The internet is a powerful tool that has given a platform for everyone to showcase their skills, sell products/services, and whatnot? Thus, anyone can leverage this amazing platform and make money online.
Above all, one can generate a passive income as people can access your business anytime with the internet. Passive income is nothing but making money even when you are not actively working. Often people call it making money even while you are sleeping.
Today, more and more people are looking for ways to create passive income or generate more income streams. Over the past few years, dropshipping has emerged as a popular business option. Dropshipping demands less or no investment, no maintenance, and yet a drop shipper can gain handsome profits.
Many entrepreneurs have generated consistent revenue with dropshipping businesses. Even most of those entrepreneurs started small without investing big money. So, are you wondering how come that is possible and what exactly is dropshipping?
We have dissected it for you in simpler steps. This blog will walk you through the basics of dropshipping business model, how it works and how to do a successful dropshipping business. Let’s get started.
What is Dropshipping?
Dropshipping is a business model that lets you sell products directly to your customers without stocking them or holding any inventory. Once a customer places an order, you transfer the order and shipment details to a manufacturer, another retailer, or a wholesaler. They ship the product directly to the customer.
Dropshipping is a profitable business model indeed as you need not buy, maintain and store the products. All you need is to have an eCommerce website, find customers, and provide customer support.
How does Dropshipping Works?
In simple words, dropshipping works like,
- A customer purchases a product from your online store at retail price.
- You forward that particular order to your supplier. You pay for the product at a wholesale price.
- The supplier then ships the item directly to the customer under your online store’s name.
Dropshipping is a profitable business model. As a drop shipper, you will not buy and store in bulk. Thus, you need not invest a lot of money upfront. It also prevents the risk of facing loss by not being able to sell the products. Apparently, dropshipping is popular as it requires minimal investment but renders similar benefits to traditional retail models.
How to Start Dropshipping Business?
An eCommerce website is ideal for running a dropshipping business online. As a website owner, you purchase the item from a third-party supplier or manufacturer. The supplier then ships the order directly to the customer. It cuts the operational and maintenance costs of your business. Plus, it frees up your time, allowing you to focus more on customers.
So, are you all geared up to start a dropshipping business online? Now that you know how dropshipping works, do you want some practical tips to launch a dropshipping business online? Read on.
1. Pick a Niche:
You can’t sell everything in your eCommerce platform, at least initially. That is why you need to be laser-focused in picking a niche. It is better to choose a field that you are genuinely interested in and enjoy doing it. Else, soon you will lose interest and eventually get burned out.
Apart from your interest and passion for your niche, here are some tips that you can consider while choosing the niche for your dropshipping business.
● Look for handsome profits:
With the dropshipping business model, the prime focus will be on marketing and enticing customers. Thus, the effort needed to sell a $20 product or $ 2000 item will likely be the same. So, be wise and go for a niche with high-priced products.
● Keep an eye on Shipping Costs:
Of course, the supplier or the manufacturer handles the shipping. But, if the cost is more, the customer might hesitate to buy the item. No doubt, who will bear the high shipping charges?
Instead, they will buy such products in the local shops in their place without any shipping charges. So, always find something inexpensive to ship. Thus, you can provide free shipping to your customers and retain them for the long term.
● Go for Products that have demand in the market:
This one goes without saying. You have to sell what people want more than what you want. Finally, they are the customers who are going to give you business. So, go for products that will leave you with the highest conversion rate possible. Nevertheless, the products should trigger impulse buys and entice people to purchase instantly.
● Use Tools to find Marketing Insights:
In this digital world, you have various free tools to check the current trends in the market. Leverage such tools to find the relevant keywords and know other information that will benefit your business. Thus, you can drive maximum traffic to your online store.
● Establish your Brand:
It is always better to sell something in your brand name rather than reselling other brands. So, look for a product that you can white label and sell as your own brand. You can do so with custom packaging and branding.
● Go for Products that are not readily available in the Local Market:
Of course, if the product is readily available in the neighborhood, people rarely buy it online. So, opt for products that are of demand in the local market. That is also one of the marketing tactics to attract the crowd.
