Dropshipping is an ecommerce method to fulfil a customer’s order by purchasing from a third-party wholesaler or manufacturer who ships to your customer under your brand. This implies that you never get to see the actual products of each order fulfilment because you don’t hold any inventory.
It is a unique but popular method in which most sellers are practicing on third party selling platforms and self-hosted platforms such as: Amazon, eBay, Bonanza, WordPress, and Shopify.
(Dropshippers are sometimes loosely referred to as brokers, affiliates or resellers, although they are defined differently. For example, resellers can resell a service, or physical/digital product.)
Dropshipping sounds great when you first hear about it. You probably noticed these first:
- Low capital (or at least, the least expensive)
- No need to keep physical stock/inventory
- Logistics handled by suppliers
- Test and throw i.e. easy to give up
And you’re all excited because, wow that sounds like something to start off with easy and fast! Well… yes and no. “Yes” because the benefits are quite true, no lies about that. “No” because it’s definitely not going to be easy when you’re first starting out and the sweet results come only after a certain amount of effort. Not fast at all.
Furthermore, “low cost” isn’t as true as it sounds like. In fact, it could be way over your budget, depending on how big your goals are. Especially when you’re planning long-term, you need to think about cost of your platform. For example, paying for a monthly subscription in email marketing solutions like MailChimp, ConvertKit and also the platform you’re selling on e.g. Shopify.
Further down this article, I’m going to cover common misconceptions that people have about drop shipping and what to do about them.
4 Misconceptions People Have About Drop Shipping
1) You don’t need to care about inventory.
Wait… I thought it would be handled by my supplier?
You won’t have a physical inventory, but that does not mean you don’t need an inventory solution.
On this point, if you’re bad at organisation, you’re probably on the verge of pulling your hair out. I nearly did too, by the way.
Why is an inventory solution so important?
- Saves your from data entry, or any manual typing you have to make
- Handling multiple suppliers
- Fulfilling orders
- Tracking shipment
- Tracking sales
As a dropshipper, you might be sourcing from a few suppliers, because offering a wider range of products in your niche would increase the chances of catching attention of potential customers. Having a good inventory solution allows you to put focus on the products that you wish to carry, and not let the hassle of handling multiple suppliers or large inventory restrict you.
A quick google search would show you some paid inventory management solutions, and also free ones with restrictions. Be careful to read if it integrates with your selling platform.
A popular one with a nice interface and integrates perfectly with Shopify is Oberlo, which has gathered quite a number of positive reviews. It allows you to import products from Aliexpress directly into your store i.e. automates products, order management, and shipment, saving you loads of time to focus on other aspects of your business. You can start and run your dropshipping store in literally minutes.
So what should you look out for? Your inventory management software should at least:
- Automatically update product quantity in inventory across sales channels
- Automatically update product details e.g. size, colour, material
If you don’t think it’s worth it for you to invest in an inventory management solution yet, manual typing would be free. Think spreadsheets. You could use google spreadsheets, or Microsoft Excel. Worrying about the formulas, and not sure what to include? No problem, head over to TradeGecko, and download this free excel inventory management template. Everything from there is self-explanatory.
However! This means that you need to manually check your supplier’s website for their inventory levels, then update your shop with the number. It’s heavy admin work. If you’re someone with a lot of patience, you can stick with this. If not, consider the prior investment first.
2) Your product quality is as good as it appears online
Because, that computer mouse is as sleek as it can be with that superb gleam. Er, sorry to disappoint.
Product photos. Product photos are taken professionally to look gorgeous. On hand, your customers might have a different impression of it. It might not be as high quality (esp. for fabrics, jewellery, and gadgets) as it looked.
Just a week ago, I purchased this awesome looking daily planner from an online shop and it was completely different from what was advertised. To put it bluntly, only the attractive useful pages were showcased and described in the product gallery and descriptions. I was not too happy when I found that half of the planner consisted of single lines and less of the colourful doodles, to-do lists, and motivational inserts.
