A few thousand people, every month, search Google to learn about what is dropshipping and how to start their own online business. Simply put, this business model is an affordable eCommerce business model for the everyday person. How so? Well, normally there are lots of upfront costs when creating any type of business. With eCommerce, inventory and storage costs are some of the primary expenses that can make starting an online business more challenging for first time entrepreneurs. Dropshipping removes that part of the equation.
You advertise and sell a product that you haven’t had to pay for or store. Instead, you have the supplier ship the product directly to your customer. You never even have to touch the product that you sell online. Why is this important? Because it creates a low barrier-to-entry for the everyday person to have their own eCommerce business! Let’s take a deeper look at this.
There are a few different ways that normal eCommerce websites work. With the typical eCommerce model, you create a web store and fill it with inventory listings that you have purchased from a supplier in bulk. This means you are responsible for storing, shipping, and updating your site’s inventory levels as you make sales. This costs a lot time and money.
In fact, when procuring from wholesale suppliers, you typically have to purchase entire pallets of a product, which can cost tens of thousands of dollars. If you rent a warehouse, you have to pay the fees involved with storage and labor.
After this, you have to make sure your orders get shipped out correctly as well. Essentially, you’ll need a major investment and system planning for supply chain and inventory management before you can make your first sale.
There are some alternatives when it comes to warehousing. You can rent warehouse space instead of having your own, but this still costs money. Amazon has their fulfillment center program, but then you are just another product listing on Amazon with nothing to distinguish you from other sellers. Essentially, you are a small fish in a very big pond. Not to mention the high warehousing and processing fees Amazon will charge you, making your dropshipping profit margins slim and your initial financial investment risk high.
What about creating your own site? To do this, you need to pay for the design, appropriate security, payment processing costs, website maintenance and new feature costs that come along.
These are ongoing and upfront expenses. Additionally, you cannot resell returned merchandise as “new” and you may be stuck with it. This makes it difficult for some entrepreneurs to start their own eCommerce business.
Well, first of all, it saves you A LOT of money up-front. Since the supplier ships the order directly to your customer for you, you do not have to buy your products in bulk or pay to store them. This automatically saves you thousands of dollars right off the bat. Because everything is shipped by the supplier, you pay the shipping charges straight to the supplier and they do the rest.
Drop shipping platforms allow entrepreneurs to have a quality web stores with access to suppliers for lower cost than creating their own store.
Shop1, for instance, will provide you with an amazing looking web store that includes all of the features an ecommerce entrepreneur could need. And better yet, they only use U.S based suppliers, reducing shipping times and improving quality.
Dropship eCommerce businesses are also able to scale easier. Trying new products out isn’t costly and you don’t get stuck with unsold merchandise that has outlived it’s current sales potential.
The U.S. eCommerce system has been permanently altered by the increase in shipping speeds. People have become used to shorter shipping times. For American drop shippers that use over-seas based suppliers, this means that selling products that can take up to 10-14 business days to reach their customer’s door (approximately 20 days total), which can result in lot of abandoned carts. And abandoned carts equals lost sales for you.The solution to this is to use U.S. based suppliers. Shop1 recognizes this and exclusively uses U.S. based suppliers, making sure your customers enjoy short shipping times and quality products.
To sell, you first need to find products through suppliers. There are a few important things to do when obtaining and maintaining suppliers.
Unless you are using a dropshipping platform such as Shop1 or paying for a supplier aggregate, you will need to take to google to find some American suppliers. However, there are some strategies to follow when searching for suppliers.
We mentioned this previously, but remember to always use U.S. based suppliers. You can usually find information on where their warehouses are located. The shorter shipping times and more available customer service is 100% worth it.
Don’t get overly concerned if you do not find what you are looking for on the first 2 pages of a google search. Because Google’s SEO features means that certain sites will get prioritized on the list, there are plenty of great suppliers that don’t make those first two pages. It is usually good go through pages 1-14 during your supplier searches.
