Why Should You Start A Dropship Business Online?
Now while you may think drop shipping is some form of delivery service via parachute (I know I first did) you might be in for a surprise. Drop shipping is a legitimate way to earn income online that takes away the risk of having to store product while at the same time making it incredibly easy to ship and to not run into the standard distribution problems.
Drop Shipping: Does It Work?
I know I’m in love with the idea of not having to purchase product before an order. This guarantees that I won’t be stuck with extra inventory that I can’t sell. This means that I won’t have to pay money to store it, to package it and to ship it. Those costs alone add up very fast. Saving that money allows me to use it towards marketing and expanding my business. The way drop shipping works is that you advertise a product on your website, Ebay, Amazon etc….. then when it sells you go to your third party and purchase it from them (of course at a lower cost than your own) give the third party your customers information and then have them ship it. It’s that simple; however, not a lot of people are successful at it. Why is this you ask? It is because they lack the proper motivation to carry on when things If you want to increase your sales you first need the right mindset. Read my article on motivation about how you can achieve this. Now that we know what drop shipping is here are simple steps to follow when drop shipping.
Find a platform to sell on.
Now while this seems like a no brainer, you should pay close attention to the rules regarding drop shipping as well as the payment structure for each site you want to sell on. For instance, if you loathe using paypal then you might want to stay away from Ebay as many customers prefer to pay via paypal for their purchases; however, a platform like amazon can be easier for certain payments.
Each platform will have its advantages and benefits; however, it is up to you to find which one works for your business model.
Find a wholesaler
Now that you have a platform to sell on what you need is a wholesaler. A wholesaler is someone who can offer you the products at a reduced price which is usually closer to what the manufacture paid. Wholesalers are extremely important as they send the products you are selling to your customers. By using reputable wholesalers and establishing a relationship with them you can even get greater discounts on products and increase your sales.
Vetting your wholesaler so you know they are legitimate and aren’t just another third party trying to screw you for a price is extremely important. If you have a wholesaler who isn’t really a wholesaler then you risk your product not being as described and you risk that they won’t ship on time. This can affect your sellers rating which is a reflection of customer satisfaction and without customers well we wouldn’t be able to sell.
However, although finding and working with wholesalers is worth the time and effort of finding a good one; I understand if you just want to just ship the product without talking to another party. The good news is that there are other ways to drop ship without paying monthly fees to wholesalers. If you want to know how check out my article on how to drop ship with ebay and amazon.
Find a product to promote
Now while this is a no brainer that you need a product to promote, too many people just try to sell anything and everything. Their line of thinking goes something like this. If a potential customer comes to my store and doesn’t find something in a specific category they want they can still browse at my other categories so by broadening my products I still have a chance to make the sale. This way of thinking actually doesn’t increase your sales but distracts from them.
Think of dangling a carrot in front of a rabbit to get it to run. Now if you dangle one carrot in front of the rabbit it only has one choice and will try to eat only that one carrot; however, if you dangle many carrots around the rabbit it may get confused and end up just looking at each carrot wondering which one to take. Likewise with people, we have a horrible attention span, which is why if you try to sell everything you might end up with nothing. It is better to choose a niche that you want to specialise in then go too broad and confuse your customer.
Don’t go in blind
While this expression is used for super secret operations where information is the key to winning the battle or war, this same rule applies for drop shipping and don’t think for a second that drop shipping isn’t a war. Just choosing a random product that you think will do well won’t cut it in today’s market. You may get lucky and it actually becomes a hot product; however, you are more likely to have it on the virtual shelf of whatever platform you are using to sell collecting dust. What you should do is to use the tools at your disposal to gather information and then base what you are going to sell on that information.
There are a couple of different tools I use when determining trends and what I should sell within my niche.
The first tool is Jaaxy. Jaaxy is a fantastic keyword tool that allows you to search specific keywords not only that but it shows you the competition for the keywords and even allows you to further analyze the keywords in order for you to really focus on how many people are looking for what you are promoting. Using this tool you can see if it is worth investing in a product which will do wonders for your sales.
Looking at other postings and researching how many of the same items your competitor sells is a good indicator of establishing whether that item is worth selling. However, lets say we find a competitors item that is in our own niche and he has sold tons of that product. We now know two things from this, we know that it is popular and we know that if we can beat our competitors price point we can sell even more.
Ok, so now we know that it without a doubt sells….the next step is trying to determine what they actually paid for the product. Now, short of hacking our competitors accounts how can we determine this information. Well it is actually quite simple, a lot of competitors will use a stock picture which is probably taken from the website where they are fulfilling the orders. So since we have the pictures all we have to do is reverse engineer the process. So how do we do this?
- Click on the picture
- Right click on the picture and choose source information.
- Follow the link and there you have it, easy as one, two, three.
Setting the price
Ok, so now we know what is selling, where our competitors are getting their product from and the price they are buying it for and selling it for. Now we have to see if we can match or beat that price. Actually, we can do this without creating a complex algorithm. Using New Life Auctions, it calculates our revenue if we set our price at a certain amount and buy it for a certain cost as well as all the associate fees with selling on different platforms.
There you go a sure fire way to get started drop shipping. So congratulations on getting started; however, dealing with competitors is only half the battle, the other half is creating a customer base and how to deal with complications along the process.