Drop shipping is vastly different to the traditional model of retail. Drop shipping allows business owners to sell directly to customers and have a third-party handle the fulfillment and delivery of goods on their behalf. It puts you in charge as a merchant and offers you more flexibility in what you can achieve within the world of e-commerce. It is for this reason and many others that many retailers are now using drop shipping to diversify and expand their businesses. Here are seven lessons drop shipping will teach you about e-commerce.
1. You Need To Constantly Analyse Your Customers’ Buying Habits
With traditional retailers, large amounts of capital have to be laid out on inventory. Despite the fact that a great deal of customer research will go into choosing and sourcing stock, once the decision has been made, it is down to the merchant to sell every last item of it. With drop shipping, you only pay for the inventory you have already sold, meaning that you will never have a large number of products tying up your working capital. Successful sellers with drop shipping suppliers will have more flexibility to change suppliers and product ranges to tie-in with their buyers’ changing needs.
2. Your Shipping Dates Need To Be Accurate
If you handle your own products from your home or warehouse location, you can accurately predict when your goods will arrive with your customers. With drop shipping, a third party is responsible for getting products with your customers, so you can never be 100% sure your orders will be fulfilled on time. Drop shipping carries many advantages in terms of inventory and startup costs, however, this will be one area where you will have to be more cautious. If you are a new e-commerce business, give your suppliers some ‘wiggle room’ on delivery times and ensure that you only purchase from reliable suppliers in the first instance.
3. Get Creative With Your Marketing Efforts
Some merchants who deal in drop shipping arrangements spend no time producing goods to sell, giving them more energy and resources to pour into their marketing efforts. From product descriptions to social media posting and guest blogging, marketing is a constantly changing discipline and one that entrepreneurs will definitely be interested in keeping ahead of, as it will help their business scale up and diversify.
4. Be Flexible In Your Scaling Options
If you are a traditional retailer and you receive a large order, you will have to do an equally large amount of work in preparing and delivering the goods on time. With drop shipping however, it is possible to process a large order with relative ease, as you can use alternative suppliers – the onus is on them to fulfill the ordering needs for your customers. Scaling up your business may give you more opportunities to diversify, expand and target new customers and markets. However, do bear in mind that increased orders does also mean that an increased amount of customer service work will be required. You will want to make sure that you can maintain good standards with your increased number of customer orders.
5. Make Use Of Automation
Automation offers a huge advantage to e-commerce sellers, taking much of the margin of error and grunt-work in running your own business away. Using a subscription-based e-commerce host will offer you many automated features, like currency conversion, shop design templates, etc. You can also customise your online store with a wide range of plugins, such as an automated chat application, that offer advice to your onsite customers and guide them to make a purchase.
6. Your Service Is Just As Important As Your Products
For entrepreneurs who are just starting out, drop shipping suppliers such as Aliexpress let you set your own margins and choose from a vast range of product options, as well as many other unique advantages for business owners. In moving away from the traditional retail model, e-commerce sellers learn the tools of the selling trade by experimenting in all aspects of their business model, whether it’s setting your prices to compete with local sellers, or offering expert advice to your customers to create a trustworthy brand. Drop shipping merchants understand the reasons why their customers shop with them, as opposed to their competitors.
7. Learn To Work With Razor-Thin Profit Margins
As there is little initial investment required in getting started with drop shipping, the profits you stand to make will also remain low, as competition with similar businesses will be fierce. Learning to work and build on these slim profit margins early on takes hard work and organisation. For every product you sell, you will need to balance the cost of the product, supplier drop shipping fees, credit card processing fees, etc. For sellers who can remain flexible and on-the-ball, turning a profit is possible, especially if your business targets an in-demand niche in the market.
Drop shipping can be a low-cost, low-risk method for building your e-commerce brand. Whether you are just starting out as an entrepreneur or you’re an established retailer looking to expand your product offerings in an easy and scalable way, drop shipping suppliers are helping millions of people to diversify and expand their businesses to new markets and customers.