Are you in search of an alternative way to make money without a heavy investment or lot of stressful work? The drop-shipping business model with a sturdy e-commerce platform is the ideal choice.Drop-shipping is economical to get started and can be run by investing a couple of hours a day or could even turn it into a full time venture.
The biggest advantage with drop-shipping business model is that you don’t have to invest a lot of money in stocking inventory or searching for storage space.
With drop shipping, you don’t have to worry about having money to invest in inventory, or finding warehouse space or shipping out packages. You just have to add images of products to the store, promote the e-commerce store, place orders with the manufacturer or wholesaler who ships the products directly to customers. That makes it exceptionally straightforward and stress free. However, like any other business there could be issues that has to be dealt with.
This article will help you get on board with drop-shipping rapidly and straightforward.
This simple example will show you how the drop-shipping business model works. For instance, Jack plans to drop-ship T shirts through suppliers such as Cafepress or Spreadshirt. Jack buys a domain name and creates a web page with images of T Shirts, its description and cost along with a link to buy the product. A customer who visits the website and buys will pay the cost to him.
Jack then orders the product from Cafepress or Spreadshirt with the money his customer has paid him, which is higher than the cost that has to be paid to the supplier. The shipping address Jack would choose is the customer’s address, so that he does not have to bother with the hassle of doing it himself. I would say it’s like making a gift purchase from sites like Amazon wherein you pay for the item and is shipped by them shipped to your preferred recipient.
If you’re thinking why not purchase from Amazon and sell it to customers, there are few issues with that. Amazon would insert their marketing materials along with the shipments and the price is retail price which is higher compared to a manufacturer’s or wholesaler’s. It’s not a smart way to build a business.
What’s important in drop-shipping is that the suppliers don’t put their marketing materials along with the shipments. There are some suppliers who would insert your branded materials with the shipments, but you will have to let them know how you want it to be done.
So that’s the crux of it. You sell the products as though they come directly from you, but in reality it is packed and shipped by someone else. Well, that explains the fact why a lot of people get into this business model.
Drop-shipping is a safe business model compared to stocking a lot of products and working with it. There are people who find success with just one simple product and a landing page which requires very less initial investment. At the same time there are people who invest a lot in stocks and offer them on their websites. It all depends on your distinct circumstances.
Nevertheless, if you don’t intend to invest a lot of your hard earned money in purchasing products and be conservative, drop-shipping is the ideal way to go. Once you know what kind of products are moving in the market, you could later on start stocking products and even brand it as your own by getting into an agreement with the suppliers.
Having mentioned all that, let me also remind you that drop-shipping is not a flawless business model, which I would explain later.
As mentioned earlier, there are a few downsides to the drop-shipping business model. However, this could be minimised by being vigilant and smart.
Products becoming out-of-stock is one of the usual complaints heard. This mostly happens with popular products and during festive seasons when there is a huge demand. As a matter of fact this issue can happen on any online stores including amazon which could disappoint prospects and customers.
The importance of keeping track of the inventory becomes very visible here. If the customers were cautioned beforehand that certain items are out of stock, they might not mind much as compared to when they order an item and later on you send an e-mail to them saying , “sorry the item you ordered is out-of-stock”. This would lead to a bad experience for the customer with your brand or store name.
It is a good ideas to use some plug-in that would automatically update your store as and when the products becomes out-of-stock. Check out the following and see which one is the ideal one for your current situation.
If you are into selling products,you cannot escape this reality. As a transparent e-commerce entrepreneur you should have a great product return policy which would favour customers. Unhappy customers have to be dealt with in the best possible manner. The success of Zappos was their ability to provide great customer service, mainly to do with product returns. In this era of social media, unsatisfied customers will malign you everywhere on the web.
Therefore, it’s not a good indication of a smart business policy to provide no refunds to unhappy customers, which could also get your account with the billing company revoked. The bad reviews from customers could negatively impact your business over a longtime.
Be very certain that your product descriptions are very truthful and if you are into apparel business your sizing charts should be correct along with clear pictures to reduce returns.
Let’s take it this way. For instance, if an item costs less than $5, such as shoelace, you might as well mail another one without asking the customer to return the original one. However, if the cost is more than that, ask the customer to return it to you and send them a new one immediately. If the item is not damaged but there was an issue with the colour, you could send it to the next customer that orders it.
This is a very serious issue with drop-ship suppliers from overseas, in which case the products ordered reach late. From people’s experience with companies such as Amazon and Costco, they are used to getting their orders really quick.
However, there are local drop-shippers who would ship items fast and thereby customers are kept happy. Do a google search to find local drop-shippers.
There are various e-commerce platforms that have become dominant in recent years. There is so much hype about Shopify these days, but there are other platforms such as WooCommerce and Big Commerce.
Picking an e-commerce platform to launch your business is subjective. Based on your current circumstances, there would be one that would match your needs better than others
Every one of them have certain strengths and weaknesses which we would analyse here.
BigCommerce is a good choice as they have added features out of the box than others, but at a price.The basic plan starts at $29.95 per month and scales upward based on the features you want and your annual turnover.
Compared to other platforms, Big
Commerce have less apps but offer many built-in functionalities.
There are few free BigCommerce themes available, but if you want a paid theme , it would range from $150 to $240 .
WooCommerce is a very popular option, because it’s free. Nonetheless, it may not be the best option as it does not have a lot of built-in functionalities in the base program.