Unfortunately, there are supplier scams. There are a few ways to test for this so it doesn’t become a problem. See what their customer reviews are like. If they have no reviews, only a few, or bad reviews all the way around, chances are that this is not the supplier for you. Placing a test order with your suppliers before their products go live on your site also lets you to see what your customer’s experience will be when purchasing products that are sent from this supplier.
If the supplier doesn’t live up to your standards, find a different one. You also want to compare their pricing to the pricing of other eCommerce sites. If their pricing is higher than the market price on the item, it is better to avoid that supplier.
Most suppliers do not accept returns, so know that you will have to manage returned items and resell the item accordingly. They oftentimes also charge a fee to use them as a supplier and some require business documentation before you can get the discounted product pricing. Make sure to ask them about their fulfilment methods and pricings and consider them when deciding on your pricing strategy.
Fun fact: when suppliers give you their product feeds, they are almost ALL different formats. This requires data clean-up or API to sync the feeds more accurately.
Once you have your store set up, there is still another step to take before you can start making sales. You must market your web store. The internet is a big place, and people won’t arrive at your store unless you guide them there.
Social media is currently the top marketing tool for entrepreneurs. Almost everyone uses it, and giants like Facebook and Instagram use detailed analytics to find out the interests and wants of their users.
If you’re selling trending products, with the right social media marketing campaign, you can bring in hundreds of orders in just a few days. In turn, when you advertise with them they allow you to customize your ads so the most relevant target audience sees your ads. You can even set a budget and control what times and days your ads show.
You can also join social media communities related to your niche. As you get to know people, you will eventually become a trusted source and can recommend products from your store that you believe in. This is free marketing right now. Finding a social media influencer can be beneficial, but it is more expensive to go that route.
It doesn’t end there though. Once you start making sales, you will have a whole new opportunity to retain customers and make more sales. Offering coupons to customers that have recently shopped at your store is a great way to have them come back and buy more.
Running promotions also helps convert sales. People love a deal and tend to purchase more during these promotions.Tracking your sales also lets you see what is selling and what isn’t selling. There is no point in devoting product listing spots to products that are not selling.Track the keywords being entered into the search bar of your site. If you see that that the keywords they are typing are not pulling up many as many options as they should, add keywords to your products. The more products that show, the greater the chance of a sale.
If you notice a hot item trending, take advantage this by finding similar items and setting them as featured items on your store.
How much dropshipping costs depends on how you decide to set up your store. If you decide to take the route of creating your own Shopify store by yourself, your costs will be higher by the time you factor in development, maintenance, security, and payment processing. You will also have to pay for the product before the customer’s payment clears your bank.
Marketing is another cost. Now, this is to be expected since it is how you will drive traffic and sales for your store. The good news is these costs can be easily managed if you use the correct avenues. We previously mentioned how advertising costs can be managed with companies like Facebook and how you can balance this out with the free advertising that comes with being involved with the communities
Using a platform that already has all the tools you need is the most cost-effective method to start.
Shop1 is the only all-in-one dropshipping system in the world. This means no additional apps required or hidden costs that pop up along the way. The plan you choose is the price you pay each month. Check out our plans below and see which one works best for your store.
You now have the answer to what is dropshipping. Ready to get your journey started?
You can travel the do it yourself route, which has expensive ongoing costs, or you can use a platform. There are multiple platforms that can handle this, such as Oberlo, but many of the suppliers they use are Chinese in origin, which means that your customers will get these long shipping times. The other platforms often use multiple apps that you have to pay for in order to get full functionality of your store.
Let Shop1 handle the background heavy lifting so you can focus on driving sales for your store. Not only do you get access to all supplier catalogs instantaneously, you also don’t have to front the cost of the products to the supplier.
Shop1 does that for you, and don’t forget, Shop1 automatically handles the entire processing of customer orders on your behalf. No extra apps, no surprise shipping costs, no fronting product costs. When the orders come in, the suppliers packages and ships the items without you having to bat an eye.
Simply press the button below, follow the 3 easy steps, and start your very own American dropshipping store today.
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