How would you like to grow a business with little outlay to begin with? Drop shipping has grown quite popular in recent years. With a limited budget, you can sell stock online without actually handling the goods. This is an appealing prospect for many.
What is Drop Shipping?
In a traditional retail store, you own and sell your own products. With drop shipping, you sell a supplier’s products from your online store. You don’t have the hassles of storing stock or shipping products yourself.
How it Works
- Customer orders a product from your store.
- You send the order and customer shipping details to your wholesale supplier.
- The supplier ships the product to the customer.
How to Start
1. Choose Your Niche
Like most online business, drop shipping requires a lot of work to make it successful. It’s important that you take time to choose the right niche for you. Some factors to consider:
- Choose something you’re interested in. It helps with product knowledge and keeping you engaged through the whole process.
- Choose a product that isn’t sold locally.
- Investigate Amazon and Google trends to see what products people are searching for.
- See which niches trigger impulse buys.
- A disposable product may prompt frequent return buys.
- Product lifespan; if it’s regularly updated or changed, it may cost more time and money in reproducing marketing.
- Sales vs retail price. A higher-priced item could mean more profit. Depending on the product, you might be better selling lower price at large volumes.
Drop shipping wholesale products can be 40-50% less than retail price. You need to work out markups and profit margins. This article outlines different pricing strategies.
2. Choose Your Supplier
It’s important to investigate suppliers to ensure you pick the right one. You need to consider:
- overall reputation
- low shipping costs
- return policies
- do they supply samples?
- can they do customised items?
Beware of scammers. Some tell-tale signs are:
- no physical address displayed
- lack of contact information
- “get rich quick” promises.
If you come across a supplier you’re not sure about, check for reviews online.
There are drop shipping marketplaces that provide access to many suppliers (annual fees apply).
- Wholesale Central
3. Create an e-Commerce Website
You can create an online store quickly using e-commerce platforms like Shopify, Woocommerce, Magento, OpenCart.
Shopify has a free webinar with step-by-step instructions on how to set up an online store.
4. Market Your Product
If you don’t have traffic, your products won’t sell. Here are some marketing strategies to try:
- Write great content to capture interest.
- Place notices in social media.
- Use effective SEO to capture organic searches.
- Do email marketing.
- Use pay-per-click ads on platforms such as Facebook.
- Give great customer service, seek feedback and request reviews.
- Track your sales conversions. Use analytics to identify your target audience, region, and see what sales tactics works.
Some trending products:
Phone accessories, customised phone cases, car phone holder, smartwatches, health food, fitness equipment, activewear, customised shirts, posture corrector, ankle boots, jewellery, waterproof eyeliner, skincare products, baby products, customised mugs, de-shedding pet gloves, automotive accessories, camping gear, travel accessories, home security camera, drone camera.
Advantages to Drop Shipping
Little start-up costs – it’s low investment as you only purchase the product once a sale is made.
Start immediately – no need to wait for products from the supplier. You can start selling as soon as you publish.
No real estate – you don’t have to worry about buying/leasing building space.
Less hassle – the suppliers deal with the warehouse and packing, shipping, tracking and stock levels.
Flexible – you can scale up and down.
Laptop lifestyle – you can run your business from home.
Variety – there’s a huge range of stock you can sell from suppliers.
Disadvantages to Drop Shipping
Effort – you need discipline and dedicate a lot of hours of hard work.
Heavy competition – because it’s easy to get into, there’s lots of competitors using cutthroat prices.
Complaints – you must handle customer complaints about shipping issues, cancellations, refunds, potential fraud etc.
Inventory orders – if your orders to suppliers aren’t automatic, you may need to manage them and purchase inventory management software.
Cost issues – if you’re using several suppliers, they could have varying shipping costs. This can complicate prices if your customer orders several products together.
Communication – depending on the supplier you choose, risk of miscommunications can cause back-orders and cancellations.
Liability – you are completely liable for any mistakes made by the supplier (missing items, back packaging, late/dodgy shipments etc).
- Create a business plan, identify your target audience and determine how to meet their needs.
- Connect with other drop shippers, learn from their mistakes and experiences.
- Check out the competition: what are they selling, how are they marketing it, what’s their purchasing process like.
There’s plenty of ways to learn the method of drop shipping and get started. From YouTube videos, eBooks, webinars to online courses. Some cost money but others are free. Find what suits you best.
Drop shipping isn’t for everyone and there’s a lot of work involved. However, many have turned their businesses into success stories. It’s recommended you do thorough research to come to your decision.
Examples of people’s experiences:
This article covers drop shipping issues with possible solutions: