What is dropshipping?
Dropshipping is a retail fulfillment method in which the retailer operates without maintaining any inventory, handling product or shipping. Instead, when a product is ordered by a customer, it is purchased by the retailer, then it gets shipped to the customer. Essentially, the retailer works as a middleman.
Instead of keeping inventory for the products, it is only listed on their online store. Each time an online order is placed, the retailer makes purchases on behalf of the customer directly to the supplier and the supplier ships it to the consumer. This method allows the retailer to operate without any inventory.
This does sound a lucrative online business because you don’t have to deal with an inventory. However, just like drop shipping every online business or in fact, any business for that matter has its pros and cons.
Table of content:
- Dropshipping Pros and Cons
- Finding a Product that sells
- How to improve your Facebook Ads
- Sales without Ads
- Suggestions for First-time Dropshippers
Dropshipping Pros and Cons
Advantages of Dropshipping
The great thing about dropshipping is it’s super easy and inexpensive to start with the potential of growing into a full-time business. Since its easier to start this is something great for seasonal earnings. Below are a few good things about dropshipping.
Low Startup cost:
As mentioned earlier, dropshipping is a fulfilment method where the retailer works as a middleman. The only main requirement to start a drop shipping business is to create an e-commerce store. This is made super easy with platforms like Shopify, which handles all the coding aspect of the store and payments. Has drag-and-drop tools to create a website.
No inventory
Drop shippers don’t have to invest up-front for the inventory. They never deal with any inventory or the entire process; picking, packing, and shipping which is taken care of by the supplier.
Low Risk
Since there is no need for a physical location, human labour, machinery, warehouse. This reduces the risk because there is essentially no startup cost associated with the business. This can be turned into a seasonal business because you can control when you want to start and stop.
Wide range of products
Dropshipping is mostly associated with suppliers from a popular site Ali Express. The website is a much cheaper version of Amazon.
Ali Express is full of great products, and users are able and directly purchase from the suppliers. The website contains many unique products that many people don’t know about. This means as a retailer you have a wide variety of unique products that you can sell.
Disadvantages of dropshipping:
Reading over the advantages would make it seem like it’s super easy and simple to start an e-commerce business. Again, with anything there are downsides, so here are some disadvantages to this type of business.
Very competitive
Since the barrier to entry is low there is a lot of competition. This makes it difficult to decide on a product as there would be many drop shippers providing the same product at a different price.
Low-profit margin
This is due to the competitive nature of this business. Many people are doing the same as you would be, this would mean you would have to undercut your competition to be able to make more sales.
Learning curve
This would vary based on your skills and experience. This would not be a challenge for someone who has done something similar online or if they have any marketing experience.
As a beginner, you would need to understand marketing tools, social platforms, techniques; would require extensive research on products, learning a platform. This could be a lot of information to take in, for someone with no exposure to it.
- How to choose products
- How to run Facebook ads
- How to make sales without Facebook ads
- What they would do with $500 to spend on marketing
- The biggest mistakes they have made
- Advice and inspiration for first-timers
Finding a Product that sells
Picking the right product is the most difficult part of this business. As this is considered the core of the business, it is very important to find a good product that sells. Otherwise, it would mean doing everything all over again with a new product.
There are more than a million products but here are a few ways to narrow down your search:
- Search for other people’s ads
This would be time-consuming but if you can find products that people like that is a good sign. The best place to start is Facebook, scroll through your feed and like each product ad you see. This will let Facebook know you are interested and you will see more ads. The goal with this is to see what kind of products is getting traction. - Find what people are buying.
Head over to famous websites like Amazon and Ali Express and look for products. On Amazon, scroll through their bestseller list and see what people are buying in each category. On Ali express, find a product, and go through the reviews for it. This will give you a better understanding of the product. - Google trends
Google is the biggest search engine and people use it for shopping as well. Google records these trends and can be accessed here.
Search for anything and Google trends will show you a chart for when it is the most popular. This is great if you are focused on a seasonal product. - Find the product you are comfortable with.
Once you have listed a few winning products narrow down with a niche you are knowledgeable with. It’s better if you understand the product as that would save you audience research. - Start small
It is recommended to start small with a cheap product. This would reduce your chances of losing money because it would be easier to return. Also, you are more likely to get sales because a couple of dollars worth of product won’t break the bank for anyone.
How to improve your Facebook ads
Facebook is hands down the best platform for advertisers. It has the potential to reach every demographic and a massive audience in one platform.
Facebook makes it easier for its advertisers to narrow down their audiences by age, gender, interest, geolocation, profession, the list goes on. For advertisers, this is key data to make good use of their budget as the specific audience a higher chance of a conversion. Also, they make is reach inexpensive to run ads on their platforms which are a great deal for any drop shipper wanting to run ads.
Here are a few key points to consider when running your ads on Facebook:
Find the right product
Here is the thing, ads can be adjusted to target a variety of different audiences but if the product isn’t appealing it wouldn’t convert into a sale.
Find a product that is small, unique, fancy, or useful. This could be a simple product like a cute phone case. This attracts many people especially women and it will have much higher margins. Check out some cheap and unique products at Ali Express to get $19 credit.
Video ads
Video ads can be a hassle and could be very time consuming but are underrated. You could use the supplier’s pictures or take your own, but video ads are better than picture ads:
- With most content being static pictures, video auto-playing is more likely to grab the user’s attention.
- Video ads can describe the product much more in detail and can be creative in many ways.
- Video content is easier to consume. Many people just are not interested in reading the details of a product.
Multi-testing
Try with multiple sets of audiences with multiple ad images or videos. On Facebook it is called A/B testing, this is where you can test multiple audiences with the same picture or vice-versa.
Sales without Ads
Marketing your product is highly recommended because by bringing it in front of people you would make more sales compared to organic sales. But what if you have a low budget or no marketing budget at all?
Marketing with ads could be challenging especially since that requires a decently big-budget, multiple testing and has a learning curve. Well, no worries there are 2 great ways to drive traffic to your online store.
Influencer Partnership
Influencer partnership is meant for Instagram because it is a platform full of niche-specific pages. The concept behind it is to reach out to a popular page and request them for a shoutout or an ad. Influencers already have the trust built with their audiences which will help you sell your product.
This depends on your niche if it is a competitive niche like lifestyle, chances are it’s overcrowded and the top pages would charge anywhere between $100 – $300. However, if the page is very broad like a lion page, chances are you can find an influencer for $30 – $80.
Make sure to ask the influencer for their engagement stats. That will help you negotiate the rate for the ad posts.
Organic growth
Organic traffic is the only method to drive people to your product without spending on ads. There are two great ways to drive traffic organically:
Becoming an influencer
By becoming an influencer, yourself you can create content and create a following for your page. Leave a link in your bio and promote your products.
Pinterest is an amazing tool, as it is a visual search engine. You can create your content in the form of pins or could use other’s content on your boards – a collection of pins.
Suggestions for First-Time Drop shippers
Dropshipping is a lucrative way to make money especially considering that it eliminates a headache of dealing with the product entirely, no need to stockpile or ship products. However, like any online business, there is a learning curve, which takes time and effort to master.
My advice would be to plan out your strategy thoroughly before jumping into it. This includes:
- Researching your audience and product
- Setting up a marketing strategy whether it be spending money on ads or time on organic growth. If you want to get organic growth, I recommend getting a following first this would save you monthly fee on your store.
- Creating a timeline for yourself to stay on track
- Stay focused and be patient because you are running a business, it would take time and consistency to create a successful store.
- Do not be disheartened if your first product fails. Consider it a learning experience for your next store.
Finance Flourish 