eCommerce is no new business model, but a number of elements, such as ubiquitous internet access, increased smartphone ownership, and even the Covid-19 pandemic have driven its volumes to new highs.
According to the United Nations Centre for Trade and Development (UNCTAD), movement restrictions induced by the pandemic increased online retail sales’ share of total retail sales from 16% to 19% in 2020. In financial terms, the most recent UN statistics show that global eCommerce sales have hit $26.7 trillion, indicating this is a highly profitable table to sit at.
In this post, you’ll learn how to get started with the dropshipping eCommerce model.
Getting started in eCommerce
Moving your first tentative steps in eCommerce can seem like a daunting task. As with any other business initiative, it means taking a leap of faith and standing on your own two feet. But it need not be such a frightening process if you select the right partners to support you from the onset.
One of your first concerns is going to be an initial investment: how much budget do you need to start selling third-party products online? Where do you stock the products? How much will it cost to store them and how do you ensure you don’t get stuck with a lot of surpluses or unsold stock?
Dropshipping: a lean business model
Fortunately, you’re not the first to want to set up a business on a bootstrap. There already is a business model available for aspiring entrepreneurs that want to start selling third-party products without incurring expensive warehousing handling fees and making significant initial product investments: dropshipping.
Dropshippers purchase products from a third-party supplier or manufacturer, who then fulfills the order. This means the dropshipper does not have to stock products or deal with shipping items to the customer directly. As a result, because you are not bulk buying goods in advance, startup costs are low and are mostly limited to the eCommerce website building process.
The dropshipper is thus able to work from any location and to start their business with a minimal upfront investment, focusing all their energy and resources on marketing and sales. Its digital nature makes dropshipping particularly appealing to gen Z and Millennials that want to live their ideal life without being bound to a regular 9-5 or to a specific location.
Sounds ideal, right? And it is, but there are some common pitfalls that any aspiring dropshipper needs to be aware of if they hope to become successful. This step-by-step guide will show you how to avoid obstacles and how to set up your own successful dropshipping business.
Finding a winning product
This has to be the single biggest hurdle for any dropshipper; identifying a product that will sell well and that will provide you with a healthy margin is the cornerstone of your success.
There are some key tips to bear in mind when making this selection: first and foremost, select a niche that you understand and are comfortable selling in; you will need to market the product so you should be able to relate its strengths and benefits clearly to your ideal buyers. A smaller niche also means fewer competitors and less marketing budget; broader niche stores tend to struggle to market all their different products effectively.
You should also ensure that your product is popular, but not too popular. Following trends is important as it will enable you to tap into a relatively new market, but if a product is already very trendy then you risk having to battle for market share with a lot of competitors.
There are some online tools that can provide you with a few pointers such as Commerce Inspector and Facebook Library, but bear in mind these are the first port of call for your competitors too!
As a dropshipper, selling products manufactured all over the world, you will also have to grapple with some practical issues concerning your product selection:
- Selling smaller products that easily fit in a shoebox and weigh less than 2kg, for example, will prove simpler as there will be fewer shipping issues;
- Steer clear of products containing liquids, batteries, electrical products, and products that cannot be advertised on Facebook as you will struggle to sell them;
- Grey area products such as security and surveillance, adult and drug-related products are a no-no;
- Also, of course, avoid dangerous items such as firearms, and fakes which are illegal.
Choosing a supplier
Once you have identified what you want to sell, you’ll need to find a manufacturer or a supplier to purchase from.
Direct from the factory
Identifying a factory that manufactures the products you want to sell and is able to ship your products with the dropshipping method is an extremely complex process. Not only is it difficult to find them, but you will have to liaise with them about:
- quality issues
- shipping of samples
- minimum order quantities
- inventory levels
- orders detail
- package tracking numbers
…all most likely in another language as many manufacturers are based in China and will only have limited knowledge of English.
