‘Dropshipping’ – another one of those buzzwords flying around the web.
But if you’re just starting out in e-commerce, dropshipping may be just the solution you need. Rather than sinking money into holding stock, your suppliers maintain the stock, wait for an order from your customer and the dispatch it.
Dropshipping sites typically integrate with large wholesalers, Amazon, eBay, Ali Express and Dsers and the like importing them into your website and displaying them as if they were in-stock on your store. A customer completes the online order and, on confirmation, that order is sent to the supplier for dispatch.
Sounds Amazing. Why Isn’t Everyone Doing It?
Because of the low cost of entry into the marketplace, it is highly competitive. As always, the correlate of something that is cheap (or even free) is that it takes time to do it well. Lots of stores open but few really do enough business to justify the time invested.
So Can You Make a Profit Dropshipping?
Sure you can. But as with all things, you need to start right. If you’re interested keep things in mind as you build your ideas:
- Unless business itself is your interest, pick a market segment about which you like. You’re more likely to know about what you’re selling and it’s less likely that it will bore you in a year or two’s time.
- Analyse your potential competitors, remember dropshipping is a busy market, check out their products both for things you might want to sell and look for gaps in their range where you could complete.
- Choose your suppliers carefully and, if you can, negotiate for the best possible margin.
- You’ll need a website to display your products.
Building Customer Trust
To stand out from the crowd, you’ll need a corporate identity – a logo, colour choices and consistent font usage.
Consider using a professional designer who really can produce an original identity for you. There are a huge number of generic logos out there. Within Sheffield alone I have seen car dealers using the same logo with different text.
Poor design decisions can cheapen your brand and undermine customer trust before you even start.
Choosing a Website Platform
The following are recommended:
Shopify
Shopify integrates seamlessly with Amazon and eBay. If your site does not look professional, customer trust will be undermined. With the Shopify theme store you have a great head-start with sharp, full-featured designs ripe for customisation. Backed up by enterprise level reliability, it’s a great choice.
WordPress
Not as simple to code and harder to keep looking fully professional. But WordPress and WooCommerce can be used to make a highly effective dropshipping platform.
Consider the Disadvantages
Lower Profit Margins
Because your orders (at least to start with) will be in retail quantities, not wholesale, you are unlikely to be able to command wholesale prices from the supplier – meaning that in order to keep your prices competitive, profit margins are likely to be slim.
It’s Not SImple
You’re not dealing with a warehouse but you still have to manage many of the headaches of owning a retail business: returns and complaints and so on. This with the headache of the extra step to the supplier. In some ways you’ll just be the go-between. Which leads us to …
Limited Quality Control
You may rarely see the products you’re selling, if the quality dips, the first you hear about it may be your customers complaining.
Limited Potential to differentiate your products
Again, because you are buying from your client in retail quantities, the extent to which any supplier is prepared to brand your products or offer you exclusive variations is likely to be very limited. It may prove difficult to offer something Amazon doesn’t.
Hidden Costs
If not set up carefully, shipping costs can mount up and rapidly erode profits. Many of the hidden costs that apply to a standard e-commerce store apply to dropshipping sites too. All those plugins can start costing a lot month-by-month.
Still Interested?
Good. Crack on. If you’d like help making a success of it, you can always contact us.