Whether or not you know what dropshipping is, stay with this article and we'll take you through how you can approach setting up a splendid business plan that has countless impressive benefits and very little in the method of drawbacks!
Dropshipping will allow you to have your cake and eat it – to take full control of an amazing online business selling physical products with your branding on them. But unlike business models that involve actually creating a product, there’s no upfront investment and no risk.
The only challenge is finding the dropshipping providers to work with and discovering the business model in the first place. The only reason more people aren’t already actively involved in dropshipping is that they don’t know what it is or how to get started.
With this article, you don’t have that problem!
So, Exactly What is Dropshipping?
Dropshipping is really a fulfillment model. Fulfillment in a business sense of course really means ‘delivery’ and so dropshipping is a model that ensures your products will be delivered to customers on time, intact and without costing you a huge amount of money.
The way this works is quite novel though and also solves any challenges you might have had regarding manufacturing etc.
That’s because dropshipping allows you to simply pass on orders directly to manufacturers and wholesalers.
You list the products on your website as though you were any online store like Amazon and then when someone places an order, you simply send that order on to the wholesaler or manufacturer that creates the products.
They will then send the product on to the customer and they will handle everything from the delivery to the packaging to the product itself.
You get to keep a proportion of the profit but you don’t need to worry about providing the service, designing or creating the product, or even storing huge amounts of inventory. This means there’s no upfront expense – only the profit that comes from selling lots of copies of your products. That sounds great right?
Dropshipping vs. Other Online Business Models
This might sound quite familiar to digital marketers reading this. Sounds a lot like affiliate marketing right? This is another business model where you don’t actually create the product but instead just pass on orders by doing marketing in order to get a cut of the profit.
So what’s the difference?
Actually, there are a few huge differences that make a massive difference and definitely give dropshipping the edge by far.
Firstly, when you sell an affiliate product you have two options:
• Sell a digital product and get around 50-75% of the commission
• Sell a physical product and get around 4-8% of the commission
So that’s a pretty high commission for a digital product! But there are big problems with digital products. First and foremost, digital products appeal primarily to young, tech-savvy buyers and largely to people who are already versed in digital marketing in many cases.
You might be willing to buy an ebook on making money online if it is well marketed and looks good.
But would your grandma? And would your Mum? Would your Dad?
Would many of your friends?
Most people still don’t like digital products because they aren’t getting anything tangible in return and they don’t want to read a book on a screen. Unless the information is so valuable to them that they’re willing to spend lots of money for this privilege, you’re going to struggle selling it. And some people will struggle even to grasp the concept of a digital product.
When you sell a physical product though, you’re making yourself a much larger potential audience and thereby opening up the potential for a much larger profit. At the same time, physical products will usually solve very specific problems for very specific people and be easy to describe and explain. This all makes them far easier to market to a wider audience.
And when you sell a physical product through a dropshipping business, you’ll be acting as a reseller. Despite the fact that you never actually receive the product, you will still be reselling in theory and thus normal pricing conventions apply.
The normal pricing convention in this particular scenario is ‘keystone pricing’. In simple English, that means you make a 100% profit – selling products for twice the value you pay for them and essentially getting 50% commission.
What’s even more important though, is the way that dropshipping keeps your customers engaged with your brand.
When you sell an affiliate product to a customer, you are recommending them a product that you didn’t create and that you have no hand in creating. You’re admitting that it’s not ‘your’ product and that someone else created it and you’re sending the customer away from your website in order to buy it.
Now ask yourself, which brand they’re more likely to remember: yours? Or the brand printed on the product they bought and the website they bought it from?
Furthermore, it now becomes highly unlikely that they’ll ever buy multiple products from your website. They’ve been sent away from your brand and so if they’re going to do some shopping, they’ll be doing it on the site where they bought the affiliate product!
With dropshipping though, the manufacturer is a silent partner. This is just the same as buying from Amazon – the company has no involvement as far as the buyer is concerned and so they can focus on buying from you and from dealing with you. The result is that your business looks much more professional and the customer stays engaged with your brand much better – potentially even placing multiple orders for multiple products!
Branding Your Products
Better yet, some forms of dropshipping actually allow you to add your branding to the product, thereby communicating loud and clear that it was you that created the product and greatly strengthening your brand awareness, visibility and professionalism. You can now sell your very own branded clothing line, or your very own supplement line – truly cementing yourself as a professional in the industry and an expert.
This is called ‘white label dropshipping’. The term white label simply means that the company you’re using to drop ship through will be a completely silent partner – not adding their branding or logo anywhere to the products themselves or to your packaging. The ‘white label’ is the simple white packaging/sticker that will be placed on your items and that the company will then print your logo onto that white label, in order to allow you to design your own branded item.
And in some cases, you can even design some aspects of the product.
For example, a white label supplement company will let you sell supplements that come in pots bearing your logo and your company name. But what’s more, is you can often even decide what goes into them. For example, if you were to design your own multivitamin or multi-mineral, you could choose precisely the vitamins and minerals you wanted to put into it and then give it a name of your choice like ‘Multi Core’. Add your logo and some fancy packaging, pick a price point and sell it.
But despite having complete control over the dropshipping in this manner, you don’t need to create any design specifications or blueprints, you don’t need to work with a manufacturer and you don’t need to put in a ‘MOQ’ (minimum order of quantity) and potentially get stuck with thousands of dollars of supplements that no one will buy.
