E-Commerce with a Dropshipping strategy. Can it work?

24.03.2020 2,136 18

Martin Pramatarov

If you are reading this article, you have probably come across some titles like “millionaire in 3 months with dropshipping” or “e-commerce from any point of the world”. Are they true? Can you actually obtain these millions of dollars? How? Let us explore what dropshipping is and how it works.

Dropshipping

Dropshipping (also known as dropship or drop ship) is a process where a reseller sells goods to end clients that he or she delivers directly from the supplier (factory, another shop, wholesaler, etc.). The reseller does not need to own the products. No need for actual storage space. In many cases, not even any logistics hustle. Sounds great, doesn’t it?!

Pros and cons of dropshipping

+ Smaller investment in comparison to a typical e-commerce site. You will need to spend some money on starting your business in your country. You will need a website. Therefore, a domain name, hosting, SSL certificate are a must-have. We can help you with the hosting

• Web hosting
• Cloud servers
• Dedicated servers

You will need to spend money on marketing. You will need to find your clients and convince them to buy from you. The costs have inlude promotions, ads, re-targeting, etc.

+ Easy to get started. Set up your company and respectively a website. These are the basics. You don’t need to worry about buying inventory, storage costs, handling returned packages. In general, it is a simplified shop model.

+ Work from almost everywhere. To manage your site, you will need a good internet connection. You can connect from the beautiful beaches of Mexico or the Italian Alps. Just bring your device and get connected.

+ Easy to scale. If you want to grow a traditional shop, you will have plenty of complications. Sending more packages, a growing need for more storage, more workers, more of everything! With a dropshipping strategy, you can simply add new categories to your site, add or remove products and sell on new markets in the matter of a few clicks.

– Low profit margins. You know, you are not the first to come up this brilliant idea. There are already thousands of similar sites out there. Because of the lower entry barrier, there is plenty of competition. This keeps the profit margins low. You can still find a niche with better profits, but it will require extra searching.

– Problems with the inventory. Not having your own storage, means that you can’t be 100% sure what is still left. Maybe you see that there is still availability on your supplier page, but actually, they run out of stock. What are you going to do with your client who’s already paid for something you can’t deliver? Wait for the item to be in stock? Offer a substitute even if you don’t earn anything on this sale?

– Problems with multiple suppliers. On your page, you can be selling items from various suppliers with different policies and delivery time. They can charge differently for the shipments. Your clients can get angry and feel dissatisfied with the multiple shipment bills.

– Limited to no customization. You will be selling exactly the same items as many more on the Internet. There is a very small percentage of suppliers, that will let you change something from the package. Branding will be hard work.

How to make money with dropshipping?

Specialization

In the beginning, use your current knowledge. What industry do you know best? Have you seen a market with a need? Is there an innovative product that can benefit the people in your country?

Find your niche and investigate it deeply. Focus on key items that can give big value to your customers.

Find trustworthy suppliers

Many of the e-commerce platforms already have add-ons that can help you with this. You can fill your ship quite easily for a certain fee.
You can also find them yourself. You can look for dropshipping suppliers or manufacturers on the market where you want to operate. Many of the search results will be ads so take your time and take a look at more of the result pages. The sites can look outdated, but they can still work without problems. Just double-check the companies through reviews and commentaries online.

SEO and SEM

Your clients need to get to know you. You will need to spend money both on “organic” and “inorganic” reach. You will need to optimize your site. A content marketing strategy can add extra value and create loyal clients. Answer their doubts. Show your products. Create trust.
You will also need to spend money on promotion. Target the right groups of people for your products. You can use target ads on social networks and search engines.

Customer service

Excellent customer service can be the distinguishing element between you and the rest of the dropshippers out there. If you can afford it, create a call center for questions and solving clients’ problems. This can be very beneficial for your company.

Accounting

Have goals and follow them. Don’t get lost between the money coming from clients and your payments to suppliers. Account for everything in detail. If your business starts well, you will be dealing with big sums of money. Be careful.

Data

Use your site to collect data. What are your clients buying? Why? How often? Are there people who don’t finish an order? Why? Do you see patterns? Use the data available to you for future decision making.

If you are interested in starting your e-commerce site, check out this article. Now think more thoroughly about your idea and create a plan. We hope we will see you soon in the Internet space. Good luck!