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Drop Shipping Business Model

WHAT IS DROP SHIPPING BUSINESS MODEL?

Drop shipping is an e-commerce business model that allows you to sell products online while leaving suppliers to fulfill your customer’s orders. Drop shippers partner with wholesalers who package, ship and deliver products to customers. In this article, we will take a look at some drop shipping business model concepts

WHAT ARE THE PROS & CONS OF RUNNING A DROP SHIPPING BUSINESS?

PROS

  • It is a Low-Cost Business

Because you don’t handle the products, the cost of starting and running a drop shipping business is low hence it is easy to start.

  • It is a Low-risk Business

Since the initial investments are low and only the products ordered are shipped, it presents you with low risks.You won’t find yourself with large stock which isn't selling,

  • Low Order Fulfillment Costs

Drop shipping leaves suppliers to fulfill orders. This leaves you to focus on marketing your products as well as building a customer base.

  • Increased Product Variety

Since you don’t handle the products you sell and you have access to different suppliers, you have a wide range of different products available.

CONS

  • You Have Less Control Of the Fulfillment Process

Shipping greatly affects customers’ experiences.You don’t have control of the speed, quality of packaging and quality of service the suppliers’ offers. Therefore, if the supplier is not good it will affect your business negatively.

  • You Get Thinner Profit Margins

Suppliers do more work while shipping and fulfilling your orders hence charge you more thus reducing your profits. On the contrary, if you ship your own products you get larger profit margins.

  • There’s More Competition

When you drop ship from a supplier, the products are not unique. Other drop shippers ship the same products hence there is more competition on the same product.

  • There is Too Much Reliance on Suppliers Stock

When there is high demand suppliers can go out of stock, this will leave you without products. You may end up missing out on good business during peak seasons. Equally important, you might lose customers.

HOW TO SELECT PRODUCTS THAT SELL?

Are you wondering how to select drop shipping products that sell? Below is proven step by step how-to guide for you.

  • How to Analyze Other Drop Shippers?

You can get best products ideas by looking at categories like trending and best-selling items on big online stores like Amazon.On the other hand, you can check the least selling items to identify products to avoid.

  • How do you use Online Community Sites?

Explore and browse online community sites to get good and relevant products ideas. For example, Facebook and Twitter display the interests of many people. They can therefore give you a clearer idea of trending products.

  • How to Research Your Local Community?

You can begin by finding out products that are not locally available but have a high demand. These products present the best-selling items in your area.

  • What is the Use of Google Trends?

Google trends are used to show trending product as well as how they perform compared to other products.Additionally, they will help you avoid least trending products.

  • How to Analyze the Competition?

You should take a look at the competitors' products. If you can offer a better price, your products will sell fast. However, if your price is high it will be hard to beat big competitors.

  • How do you find the Best Products on Social Shopping Sites?

Sites such as Fancy and Pinterest provide valuable information on trending items. These items have high demand and will sell.

HOW TO FIND SUPPLIERS?

Before looking for suppliers it is important to first identify the type of supplier you want, in the same way, you should make sure you avoid retail stores posing as suppliers.

Legitimate suppliers will offer you good prices and services besides offering products from different manufacturers. With that in mind, let’s explore how to find drop shipping suppliers

  • How to Contact the Suppliers?

You can request for a legitimate suppliers list from your manufacturer. Afterwards, you can contact each supplier and ask whether they drop ship to your region. You can then proceed to find the best one.

  • Should you attend Trade Shows?

By attending trade shows, you get a chance to research products and make contacts with wholesalers and manufacturers thus securing good suppliers.

  • Should you use Suppliers’ Directories?

Yes, by all means;these directories include lists of legitimate suppliers. In fact, they are screened to remove fake suppliers. They are organized by their products and markets e.g. WholesaleCentral  but they cost a fee.

  • Can you Order from Your Competitors?

Ordering from your competitors will help you to find out about their suppliers. The packaging includes addresses which you can Google and therefore identifying their suppliers.

  • How can Using Google Help?

Google helps you to search for suppliers worldwide. You should contact the ones you find favorable and establish a relationship.

HOW TO MARKET YOUR BUSINESS?

Recently, drop shipping has proven to be one of the most profiting online businesses. Despite this,you must market your business in order to increase traffic and sales.To give you some ideas, let us look at proven methods of how to market your drop shipping business.

  • How to Use Social Media Platforms?

There are billions of users on social media. Your drop shipping business must market through social media campaigns. Moreover, you can use social media influencer to boost sales.

  • How to Use a Blog?

A blog is a very effective place for marketing. Create a blog that reviews your products to consequently attract readers. Afterwards, you can tell them about products you drop ship hence converting them to customers.

  • How to Use Promotions?

Promotions greatly increase sales, especially on holidays. Most customers love good deals. Your new dropping business should have opening sales promotions; you can use other types of promotions later.

  • How do you Use Paid Advertising?

It costs money to use this method but surprisingly it is very effective in increasing sales when your business is new.One proven example is Pay per click advertising.

  • How to Use Search Engine Optimization?

SEO is very important. It makes your site rank high, consequently attracting more customers. Equally important, you should make sure your site;

  • Loads fast.
  • Provides a good user experience.
  • Has rich and relevant content.

 SUMMARY

Having taken you through different concepts on the drop shipping business model, you must be well informed now and can comfortably start a business. It is important to properly understand e-commerce businesses such as drop shipping before you start any.

HOW TO SET UP A DROP SHIPPING STORE?

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