2. Analyze your Competitors:
Any niche you choose, there will be someone else who will be already acing it. Invest time to learn about your competitors, their business tactics, and marketing trends. Thus, you can come up with better strategies and outsmart them.
Also, some drop shippers make the mistake of opting for less competitive products fearing other established drop shippers and retail giants like Walmart and Amazon. However, by doing so, they often end up selling products that are in less demand. That, in turn, will only hurt their sales.
Many factors play a role in defining the competitiveness of the product. For instance, a good product with high shipping costs can make it less competitive. Hence, instead of blindly avoiding highly competitive products, analyze the reason behind it.
Experts suggest going for competitive products instead, as they will have more demand. You can match up by deriving a better marketing strategy to boost sales.
3. Partner with the Right Supplier:
Partnering with the right supplier is crucial to the success of your business. So, do your due diligence before signing up for a contract with any supplier. Since most dropshipping suppliers are located overseas, communication is essential to keep serving the customers on time.
Take your time to get to know them and partner with them only if you are confident and trust them. Alibaba is one of the largest online resources to identify and communicate with potential manufacturers and suppliers. Make sure you question them a lot before finalizing any supplier. Above all, they should be able to scale with you.
Do your research on the internet and learn from other drop shippers about finding the ideal suppliers. That will help you avoid many mistakes and suffer losses.
4. Build an eCommerce Website:
eCommerce website aides the fastest way to take your dropshipping business to the market. Yes, your business will be open 24/7 online to the audience. Plus, you can easily market your business by blogging, social media marketing, and whatnot?
Moreover, when your business grows, you will want to expand your product ranges as well. An eCommerce site will let you scale up your business. You can add more lines, payment options, shipping options readily to your online store, unlike a brick and mortar store.
You need not have to be from a technical background or invest a lot of money to develop an eCommerce site these days. You can leverage handy tools like Shopify to get started with your eCommerce website. Initially, you can manage with the plug and play options. Later, when the business starts picking up, you can customize your eCommerce website.
5. Attract your Target Customers:
So, yes, now you have great products listed on your stunning eCommerce site. But, how will your target customers get to know it? Content marketing tops the list when it comes to reaching your target audience online.
Create relevant content that resonates with your audience. Keep publishing the content on your website, and social media handles consistently. If the audience finds the content valuable, they will start seeing you as a trustworthy brand.
Once you have established an online presence and increased your brand visibility, you can invest more in online marketing and run paid ad campaigns. That will take your business in front of a highly targeted audience and allow you to compete with big brands and retailers. Also, you will have to invest in SEO and optimize your website for search engines to enjoy long-term benefits.
6. Analyze and Optimize:
When you run an eCommerce store, you should track all the data and metrics available to grow your business. For instance, in an online business, you have to monitor the customer engagement metrics like cost per acquisition, conversion rate, average order value, cart abandonment rate, and more.
With tools like Google Analytics, it is pretty straightforward to track the traffic. When you trace every single conversion, it will help you know where the customer came from and the path they took that led to a sale. It will help you identify the best channel that gives more conversions and avoid the ones that don’t.
There is no one fixed advertising or marketing solution. As a business owner, you have to check new opportunities and fine-tune your marketing campaigns constantly. Thus, you can make the most out of your marketing campaigns.
Wrapping Up:
Decades ago, when the internet was a distant dream for many, starting a business demanded a lot of money and effort. But now, with all businesses moved online, it has enabled incredible opportunities for people to make money relatively faster than the traditional setup.
Dropshipping is one such profitable business model, and one can get started with it without much investment. All you need is a robust eCommerce website to list your products and indulge in customer acquisition strategies. Since the manufacturer will take care of storing, maintaining, and shipping the products, you can cut a lot of costs that a traditional business will demand. That, in turn, leaves you with a high ROI.
So, are you a drop shipper, or are you one of those willing to start a dropshipping business? And, are you overwhelmed with the numerous tools and techniques that come with developing your eCommerce site?
No worries. We at Cypherox have a team of experts who deliver highly functional and secure eCommerce websites. Reach us for your eCommerce website development right away.