What is drop shipping?
Drop shipping is an ecommerce business model in which the online retailer (drop shipper) sells a product to a consumer via a website without holding any physical stock. Once the order is placed, the retailer orders the product from the third-party supplier who physically ships the product directly to the customer. The drop shipper handles all of the marketing, customer service and sales of the business, while relying on the manufacturer to handle the shipping and logistics. It generally works as outlined below.
- A drop shipper creates a shopify, amazon or ebay store
- The drop shipper markets the store via social and search channels or paid ebay and amazon listings
- The customer buys a product from the store
- Often the store is directly linked to the manufacturer, placing an instant order directly with the supplier
- The supplier ships the product to the customer
- Anby issues or concerns are handled by the drop shipper
What are the downfalls of drop shipping?
There are two main concerns when it comes to drop shipping. The first is the margin and how much you actually make from the product when you take out the costs of operation and marketing compared with the product sale price from the supplier. The margin is usually very small and the rising costs of marketing make it a very difficult model.
The second issue is the control of the delivery time and the quality of the product. As marketing costs increase, all online businesses rely on return customers to reduce the costs of marketing. If you are drop shipping from China (which is often the case to increase margins) and operating from Australia (as an example) then the wait times can often be months.
You never see the physical product before it gets to the customer and have no control over the quality of packaging or the product. If you have ever purchased anything from Temple and Webster you will notice the lack of consistency with the quality of packaging, time to deliver and the final product.
Is drop shipping a viable option?
There are still thousands of businesses making drop shipping work, including businesses like The Iconic (partial drop shipping), Temple and Webster, Fashion Nova, Huxbaby, Be Activewear and more.
The secret behind successful drop shipping is the quality of experience you provide as the retailer, and the manufacturer/supplier you work with to deliver the product.
To make drop shipping successful in 2023, here are some key strategies and considerations to keep in mind:
- Niche Selection: Instead of trying to sell a wide range of products, focus on a specific niche or target market. By specializing in a particular product category or audience, you can differentiate yourself and appeal to a more specific customer base.
- Product Research: Conduct thorough product research to identify trending or in-demand products within your chosen niche. Look for products that have a healthy profit margin, low competition, and a strong potential for customer demand. Consider using tools like Google Trends, social media platforms, and e-commerce analytics to gather insights.
- Reliable Suppliers: Partner with reputable suppliers and wholesalers who can consistently deliver quality products on time. Check their product quality, shipping times, and customer reviews to ensure they meet your standards. Consider attending trade shows or leveraging online supplier directories to find reliable partners.
- Branding and Differentiation: Build a strong brand identity to set yourself apart from competitors. Create a visually appealing and user-friendly website, design a unique logo, and develop compelling product descriptions and visuals. Invest in professional product photography and consider incorporating videos to showcase your products.
- Marketing and Advertising: Develop a comprehensive marketing strategy to drive traffic to your online store. Utilize a combination of digital marketing techniques such as social media advertising, search engine optimization (SEO), content marketing, influencer partnerships, and email marketing. Stay updated on the latest trends and platforms to effectively reach your target audience.
- Customer Experience: Focus on providing exceptional customer service and a seamless buying experience. Respond promptly to customer inquiries and concerns, offer hassle-free returns and refunds, and provide detailed product information. Positive customer reviews and word-of-mouth referrals can significantly impact your business’s success.
- Analytics and Optimization: Regularly analyze your store’s performance using web analytics tools. Monitor key metrics like conversion rates, traffic sources, and customer behavior to identify areas for improvement. Optimize your website for speed, mobile responsiveness, and user experience to enhance customer satisfaction and increase sales.
- Adaptability and Innovation: Stay up-to-date with the latest e-commerce trends and technology advancements. Keep an eye on emerging marketplaces, new product categories, and changing consumer preferences. Be open to experimenting with new strategies and adapt your business accordingly.
- Continuous Learning: Invest in your knowledge and skills by staying informed about industry trends, attending relevant conferences or webinars, and joining online communities of fellow dropshippers. Learn from successful entrepreneurs and seek mentorship or guidance when needed.
Remember, drop shipping is a dynamic and competitive industry, so it’s essential to stay agile, continuously improve, and adapt your strategies based on market trends and customer feedback. Building a successful dropshipping business requires consistent effort, dedication, and a customer-centric approach.
Drop shipping Suppliers for 2023
Finding the best drop shipping suppliers (look for speed of delivery, connection to your shop, quality reviews) can greatly contribute to the success of your drop shipping business. Here are some popular options:
- AliExpress: As part of Alibaba Group, AliExpress is one of the largest platforms for sourcing products from Chinese suppliers. It offers a wide range of products at competitive prices, and many sellers on AliExpress are experienced in drop shipping. Aliexpress connects with many shopify apps such as CJdropshipping and Spocket making it super simple for customers to order. the caveat is that many of the Chinese suppliers have varying shipping times.
- Oberlo: The Shopify owned platform, Oberlo is a popular platform that integrates directly with your Shopify store. It provides access to thousands of suppliers and products, making it easy to add and manage inventory. Oberlo also offers features like automated order fulfilment and product customization (also offered by Spocket and CJdropshipping).
- SaleHoo: SaleHoo is a directory of verified suppliers and wholesalers from around the world. It provides a comprehensive list of reliable suppliers, along with tools to research products and compare prices. SaleHoo also offers a vibrant community for support and advice.
- Worldwide Brands: Worldwide Brands is a directory that connects dropshippers with certified wholesalers and suppliers. It has a vast product selection, and each supplier in the directory has been vetted to ensure reliability and legitimacy. Membership with Worldwide Brands comes at a one-time fee.
- Doba: Doba is a dropshipping platform that provides access to millions of products from various suppliers. It integrates with popular e-commerce platforms like Shopify, eBay, and Amazon, simplifying the process of adding products to your store. Doba also offers features like inventory management and order fulfillment automation.
- Wholesale2B: Wholesale2B offers a wide range of dropshipping products from different suppliers. They provide integration with various e-commerce platforms, including Shopify, eBay, and Amazon. Wholesale2B also offers features like inventory management and order automation.
The best drop shipping supplier for your business depends on factors such as your niche, product requirements, shipping times, and customer preferences. It’s important to research and evaluate suppliers based on factors like product quality, shipping reliability, pricing, and customer reviews. Reach out to potential suppliers to discuss terms and build relationships before committing to partnership.