I can assume that you are planning or already in the process of creating your own online business. Perhaps you want to use a social media page, free message boards, or even developing a full online store.
But did you know that over 80% of young online entrepreneurs use dropshipping when selling products on their sites. This way of making money is attractive because you can sell products that are not available in your warehouse. And the warehouse itself is not necessary at all. Perhaps from the outside it looks like some kind of underground business, but in fact everything is legal and legitimate.
And in today’s article I will try to tell you in simple words what dropshipping is, where to find suppliers, how much you can earn and how to start working without investment.
Definition of dropshipping
Dropshipping is online retailing in which the seller does not interact with the goods, but is an intermediary between the manufacturer or supplier and the buyer. The dropshipper, i.e. the seller, does not have his own warehouse, nor does he work with shipping. Storage and logistics are the concerns of the supplier.
Then why do you need a salesperson? He implements his tasks: creates a product card, attracts new customers, offers bonuses to regular customers, collects orders, organizes payment acceptance, and executes transactions. The whole sales process and traffic mining is entirely on the dropshipper.
For this, the intermediary receives the difference between the price for which the buyer purchased the goods and the original cost set by the supplier.
To make it easier to understand, I will explain the dropshipping scheme in the form of an algorithm of actions:
- Dropshipper analyzes the market and highlights profitable niches.
- Finds a supplier with favorable terms and suitable products, then enters into a contract.
- Receives a list of low cost products and their photos from the manufacturer. He doesn’t need the products themselves, just the list.
- On its own or a third-party marketplace, displays product cards with a general description and description of benefits, photos, and a price that will be higher than the supplier’s.
- Promotes and advertises products and attracts customers.
- Takes orders and handles order processing.
- Forwards the request and order data to the manufacturer, confirms product stock availability.
- Makes sure that the buyer receives the products from the supplier. Although the manufacturer itself ships the product from its warehouse, it does so on behalf of the seller.
- Accepts payment from the buyer.
- Receives its monetary reward.
Most often, the dropshipper pays for the goods at the purchase price and then takes the full amount that the buyer gave. Less often, the seller redirects the consumer to the supplier’s website, which itself takes payment and gives the commission to the middleman after the transaction.
Dropshipping has given the opportunity to start a business to many young entrepreneurs who are not yet ready to take on production, shipping and storage.
In this way, goods are sold mainly through the internet. But it is possible to organize dropshipping and offline. In this case, it will be useful as an additional means to expand the assortment in small retail stores.
Instructions for beginners
First of all, I would like to say that you should prepare thoroughly before starting work. Do not skip any point from the instructions, even if it seems optional to you.
And be prepared for mistakes. Yes, they will happen anyway, no matter how much you avoid them. I’ll help you dodge most of them, but others will appear. I’m not telling you this to dissuade you from dropshipping, but to make sure you’re ready for anything and don’t give up at the most crucial moment.
Market Analysis
So, where to start? First of all, analyze the market. Study current trends, the needs and desires of customers, how much you can earn in various areas, the presence of competitors in a particular niche.
I want to dwell on competitors. Carefully analyze their activities: what are their web sites, why some sellers have closed and others are thriving, after which there was a turning point that brought success or failure. Once you have the results and conclusions, do better than other sellers.
And you can find out what the consumer wants and is interested in using Google ,Yandex. Wordstat or Google Trends tools.
Selection of goods
The first step flows smoothly into the second. After analyzing the market and based on the results, you can identify several niches that bring a decent and stable income to sellers. Then you can get busy comparing products in these niches to highlight the most profitable products for dropshipping.
The following criteria are important in product selection
- Initial price. Dropshipper profits are affected by the retail price and the markup that the seller can make. And the cheaper a product is, the more likely it is to be bought. Therefore, products should be priced as low as possible so that even with the markup, they will want to be purchased.
- Cross-selling opportunities. This is a type of sales in which, together with the main product, related products or additional services are sold. In order to realize cross-selling, most often use discounts and bonuses. Almost every product can be sold with additional products, but this scheme is best realized with electronics and household appliances.
