Dropshipping or drop shipment, is a way of selling online through which the company that owns the online store acts only as an intermediate in the transaction. As an intermediate, this company may be responsible for some aspects of the transaction such as customer service, billing, and so on, however, the wholesale company is the actual owner of the product and is responsible for preparation and shipment to the end customer.
These types of situations often utilize blind shipping to conceal the actual manufacturer of the goods from the end consumer.
Advantages of dropshipping for your business
One of the main advantages of dropshipping is that initial costs are greatly reduced. This is a great way for companies to start an e-commerce business without making a large upfront investment. Costs such as inventory, acquiring the goods, and storage are incredibly high. Since these costs are absorbed by the manufacturer or provider of the goods, the barrier to entry in this industry is relatively low.
The margin for error in the beginnings of starting an e-commerce company utilizing dropshipping are greatly reduced as well. Since all complicated procedures are taken care of by the manufacturer, there’s very few tactical tasks a company can make errors on.
Dropshipping also gives businesses the ability to carry a wide array of products. Since products are inventoried by the manufacturer, e-commerce companies may have a near limitless number of product offerings.
Dropshipping gives companies the ability to scale in a flexible manner. Usually growth in sales equates to growth in responsibilities and tasks on the part of management. However, when utilizing dropshipping, e-commerce companies’ sales growth does not directly correlate to an increase in task management needs. While customer service needs may increase, tasks such as inventory, sales, cost and margin management, and other factors will remain largely the same.
6 Steps to create successful e-commerce with Dropshipping
1. Establishing the perfect niche market
If you want to be profitable in the dropshipping industry, you’ll need to have a niche. The market is greatly polluted with tons of product offerings in common industries. Have real data readily available on your market sectors, products, competition levels, and the existing demand. Pay special attention to whether or not you are differentiating yourself by product offering or price positioning. These will be key indicators of your success.
2. Search for reliable suppliers
The right choice of our suppliers is a key issue for the success of our e-shop.
It is important that the Dropshippers we work with have a stock synchronization system, which allows there to be coordination between the supplier and your dropshipping business and prevents you from offering products which are out of stock. It is also a good idea to make sure that the suppliers we work with are professional and meet delivery deadlines and manage returns and exchanges correctly.
If you operate with more than one supplier, you will be able to offer more variety of products to your customers and you will be able to select the ones you work best with.
3. Attractive and functional website
In order to be able to offer different products to clients, a company must have a well-functioning e-commerce website. However, website feel, look, theme, and layout will all play a role in defining user behavior.
A website needs to be strategically mapped and linked so as to work an electronic shop on a website. Online shops allow you to place orders and pay for them electronically directly from the website of the online store.
The website must be attractive so as to influence potential customers to purchase products from you, it must also be functional and easy to navigate to make the experience more enjoyable.
The website is the letter of presentation of our business, so it must project the style and values of our company, and show a professional image and confidence that invites the potential customer to browse our website and make purchases through e-commerce.
We may have prepared our website in detail, but it will be of little use if no one knows of its existence and it hardly receives any traffic from visitors.
It will be necessary to carry out various marketing strategies to publicize your website and your online store. Among them, some like content marketing, SEO, social media, mail marketing, etc. stand out. All strategies will make more and more people know about your company and the traffic to your website increases, so you can attract new and potential customers.
5. Customer Service
One of the functions that our company is responsible for is customer service. This is a key function since it will determine whether potential customers choose our company and continue to choose it to meet their needs. A call center software, a virtual PBX or a special number such as 900 numbers or 902 numbers can be a great option for customer service depending on the type of your company.
6. Stock control
An essential point for the success of the system is the coordination between our company and all supplier companies. Within the coordination, it is very important that an exhaustive control of inventories is carried out and updated in real time so that we have the most truthful information possible.
In order to achieve this coordination in inventory control, it is necessary to establish a common system with all the supplier companies to manage the stock or to choose as suppliers only those companies that have tools that allow the updating of the inventories in real time.
The dropshipping technique is a perfect alternative for those companies that are starting their journey in online commerce, as it allows them to develop their electronic store without large investments and in a very flexible and scalable way, which adapts to its path and growth.