You know this for a fact — there is absolutely no business without risk. If you're planning to try your luck in the dropshipping business, no one would dare promise you a comfy, smooth journey. Nor are there any guarantees that earnings will come as effortlessly as you may like. On the contrary, in fact; there are bound to be bumps ahead.
You might feel that your products aren't selling as well as expected, or you have been spending too much returning items that are either knock offs or damaged. All these difficulties might ultimately hurt your profit, which would definitely take its toll not just on your business, but also on your financial well-being as a whole.
In the world of dropshipping, you have to reduce what eats away at your profit margins. Below are 3 lessons on how to make sure that your dropshipping business is as profitable as it should be:
Lesson no. 1: Get the right products
There are right and wrong products to dropship. The idea is to sell the right ones and avoid the wrong ones. The drill seems quite simple, right? However, determining which products to sell and not to sell can be a challenging process. Luckily, you don't have to drastically deplete your profit by resorting to trial and error just to choose the products that will sell like hotcakes and rake in profits.
Now, the question, what are the right products to sell? The response is quite simple: Go for what's cheap, light, and different.
Sell what's cheap
Selling relatively expensive items could make for very slow business. Selling costly event tickets through your e-commerce store, for instance, could be futile for your profits, especially if the demand isn't as high as you'd project, or if the competition is too stiff. For dropshipping products from other countries, like China for example, setting the threshold at less than $200 per item ensures that you aren't venturing into a super-risky deal.
It also helps you buy more items for less, because purchasing items wholesale makes it easier to sell your wares at reasonable prices. That increases your profit margins. To find cheaper items to dropship, look into popular niches with plenty of accessories, like smartphone cases or fishing gear.
Sell what's light
The bulkier an item is, the greater the chance that it might kill a portion of your earnings. Dropshippers compete to give their buyers the lowest prices, which sometimes results in slicing a significant portion off your profit just to make room for the wholesaler's costly delivery charges, as well as your own shipping costs if you offer free shipping.
Dropshipping heavier products, such as machinery, can be profitable once you get the hang of it. But it requires a lot of savvy networking and close relationships with suppliers and shipping companies. If you are just starting out in your e-commerce venture, it's probably better to test the waters with smaller items than to jump into deep water immediately and suffer great losses.
Sell what's different
You constantly buy groceries at a nearby store. That's your grocery store's niche — food and drink and various household items that you need. Because of its location, its selection, or its friendly staff, or maybe some combination thereof, you return for business every week or so.
By establishing itself as something unique, giving you a combination of benefits you believe you can't get elsewhere, it's made you into a regular customer.
The same thing goes for the world of e-commerce. You need to offer your customers something only you can offer. By finding a niche where you are the master, customers will definitely keep returning to you. This can be achieved through special offers, product exclusively, or by going the extra mile in packaging, customer service, or delivery speed.
Lesson no. 2: Get the right suppliers
Finding the best, most credible supplier means safeguarding yourself from untimely deliveries and fake products. Finding the right supplier means looking for them in the right places. Now, how would you know if you are searching in the right spot?
One option is to look for sources that list numerous suppliers in many different locations. SaleHoo, for instance, boasts a directory containing more than 8,000 verified suppliers in more than 100 countries across the globe.
As such, finding a supplier with SaleHoo might just be what you need to ensure that you would be selling genuine items at reasonable cost, delivered in a professional and timely manner.
After getting into the right channel, remember these three G's in looking for the right supplier(s):
- Get in touch with more than one supplier – You can only get the best deal once you shop around. After you've procured a list of trusted suppliers, contact them and ask about their prices, product specs, and shipping policies. Compare between each, and see which best fits your e-commerce goals. And remember to always have backup suppliers, in case your go-to guy falls through.
- Get some conversations going – Once you trim down your list of suppliers, now's the perfect time to negotiate (or haggle over) the exact terms of a deal. Here, you can get a feel for whether you could get along well in the future. If you think you'd be able to work well with one another, proceed to the next G.
- Get samples – This is extremely important, especially if you're importing goods. Go over the samples and look for any damage and flaws. Use it the way a customer might use it and put some additional stress on the product. After all, e-commerce business is all about your credibility, and you don't want to put your name behind things that are second-best, or worse, fake. By acquiring samples, you may also get a feel for the delivery times, which is very important for your buyers.
Lesson no. 3: Get into the best sales channel
Finally, after getting the right products from the best suppliers, you are now ready to be a Power Seller. But first, you have to choose the sales channels that can best cater to your selling needs. eBay, for instance, has become the largest online marketplace in the world since its founding in 1995. Other eBay alternatives can be found here.
There are also plenty of web and mobile apps out there that can help you develop your online store into a strong, nimble e-commerce business. SaleHoo Market Reasearch Lab, for instance, is an awesome way to identify hot items that would profit well. For a list of other e-commerce web and mobile apps, click here.
Now that you've read about how to make your dropshipping endeavors a truly rewarding one, it's time to share your stories. What are your best practices to ensure that your e-commerce business is as profitable as it should be? Let us know in the comments below.