There are many free themes and plugins available. Certain themes and plugins would require additional payments for extended functionalities, which are in many cases one time payments rather than recurring monthly payments required by other platforms. Some of them are a bit expensive for someone who is new to the business.
Keep in mind that WooCommerce is run on WordPress on your choice of hosting such as Bluehost or Hostgator, where you will have to pay the monthly hosting fee. Big Commerce and Shopify are run on their own servers and hence hosting fee is included in their monthly fee.
Shopify is also a very popular platform which is reasonable and scales with the store’s sales. This comes with a variety of themes and plugins.
It goes well with Oberlo, which is a plugin that can be used to import products from AliExpress- a popular drop-ship supplier from China, which could also help you keep track of inventory.
Hence, a lot of work and time related to drop-shipping can be reduced and more time could be utilised for promoting and getting traffic to your e-commerce store.
Best of all, you can get started with Oberlo for free on Shopify!
Almost all of these e-commerce platforms have various free and paid themes with multiple features and functionalities.
A bit expensive out of the three is that of BigCommerce which ranges from $145 to $235), followed by Shopify which ranges from $100 to $180 and lastly WooCommerce themes which have a wide range of prices provided by external developers.
Having mentioned all that, you could start of with a free theme, but a paid theme that comes with many functionalities would allow you to customise your store as per your taste and make it more appealing to customers.
All these platforms have many apps which would extend its functionality. In the beginning stage you just use the platform as it is and add the functionalities later if needed.
Next you could consider choosing a niche market rather than serving everyone in the market. Many people have ideas in their mind about selecting a niche based on their interests. Well, that’s fine, but as a smart entrepreneur it is paramount to ensure that the chosen niche has the prospects of becoming a success.
Even though the drop-shipping business model for embarking on an e-commerce venture requires very less financial commitment initially, it certainly would require investment with regard to time.
So, you wouldn’t want to invest a lot of money and time into a niche that is not very lucrative as you had presumed.
A lucrative niche should have the
Actually having competitors in a particular niche is a good sign, as it means there are many takers for the offer.
There are many creative ways to overtake your competition in this era of social media and internet explosion.You could make few changes to the products, add bonuses or offer some special add-on to the products to make it look unique from similar products available in the market. Having mentioned that, if there is severe competition you could look for another niche with a medium competition.
As the selection of store platform and niche is done, you could get your store ready for visitors to come to your store. Setting up of the store is easy once you go through the particular shop platform’s set up process.
There are mainly two ways to bring traffic to your store, which are paid and free. Free ways include SEO and social media shares. Paid ways include Google Ads, Facebook ads, YouTube ads,Online PR, and all other social media ads. The paid methods will bring traffic faster compared to the free methods. You could try a combination of both the methods or choose the one that is ideal for your current circumstance.
Facebook has both paid and free methods of promotion. As mentioned above it is a good alternative to use paid promotions as it would bring more traffic faster. However, it is also possible to reach people if you are strapped on capital. Search for groups related to your niche and be a regular contributor there. Later, contact the group’s admin and request them if you could post a link to your store in the group. Run contests for members of the group and offer coupons to get further traction.
Pinterest is a great way to bring in traffic to your e-commerce store. Pinterest is known to convert better and bring in more sales.
It is advisable to open a separate account for every niche or shop you develop. To get people to follow you on Pinterest, it is important that you have a clearly defined niche with multiple boards which have really interesting pins. Follow many accounts in your niche after making sure you have set up a sturdy profile for your brand, so that a lot people would follow you back.
These are few tips for getting traffic from Pinterest:
Instagram is great for sales if you can engage with the users. If you want to get people to engage with your posts, it is paramount to have your posts and images really attractive and interesting to instigate people to engage.
Tips for Instagram marketing:
As a matter of fact one of the most important component of the whole process of getting to work on this business model is picking the right drop-shipper. This involves contacting various companies through chats,e-mails, phone calls and in some cases physical visits to zero-in-on the right drop-shipper.
One of the largest drop-ship and wholesale directories is Worldwide Brands which operates on a subscription. As they claim to do some primary quality checks prior to adding the suppliers to their directory, it could be worth trying them.
Have a look at the link below to find an extensive list of potential drop-ship sources.
Another way you can go about is by using Shopify platform and connecting Oberlo to it where-by you can find suppliers via AliExpress which is a sister concern of Alibaba.
Finding suppliers through Aliexpress is hassle free, as much of the documentation required by many traditional drop-shippers are not mandatory here. However, do keep in mind that most of the products from Aliexpress are shipped from China, which would take some time to reach customers. So the customers should be made very clear about the shipping time in advance so as not to have a bad experience later. There are suppliers in Aliexpress who provide e-packet shipping which are relatively faster compared to normal shipping and in some cases you would also find suppliers who would ship from US , Germany, France etc., which are as good as local shipping. So keep an eye on that while doing your research.
Another advantage of using Aliexpress is that shipping by these suppliers is free.
So to conclude, operating an online store via the traditional way can be expensive and would involve a lot of overheads. Drop-shipping business model can make the process much easier and economical. Using Shopify and Oberlo can make it much faster to get started.
You read about certain ways to deal with some of the most common issues you could come across with drop-shipping, such as shipping delays, out-of-stock products, product returns etc.
Nevertheless, drop-shipping has few hassles as you don’t have to deal with inventory management, warehousing or shipping.
You also read about popular traffic sources which is very much the essence of e-commerce businesses.
So, best wishes for your drop-shipping journey. Do post your comments and let me know if I could be of any help to you.