- Shelf life. To provide yourself with regular customers, you can sell disposable goods or products with a short shelf life. For example, clothes and shoes, especially children’s shoes, are suitable for repeat sales, as they need to be changed more often than adult ones, and food products. Infoproducts can also fall into this category, if you need to subscribe to them every month, six months or year.
- Seasonality. It is better to choose all-season goods, so that the income does not sag in the months when no one needs the products. So, Christmas tree toys will not buy in the summer, and swimsuits to order in the winter. But smartphones, linens, stationery, books, jewelry and other similar items are used all year round.
- Product knowledge. The seller must understand what exactly he is selling, what qualities and characteristics the product has, what are the advantages and disadvantages of the product. This is necessary so that the seller can answer any question the buyer may have. It is also desirable that the intermediary likes the product. But a wrong strategy would be one in which products are chosen only because they are liked and do not pay attention to other criteria.
- Authenticity and quality of products. In Russia, the sale of fakes is illegal. Therefore, before selling goods of supposedly famous brands, think about the consequences. To work in the plus, and not in the minus, sell only quality goods from official suppliers.
- Trends and fashion. Goods that are at the peak of popularity, most sellers want to sell. They believe that they will be able to get rich quickly on such products. This may be the case for the first time. But what happens after that? Usually, all fashionable goods quickly depreciate in value and become unnecessary. In addition, you will have huge competition. Therefore, I advise you to engage in selling those products for which the demand will always be. But it is still useful to take into account fashion and trends. To do this, I advise you to follow what is interesting to the younger generation in social networks. They are often the engines of progress.
- Return or rejection of the product. In most cases, the expense due to product returns is borne by the seller. There are categories of goods that are most often returned. First of all, these are clothes and shoes, as the buyer may not fit the purchased products. Therefore, before choosing any product, consider how high the probability of its return is.
You need to be cautious about selling oversized, hype, seasonal, and certification-required items that may have a wide range of size, color, style, etc.
If you can’t decide what to sell after all, take a closer look at the following products:
- stationery;
- smartphone cases;
- Unisex clothing in universal sizes, such as T-shirts with prints;
- skin care products;
- children’s toys;
- bedding;
- auto parts;
- household appliances;
- household goods;
- jewelry;
- household chemicals.
You can try more profitable products first, and after that gradually expand your assortment with highly specialized products that you would like to sell.
Sourcing
This is an important point, which must be treated with all responsibility. It is the supplier that determines whether the buyer will be satisfied with the goods.
When selecting partners for cooperation, the following factors are important:
- Payments. Before signing a contract, make it clear what your profit will come from and whether you need to make additional payments to the supplier. Try to avoid companies that demand money above the retail price.
- Manufacturer. It is better to choose suppliers who are manufacturers of goods. If they are also intermediaries, you will get the products with a markup, which is extremely unprofitable.
- Information for buyers. Find out what information is placed on the parcels. The supplier may indicate their own data, not the seller, which makes the consumer want to buy not from you, but directly from the manufacturer.
- Feedback. Cooperate only with those companies that always and quickly answer phone calls and letters. Also pay attention to how the manager communicates, whether he answers questions in detail.
- Delivery. Buyers like it when they have a choice. This applies both to the range of goods and delivery methods. It is good if the supplier cooperates with several courier services. The speed of delivery is also important, otherwise the goods may be refused. Therefore, check not only the supplier itself, but also the services that will deliver parcels.
- Product data. Suppliers should inform the seller about changes related to the goods, especially the availability of products in stock. Discuss this point with your partners so that they will promptly inform you if the product is out of stock.
You can find a supplier on websites that work on a dropshipping basis. These can be marketplaces such as AliExpress, Amazon, eBay and others. Choose the goods you would like to sell, find out who the manufacturer is and contact them to offer cooperation.
Another way is to write to major manufacturers directly and ask if they would like to try working on this scheme.