Add to all this the uncertainty of shipping times, as often manufacturers will agree on one shipping method with you, such as Special Line, but then actually turn to a cheaper (and slower!) method, such as Registered Post, at the last moment leaving you to deal with negative feedback, refund requests and a host of other problems.
AliExpress and other marketplaces
Given the difficulties posed by sourcing a manufacturer directly, you may turn to purchase from a marketplace such as AliExpress, but this would be a false economy at best.
AliExpress and other marketplaces sell at B2C prices, reducing your margin, and take no responsibility for shipping issues, providing zero after-sales assistance. Far too often AliExpress sellers do not ship the packages with the agreed method or share incorrect tracking numbers which then prove impossible to track down.
An end-to-end supplier
A far more business-savvy option is to partner with a supplier that will provide you with software to manage all the information exchanges, will offer you products at B2B prices, and act as an intermediary between you and your manufacturer in China. A partner that can help verify the quality of your items and track the ideal producer saves you hours of difficult emails.
Choosing to work with a supplier that also offers automatic fulfillment will take the headache out of shipping too and ensures that you are provided with the fastest and most reliable shipping method, while also providing tracking and assistance with managing complaints should they arise.
As negative feedback can lead to Facebook and PayPal bans, it’s critical to find a partner that can help you keep these down as much as possible.
Another important type of support to look for in a partner is help with day-to-day tasks. If they can lighten the load for you, by automating how products are uploaded to your store or sending your customers’ orders and tracking numbers directly, for example, you will have more time available to focus on promotion, scaling your niche market, and finding new customers.
Choosing a platform
Now you’ve got a product and have found who to purchase it from, you’ll need to set up your eCommerce site. Some of the most commonly used platforms are Shopify, WooCommerce, and CommerceHQ.
Each has its benefits and challenges but for complete beginners Shopify is certainly the most intuitive to set up and manage, providing you with a range of customizable features that do not require coding skills or previous website building experience. Selecting a platform with plenty of apps that you can add on will give you more options to boost sales as your business grows.
The faster you get your website set up, the faster you’ll be selling and making that cash!
Marketing and promotion
Once your store is up and running and you are confident that your products are available and can be shipped consistently and efficiently to your customers, you should focus on bringing people to your store! Find some tips on how to grow your eCommerce customer base and read up on new digital marketing trends to stay ahead of the game.
You should also dwell on pricing and compare yours with that of other stores- can you devise special offers or time-sensitive sales such as discounting barbecue tongs the week before a summer national holiday? Think of seasonal strategies and longer-term marketing tactics too.
If you’ve identified a niche product that you know a lot about, you’ll be at a huge advantage in developing a marketing and sales plan that really targets your audience effectively. You’ll know what channels your prospects use, which messages they are most sensitive to, and what their buying habits are. Harness this knowledge to develop a marketing strategy that hits the sweet spot.
An accurate analysis of your customer profiles will also help you understand which social media they spend the most time on and which they are most likely to buy from (these may not be the same!). You will probably need to spend some time familiarizing yourself with the advertising options available on major social media channels such as Facebook and Instagram as these have typically proven highly effective for dropshippers.
There are numerous tutorial videos available on YouTube showing the ins and outs of setting up an advertising campaign on these channels but as with all digital activities tinkering, testing and trial-and-error is usually the best strategy to ensure you find the ideal investment budgets and channels. You’ll have plenty of time to focus on building this experience if your initial business setup choices are sound and you have entrusted your product sourcing, shipping, and fulfillment to a reliable partner.
Yakkyofy is a leading dropshipping software provider. Part of Yakkyo Srl, a company based in Italy and in China, Yakkyofy helps shop owners to completely automate the management of their Dropshipping store. Yakkyofy sources the products to sell, brands them with your own logo if required, helps rapidly import them into your store and takes care of the entire order fulfillment process automatically. All of the Yakkyofy services are available in just a few clicks, directly on our interface, with no manual work required. To start your dropshipping business visit our website.