your SEO at all (actually, they ruin it if they’re labeled as duplicate content). So write amazing, custom product descriptions.
You’ll also want to put some items on sale and also create bundle deals, as these really help with initial conversions. Once a customer makes the first purchase, everything goes smoother from that point on, especially if you’re selling a quality product and they recognize it as such.
Bad Suppliers are Bad for Business
As a shop owner, you’ll most likely have access to hundreds, if not thousands of suppliers. Take AliExpress for example, you can find most products in at least 10 stores. But one or two out of those 10 will have horrible shipping, ugly packaging, or even ship the wrong items on regular basis. These bad suppliers will definitely reflect poorly on your own reputation, which is why you’ll always want to identify them as soon as possible and get rid of them even faster. It’s an easy task to find a replacement, and no single product is worth ruining your store’s name over it.
Another tip is to always test the shipping, packaging and every other element yourself before you take them on as your suppliers. If you’ve got the time and nerves for this, it will make things much easier for you.
Work Around Low Margins
The main problem with the dropshipping model is that you’ll always have to deal with low margins. Most stores can’t go above another 20% on top of what the supplier is asking, which is why you’ll have to strategize about what’s your best way to earn money. If you’re hitting average profit of about 10$ per product, you’ll need tons of sales to make the whole thing worthwhile. When you also consider the operating costs of running a store (SEO, PPC, free shipping that you’re paying for to stimulate the sales) you’ll get very little revenue. Luckily, there are a few things you can do to work around this problem:
- Always Negotiate With Your Suppliers – This one’s fairly obvious, but people don’t usually do it for some reason. From my experience, most suppliers will be ready to cut the costs of the products you’re selling for 5-10%, which can mean quite a lot, especially if you’re selling expensive items.
- Raise Prices – This won’t always work, especially if your competitors are selling the same items. But if you’re selling something in a specific niche and your competitors can’t match the offer, you can actually raise the prices and get away with it. Plus, higher prices can actually help your sales since your products will be seen as higher-quality than they are.
- Sell More Products – Lower margins can still be great if you can keep your sales high. If you’re selling tens of thousands of products on monthly basis, it won’t matter that you’re only getting 10$ per sale. However, this is easier said than done, and it will require you to boost both your traffic and store reputation before you start selling that much.
Have a Great Website
Our society is becoming more and more visual each year, which means there’s nothing like a poor looking website to make your potential customers hit the close button on their browser. A great looking website won’t only attract the attention of your new visitors, but it will also make them more confident about you being a reliable shop and that they can feel safe about giving out their credit card information to you.
You’ll also want your customers to easily navigate through your store so that they can find what they’re looking for with as little clicks as possible. Achieving this on your own can be difficult, which is why it might be a good idea for you to hire a web development agency to check all the boxes for you.
Online Marketing is Your Best Friend
You can have the best store in the world, with best products and lowest prices, but it won’t matter one bit if you’re completely invisible on the web. Marketing campaigns are essential if you want to drive more traffic to your website since without traffic you won’t have anyone to convert to a buyer.
Search engine optimization (SEO) is a great investment in the long run. If you manage to rank well for your niche keywords you’ll be driving tons of traffic, which will directly impact your sales. You should also build a backlinks, but always stick to the white hat link building techniques.
SEO takes time and effort though, so if you’re looking for an instant boost in traffic you should try a PPC campaign. Keep in mind that your low margins won’t let you sustain a PPC campaign for long since you’ll barely be making any money if you’re paying for every visitor that comes that way to your website.
You should also constantly send promo offers to your existing customers via email marketing campaigns, as these are still extremely cost effective.
Customer Reviews Build Trust
The biggest flaw of online shopping is that it’s extremely hard for your customers to check the quality of your products first hand. Adding customer ratings, reviews, and offering testimonial deals to your buyers will make you look reliable and help you build trust between you and your visitors. Product reviews will help new visitors immensely to get a grasp of the quality of the products, as well as other product related experiences. It’s also worth mentioning that 90% of buyers decide to buy only after reading 2-3 product reviews, so implementing these on your website is sure to increase your conversion rates.
Bottom Line
Drop shipping definitely has its pros and cons, but given that it’s a model that’s considerably lower risk than other e-commerce models, it’s a great way for small entrepreneurs to start their careers. Focusing on your niche will allow you to target your audience better through marketing campaigns, so always try to keep the store specialized, at least until you enter a growth stage. If you check everything we covered in this guide, you should be able to work your way towards the top and hopefully become a leader among stores in your niche.