Is Drop shipping a good solution for you? For a large majority of e-commerce businesses it is!
When you use drop shipping you don’t need to maintain an actual stock yourself. So if you are interested in running an online store without expensive stock – read on!
This is how it works: You sell products through a dropship supplier. You put the products of your suppliers online and set the price yourself; the drop ship supplier directly ships the products to your clients.
Expand your range of products enormously with drop shipping
Stock is expensive and one of the biggest challenges for the (starting) e-commerce entrepreneur. Maintaining an up-to-date stock for a reasonable range of products quickly runs to thousands of dollars spent – without having earned a cent. Therefore drop shipping is a very interesting option for many online stores!
Consider this: if you have a niche store, you (and your competitor!) will quickly have a product range of 50 different items. For all these products there are often various sizes and/or colours, meaning you will quickly run to a minimum stock of 100-200 products to be competitive!
How does drop shipping work?
Drop shipping means you sell products through a so-called drop ship supplier, without having the products in stock yourself. You put the products of your suppliers on your website and set the retail price yourself. Apart from the purchase price and shipping costs most drop ship suppliers demand a (small) fee for the drop shipping service.
When someone orders one or more of these articles through your website, you order these products with the drop ship supplier. The drop ship supplier sends the order straight to your customer and sends its invoice to you.
In this way you don’t need to maintain a stock yourself. You only need to place orders with the drop ship suppliers and keep track of everything to ensure a smooth client experience. This has the potential to save you a lot of time (and therefore money). Especially when one or more products are selling well you will find you garner a nice income per month, while you don’t have to do much for it!
A number of criteria to keep in mind when choosing a suitable drop ship supplier
Finding a suitable drop ship supplier can be tricky. I say “can” because it happens you find the right drop ship supply-partner right away! However quick the process of selecting the suitable supplier will be for you, any selection process should take into account the following criteria:
Are there limitations to the availability of the product?
It should in fact never occurr that the product you offer on your website is not deliverable.
In case this would happen this gives you a lot of extra work. Already paid-for orders need to be refunded and the products need to be temporarily deleted from your online store. It is definitely not good for your reputation, either.
Is it profitable?
Drop ship suppliers often ask a fee for their service. In some cases even a percentage of your profits. Will you still make enough profit on the sale of the product? (Of course you determine the retail price, but you need to be careful that you will not be too expensive for the consumer.)
Are there product descriptions and photos?
Are there good photos and descriptions of the products that you are going to offer online? This can save you a great amount of time and money! It is important to make good agreements on this with the drop ship supplier.
To achieve a high ranking in the search sites it is important that you have unique content (texts). Does the supplier supply other online stores? In that case it is important to rewrite the product descriptions.
Did you find a dropshipper? Pay attention to the following
The supplier may seem very suitable for your online store, but you only find out how they really are when you start doing business with them. Place a few test orders, send a few back and call the customer service. In this way you get a fuller impression of the supplier!
Pay especially attention to the following:
Does the supplier do what he agreed with you? Is it a reliable company? You can ask references from the suppliers, or question existing customers, but in fact you will find out how reliable they exactly are only when you start doing business with them.
Is your supplier a stable company? Will he be able to deliver today as well as in the future? Relatively young companies have an increased risk that they will not be in business for long, although big companies may go bankrupt as well.
What is the quality of the service? Are requests for returning products and complaints dealt with in a proper manner? Having a bad drop ship supplier will impact directly on the quality of your online store. The faster problems are tackled, the fewer the complaints you will receive and the more your online store gets positive reviews.
What are the suppliers’s shipping times? Customers like short shipping times a lot. In fact shipping times are closely related to stock. Suppliers sometimes keep only a relatively small stock to save costs. This may result in a product not being in stock temporarily, which influences shipping times.
When thinking about shipping times you should also keep payment methods in mind. Orders are sent when the customer’s money is received. In some countries (for example in European countries) people prefer bank transfers as a payment method. The disadvantage is that the bank transfer may take a few days – and only after receipt of payment the order will get on its way to the customer.
Is the supplier cheap? Is it possible to negotiate discounts? You often can when you sell in large quantities. Ask what the possibilities are and try to make agreements on this.
Finding Drop Ship Suppliers
When you choose for drop shipping it is very important to find a reliable supplier. Prolems with the drop ship supplier impact directly on your e-commerce business! Imagine that the supplier delivers the orders too slowly again and again. This gives you not only more work (dealing with complaints, contacting the supplier) but also less income (unsatisfied customers, bad reputation, a drop in sales).
It may be hard to find the right drop ship suppliers through google. There are some sites based per region which give an overview of all drop shippers in your region. You pay a fee once and have access to everyone who matters in your area.
I advise you to visit fairs. Drop shippers often take part in fairs and events, because it is often the best way for them to show and sell new products. Your advantage is that you can approach many drop shippers at once. And perhaps you will meet a few that you didn’t know before.
When you finally decided to give one drop shipper a go, contact them by phone. It is more personal than contact by e-mail and it is appreciated if you phone them up.
Make sure that you have a clear image for yourself of what you want, ensuring that nothing unexpected pops up during the converstation. Keep it focussed on the essence: be clear, don’t tell long stories but keep it brief and to-the-point. Keep in your mind to emphasize the term “cooperation”. Because that’s what it is about, both for you and the drop ship supplier.