Product specifications. Using jewellery store as an example, it’s important to know that the type/material concerns our skin. Nickel, lead, cadmium are things that you don’t want in your jewellery because they are harmful to the skin. Your responsibility would be to know these stuff. To ask your supplier questions like, do you use Zinc Alloy or Lead Alloy? A good supplier would be able to produce certified test reports for proof, especially if they test for 14k gold, 928 silver, etc. because you need to ensure that that customers are getting what they paid for. For example, a customer with sensitive skin would not mind paying more to get a genuine 928 silver necklace as long as she doesn’t get rashes on her skin. You just have to deliver that promise.
So, here’s my advice:
Know your products inside out, and leave no room for what-ifs.
Your niche could be from baby products to mobile accessories to machine parts. My question to you is, how well do you know it? I’ve seen different advices from experienced people – some recommend to choose niche that you know and understand. Others recommend to choose a niche that is popular and known to sell well. For example, choosing to sell tech gadgets might be more ideal in sales than fluffy pillows.
Whatever niche you chose, whether it’s something you are familiar with or you chose something unfamiliar but reckoned to sell a lot, just make sure that you keep yourself updated with its latest trends/updates/advancements/news/comments/reviews. Basically what’s new and what people are saying about it, and what information is associated with it.
Only then will you be able to correctly describe a product such that your customer sees it, reads it, and knows what to expect.
3) You are going to be happy with your suppliers and customers.
It’s like bad hair day. You don’t know when it comes.
Think about translation issues for different languages, commission fees that you’re charged with, or regular out of stock items for bestsellers. And many, many other issues. Communicate clearly with both your suppliers and customers, as miscommunication may cost you a lot.
In a general niche, you can come up with a set of selection criteria when choosing your suppliers. So if you’re going to work with someone, they must at least meet a certain standard. Say for example, if you expect your supplier to reply at least within 2 days, or to be available on live chat, then write than down as one of your criteria. You can also sign an agreement template with your supplier, typically called a Drop Shipping Contract or Agreement. With this agreement, you and your supplier know what to abide by. And if you’ve selected the suppliers to stick with and order from, it means they have somewhat passed your selection criteria. Just think about what you can do next on your part for effective communication and maintaining a good relationship.
Also try to sign up for a help desk software, such as GrooveHQ or Freshdesk at an early stage for efficient customer support. Use tags and view reports for an overview of nagging issues and measure your efficiency. Both have free forever plans if you’re going to maintain the store alone. Prepare some SOPs beforehand as well, especially when dealing with refunds and returns. Just remember:
- Don’t oversell, or promise something that can’t be delivered
- Follow up when you can, as both good or bad reviews can be useful to you
4) You don’t need to spend a lot of time and effort.
It is actually more work when you’re starting off, because most people would be on a bumpy road while they’re trying to find a way to continue walking on. It is also more work if you’re looking to constantly expand your drop shipping business.
But lets not get too negative… I would say, it’s less work if you’re off that bumpy road, you’re at a point where you’re absolutely familiar with handling your drop shipping business, and getting things automated. Automation includes your social media and content marketing. (Btw, this is also where some satisfied with current status owner would hire a virtual assistant to fulfil orders daily, and earn a sweet passive income).
To be very blunt, lazy, no motivation, no perseverance equals to failure.
It doesn’t matter if you’re new drop shipping, or stuck everywhere that you basically have to google answers to everything. If you persevere on through constant learning and put all hard work and effort into maintaining your business, the fruits of labour at the end would be sweet.
If you find yourself earning a satisfactory amount but kinda working your ass off, you probably need to come up with a good schedule to balance your time.
Relate to Your Marketing Strategies
Can you somehow link the 4 points that we mentioned above with your marketing strategies? Think about how each point would indirectly help you boost sales:
– Having a good inventory solution
– Having quality products
– Having effective communication
– Having business goals and energy to reach high
I would probably write another blog post about that, but for now, perhaps you can take some time to brainstorm on your Dropshipping Supplier Agreement with this free template in the resource library!