It really is the perfect business model, offering truly passive income, zero risk or up-front cost and complete control.
How to Find a Dropshipping Company
Now comes the tricky part – finding a dropshipping company.
Unfortunately, not every business out there is going to be willing to offer dropshipping services because they benefit you much more than them!
But more and more companies are starting to offer the service over time to adapt to the changing demands of online business. The only challenging is finding them.
Fortunately, there are a number of directories that store all this information for you to easily find online and these sites make life a lot easier.
Some good examples include DropshipDesign, Doba, Shopster and Worldwide Brands. We also look at some free alternatives.
But there are other methods you can use too. One is simply to use good-old Google! Try searching on Google for ‘clothing dropshipper USA’ or ‘white label supplements dropshipping UK’ and you’ll find lots of sites come up.
Another useful method is just to contact companies directly. Find a product you like, get the contact details of the manufacturer and then drop them an email. You may find that even if the company doesn’t offer dropshipping right away, they’ll be willing to look into it.
When discussing with dropshipping suppliers, there are a few things to keep in mind. Some might require fees, or might use specific terminology that you’ll need to refer to. So it’s definitely worth checking that out to make sure that you find a company that’s willing to work with you and so that you come across well!
The main thing you need to do is to convince them that you’re a real reseller and not a commercial customer. Wholesalers want to avoid letting consumers buy from them directly as a way to get the resale price. Likewise, they want to avoid working with resellers who are going to waste their time with lots of questions only to help them sell two items…
How to Find GOOD Partners to Work With
What’s also crucially important, is that you find high quality dropshipping partners to work with and avoid companies that aren’t going to offer a good service.
Remember, your reputation rests on the quality of their service. If they don’t deliver your product on time, or if the product arrives broken, then it’s your reputation that will take the hit and your site that won’t make any more sales!
What’s more, is that some dropshipping companies are ‘fake’ and actually won’t get you a very good deal.
How can a dropshipping company be fake? Simple: they are actually just resellers! Their game is to work with dropshippers, to sell their products to you at an increased price and then to take the profit. Of course, this means you’re not getting the very best deal at all.
But another tip is just to test the service out yourself first. Message the company to let them know you’re interested in working with them but ask to see an example of one of their products first. A good dropshipping company should be more than happy to send over a sample, as that way, they can demonstrate their expertise and hopefully secure your business.
Another good idea is to ask them what they do for quality control. It’s common for factories with large outputs to let mistakes creep into their work and this is how people can often end up with products that don’t quite work or that look misshapen. Ensure this doesn’t happen by discussing the measures that the company goes to in order to check everything produced meets a minimum standard.
Setting Up Your Online Business
Now you know what dropshipping is and how to find and work with dropshipping partners, what’s left is to actually build your business.
The first step is to identify your niche/industry. In other words, what type of product are you interested in making? Who are you interested in targeting?
Do you want to create a health and fitness product aimed at young men?
Or do you want to create a beauty product for older women?
Either way, it’s useful to identify the size of your potential market, the competition that you would be facing in that market and the trends. You should be able to identify a good price point for your product this way, as well as finding a niche where there isn’t too much competition.
You then need to think about the product you want to sell and how this is going to tie in with your overall brand. This is important too – there should be a synergy between your brand, your message and what it is you sell. Sell something you believe in and that you understand and aim for something that you can describe easily.
Ask yourself: what problem does this product solve? What makes it different/better than the competition?
From here, there are two ways to find your audience.
The most brilliantly simple method is simply to list the product on eBay or on Amazon. That’s right: you can sell a product on eBay that’s dropshipped. In fact, a huge proportion of items on eBay are dropshipped!
This makes your life incredibly easy – there’s no marketing, no promotion, no writing blog posts…
You’re just finding a product, listing it on eBay and profiting!
The other method is a little harder and more involved but it also gives you the ability to build a large, loyal customer base and to sell a lot more as a result. This latter option is of course to create your own
website or blog, to create regular content and to that way develop a large, loyal audience by positioning yourself as an authority in the niche. From there, you can then recommend and sell products.
This is where your skill as an internet marketer comes in. Your job is to create a website, to write regularly content that offers something different while still being highly searchable and to update regularly. The more content, the more there is for Google to search and the more you can start to build a large audience. Grow your mailing list, answer questions and create a social media presence with strong branding that has a very straightforward mission statement.
The only ‘new part’ will be to create an online store. An e-commerce store will allow you to sell products online through a shopfront that looks a little like Amazon or any other online store that you might have used in the past. This lets you display your products along with photos and descriptions and this helps you to make them more desirable.
There are actually some methods you can then use as well that will help you to encourage more sales. These are the psychological strategies that smart shop owners use in order to make items appear better value, or to tempt people into increasing their order.
This is a perfect way to grow from a small blog into a massive business, selling multiple products and generating a huge income. And once that’s underway, then you can start to consider the possibility of designing your own products from scratch.
And of course, there’s nothing to prevent you from combining your eBay store with a website. This way, you can start off selling products from eBay and drawing in customers and only then grow that store to branch out with your own website. If you take a look at many of the stores on eBay, you’ll see that the bigger ones now have their own websites and e-commerce sites too.
Conclusion
There are countless possibilities with dropshipping and it’s crazy that more marketers aren’t using this model to create profitable businesses. It’s time you got involved! Start looking for dropshippers today.
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