In theory, dropshipping sounds like an ideal business for tech-savvy people with a flair for marketing. You are not responsible for the production and manufacturing of products, you don’t have to worry about stocks, and you’re not in charge of shipping.
Your only job is to sell.
It sounds like easy make money online, right? You sell someone else’s products and take a cut for this. Everyone with a brain can see that this is a very lucrative line of business!
While dropshipping can indeed be profitable, there are several pitfalls that can engulf any business before it takes off. In this article, we will discuss some of the most common mistakes but also the main pros dropshipping can bring, and we’ll touch on several business moves that proved successful in the past.
Understand the Pros & Cons
Dropshipping is a great way of testing different niches and business models without investing too much. And, with the freedom provided by worldwide e-commerce platforms, you are not limited by your geographic position.
It’s also a fantastic way to learn how different audiences react, how demand meets offer, and how commerce can be molded to benefit all the parties involved. In fact, the system is so complex and vas that you can take dropshipping courses to better understand its intricacies.
- The initial investment is small – since you don’t have to purchase inventory and put business processes in place, dropshipping doesn’t require that much capital. Apply to alternative approaches to start a business with no money.
- It’s easy to get started – all you need is a website and an audience interested in buying. You don’t have to actually worry about the physical products as they will be shipped by the supplier;
- Increased flexibility – you are not pinned down by a headquarters or even an office. All you need is a laptop and a reliable internet connection, and you’re in business.
- There are no limits on what you can sell (as long as the supplier provides the product).
- It’s easy to scale the business – if the business takes off, it doesn’t translate in more work for you. The effort is transferred to the supplier and you remain with the profit.
- The profit margins are low – while you are the one who sets the price, you can’t go too high if you want to make a sale. Most customers today will do thorough research (or at least compare prices) before clicking the Buy Now button.
- The competition is fierce – Since it’s so easy to get started, you will always have other online stores in direct competition with yours. The situation gets even tighter if you’re starting with a popular segment of products.
- No control over the product and its image – Since you don’t own the products, you can’t adapt them to your business model or website visual aspect.
- Supplier problems – Even if you’re working with the best dropshipping platform, there will be some errors in the supply process. While it’s clearly not your fault, you will be the one who has to deal with angry customers.
How to Gain More from your Dropshipping Business
The first step in starting a successful dropshipping business is to carefully analyze the pros & cons. The second step is to have a few tips and tricks up your sleeve to get you started.
Choose Reliable Platform(s)
Most successful dropshippers work with more than one supplier. This ensures their offer is diverse and attracts a wide range of people. However, it’s important to select reliable suppliers that will honor the orders in the specified time-frame.
Beginners should start with platforms like Amazon, eBay, Oberlo, and more. Many of these platforms have a built-in module for dropshipping, so you don’t have to do any extra effort.
Now, before you can start selling, you also need to select a reliable e-commerce platform that comes with a built-in system for dropshipping. Woocommerce (for WordPress), Bigcommerce and Shopify are a fantastic option, but you can also use Amazon (check their Fulfillment program) if you don’t feel like building your own e-commerce store.
Pay Attention to the Competition
The best way to stand out from the crowd is to take a different direction. In the world of drop shipping, this means avoiding an already crowded market where there’s no room for growth or change.
So, even if you love selling Bluetooth speakers, unless you already have the audience for this, it’s best to avoid diving into this niche if every other drop shipper does the same thing.
Even if you don’t cover shipping and inventory, whenever there’s a problem in this area you’ll be the one to blame. As such, it’s best to follow the trends in your store and on the market and prepare for what’s about to come.
For instance, if you register an increase in sales for a specific product or category of products, it doesn’t hurt to make a small stock of your own (if your space allows it). As the orders increase, you will be able to meet the demand and fulfill each order. If the competition can’t this may mean more customers for you.
Another way to prepare for an increase in demand is to work with several suppliers for the same product. This way, if one supplier has a problem, you can switch to your backup.
Niche It Up
The best solution to gain some traction in an overcrowded market is to carve your own niche. True, this requires deeper market analysis and a bit of marketing creativity and innovation, but it is doable.
For instance, clothes dropshipping businesses can create a niche by selling t-shirts with in-demand prints to the right audience. After all, what cat owner doesn’t like wearing a t-shirt with a picture of their cat on it (or any cat for that matter)?
The secret is to dig deep into the market trends and find the ones that match your marketing abilities and your audience.
Dropshipping is not a get-rich-fast scheme and won’t make all your dreams come true.
However, if you are willing to invest your time and brainpower, it can be a great learning experience in the world of e-commerce. It can also become a successful business, as long as you don’t take shortcuts and understand that you will have to deal with various competitors, from all over the world.