Ecommerce Income gives you practical tips and valuable tricks to get you on the road to online success. But what is the day-to-day practice like for an owner of an online store? The dialogues of “State of Mind” focus on what is on the mind of Kees and other ecommerce entrepreneurs – in short, it focuses on your burning questions! In this third “State of Mind” interview, Kees tells us what he has been working on during the last two weeks. The second part of the interview focused on a
topic on which we received a lot of questions: drop shipping.
Kees, nice to do an interview again. What have you been working on over the last two weeks?
An important thing we worked on during the last two weeks is the planned migration of our online stores to Magento 2. As many readers will know, my systems run on Magento and this company has recently rolled out a major upgrade. It is so much different from the previous version that it is not a “regular” update, but rather a complete migration of the online stores.
I found a Sri Lankan programmer who can help me with this job. It’s a lot of work, but really has to happen. Our online stores will be fine for a couple of years after this migration.
How do you end up in Sri Lanka when you need somebody to help you with such a job? I’d also know some people in the Netherlands who can help with Magento…
That answer is pretty simple: cost. The wages somebody will ask in Sri Lanka are lower than your Dutch acquaintance would ask. This man works for a company in Australia as a database specialist.
I have 9 online stores in different languages. That’s a lot of products, category pages, pictures, etc. I don’t want to enter all of these data again into Magento – I want to transfer these data.This Sri Lankan database specialist is a perfect match for the job.
I found him through the Upwork platform. I highly recommend it for these types of jobs.
How’s progress so far with the migration?
There are quite some errors in my Magento 2 installation. This is also related to the fact that everything is still very new.
So you are an early adopter! Why don’t you wait until the teething problems are gone?
The differences between Magento 1 and Magento 2 are big. The number of errors we get are actually not too large, especially given the large amount of data.
We have plans to open more online stores. I for example told you that we are planning to conquer France. But I also want to set up some more specialist stores in our current markets.
Before we open several new stores, it is better to have already finalized the migration to Magento 2.
Sounds good! Will you manage to have everything ready before the start of the hammock season?
The deadline we have set ourselves for the migration to Magento 2 is 1 April. I think it will be possible to meet this deadline, although there will always be some minor things left to be adjusted. Such a massive migration always involves some issues.
Great. Are there other things you worked on during the last two weeks?
I concluded that our AdWords campaigns are too comprehensive. We have too many too specific keywords and landing pages. This takes a lot of time and money for maintenance. We’re working on that.
Ok, interesting! I am sure we’ll soon hear more about that. Did you pick up any interesting ecommerce news?
Well – yes actually. I have read several reports that Google is working on an update. That’s something to keep an eye on.
Are they working on the search algorithm?
Yes, it seems they are. What it is about exactly and what it could affect is not entirely known yet.
We’ll come back to that topic later too then. Kees, readers have sent several questions about drop shipping recently, both on the site and by email. I’d like to discuss them with you. What is the role of drop shipping in your business?
I have used drop shipping before I started to focus my energy on hammocks. I used it to test out various markets. I was working in fair trade and felt that this was not something I wanted to keep doing for a long time. It was not really my market. I tried, for example, to sell boots and baby slings. In the end, hammocks proofed to be “my” product. We now stock everything ourselves.
One of the questions we regularly received is where to find drop shippers.
Finding good drop shippers is not easy. You have to work hard to find a really good one.
If you can easily find a drop shipper, they are probably not good.
Everyone in the chain can be a drop shipper. But you will want to do business with a wholesaler and not with a reseller. A reseller will eat into your margins before you can even think about earning something.
I started with a number of suppliers for my hammocks and in the end I ditched a couple of them. I now have about 3-4 suppliers I have been working with for a long time.
Ok, but can you give some tips?
Sure, I can. You must become active in the niche you want to move into to. Start a blog, for example, and read a lot about it. You can also place an order with a competitor, of which you suspect he is a drop shipper. Often they still have the product in the original packaging of the wholesaler. That’s valuable information – you can then Google the wholesaler and contact them. You can just return the product that you ordered, and in this way it will cost you (next to) nothing.
There are entire online stores for sale in the Netherlands, which, including products from a drop shipper, sell for 1000 or 1500 euros. But those are not the types of products you can make money with. Those are usually online stores that focus on electronics or adult products. It’s really not going to work if everybody is trying to sell the same kind of stuff.
Go investigate yourself, try out some niches. Even if you do not immediately find the ideal drop shipper, you can still build up your online store with that drop shippper, get more closely acquainted with the market and product, which will eventually also make you a more interesting party for other suppliers.
So basically what you’re saying is: just start, and get to know the market…
And why don’t you take a tour of a business park in your city? All kinds of opportunities are waiting for you…
Now I start thinking of all the opportunities in my local business park… There’s a business nearby that sells artificial turf. We also have a grower around the corner. I could go to them if I had not been too busy operating my existing online stores, and propose to do business with them. I bring my knowledge of internet marketing and selling online, they have the product.
Explain the supplier how you will add value to their business. That it is a win-win situation.
When dealing with wholesalers, you often need to purchase a certain minimum order. You should try to see if you can just pay for what you sell, and no more. In that case you don’t have to worry about expensive stock. Deals can really be made. But you need to work hard to get them!
Great tips Kees! Another frequently asked question about drop shipping is: what arrangements should I make with the drop shippping supplier?
Make sure what you can expect. What delivery speed you may expect, what will happen on part of the supplier (or you) if there is a problem with a shipment and how, and how fast communication can be. Questions like: can I call about a wrong delivery and what will the response time be like? And make sure there are clear agreements on payments.
And what can you say about returns? If a customer wants to return a product, should it be send to the drop shipper or to you? What arrangements would you need to make about that with the drop shipper?
Both ways can work and have their distinct advantages and disadvantages. Some drop shippers only want to take back a greater amount of returned products. If this means you have to collect a whole pallet this may lead to you having 3,000 euros of returned products. You can’t wait with refunding the money to the customer, but you have to wait until the pallet is full before you get your money back. This can have a significant impact on your cash flow and it can be a serious challenge for a starting ecommerce entrepreneur.
It can, however, also be good to receive the returns yourself. You will be more in contact with the products you sell and get more affinity with them. It made a real difference for me when I started to sell hammocks from my own stock. By stocking them I got much more of a connection with the products.
If you let the products be returned to the drop shipper, can’t the customer see that you did not deliver them yourself?
Why? You can let them return them on your name, but to the address of the drop shipper. I, for example, send goods from my warehouse to customers under different names. It’s more about the name than the address.
Ok wonderful Kees, thanks for your clear answers and useful insights on drop shipping. Good luck with the migration of the online stores to Magento 2! Talk to you again soon at our next State of Mind session.