The last option is to turn to supplier databases. The list of best suppliers for dropshipping includes:
- Suppliers.ru,
- Dropo,
- Happiness Provider,
- Anno Danini,
- MegaOpt24,
- OptList,
- Alibaba,
- AliDropship,
- Wholesale Central,
- Worldwide Brands.
Small companies usually work only with sole proprietorships or LLCs. In order to transfer the order to them, you need to create and execute a document in which all the necessary information will be spelled out, and then send it. And don’t forget that you need to specify the buyer’s address as the delivery address.
I recommend thinking through the following points:
To stand out among competitors and encourage consumers to buy goods exactly in your store, you need to create competitive advantages. Everyone’s price is reduced to the limit, so this option falls away. But you can win in another.
- Web platform. Create a user-friendly, clear and attractive online service. If you lack skills, take online courses on website creation.
- Delivery regions. Expand the boundaries and offer delivery not only in Russia, but also in neighboring countries.
- Feedback. Take care of the feedback form, through which the customer can contact the support team. It is better if the platform will have various contacts, so that the buyer can communicate with the seller’s representative in a convenient way. In addition, tech support managers should be as polite and competent as possible.
- How you will learn the opinion of buyers. The easiest way to find out what customers want is to ask them about it. Conduct surveys to understand the pros and cons of your business, after which you can strengthen the advantages and eliminate the disadvantages.
Sales and Promotion
Once you’ve decided what to sell and who to get your goods from, it’s time to figure out where to make sales. I suggest looking at the 3 main types of dropshipping marketplaces:
- Online shopping. The most understandable, popular and profitable option. A full-fledged service with a catalog of goods, a shopping cart, payment acceptance, and a feedback form is able to attract more customers and arouse their trust. Such a service can be created from scratch, and you can use the services of marketplaces and place the store on already known sites.
- Lending. Web pages can be used until there is no money or desire to create a full-fledged site. On the landing page it is necessary to place the basic and important information about the product and its advantages.
- Community in a social network. You can create your own group and advertise products in it, or you can place ads on third-party pages. It is more profitable to be the owner of your own gTroup, where there are detailed descriptions of products, videos and photos, a form for accepting orders, information about the cost and size, buttons to go to payment and other conveniences for work.
Before you start dropshipping, you need to make sure that you know how to attract customers. Without this skill, you will not be able to make money. Consumers themselves will not come, because there are enough famous stores and choice of goods. The products may simply be overlooked.
There are several ways to attract and promote:
- advertising in a social network, which clearly demonstrates the appearance and purpose of the product;
- contextual advertising, installed through Google Ads and Yandex.Direct;
- SEO-promotion – getting a flow of interested customers by improving the quality and ranking of the site;
- popularity of marketplaces will increase the chances that your goods will be seen if you decide to place your store on such sites.
It is better to try to use several methods of promotion at once, then analyze the results and choose the most effective sources. It is possible not to spend money on placing advertisements, creating and promoting the site, but then the turnover of goods will be lower. The more you invest in promotion, the more significant will be the return.
How much you can earn
As I said, in most cases the dropshipper’s income is the difference between the price the customer paid for the product and the retail value. The seller’s profit will depend on how much he sold. And this figure cannot be accurately predicted.
Therefore, it is impossible to give a specific amount. On average, sellers earn at least 50,000 $ per month. Other beginner middlemen give up after a week or two, if nothing works out.
To get a good profit, you should not avoid spending on advertising and promotion. That’s why it’s not a good idea to start dropshipping without investment. 7 METHODS TO MAKE MONEY
Pros and cons of dropshipping
The pros and cons of the activity are next, which will help to summarize the above.
- You can start with no initial capital. Or it will be small. Due to the fact that it is not necessary to purchase goods at once, sellers avoid many costs and risks.
- You don’t need a warehouse, and you don’t have to think about proper storage conditions.
- All routine processes such as packaging and delivery are the responsibility of the supplier.
- It is possible to cooperate with several suppliers at once, if such a thing is not prohibited by the contract. This can significantly expand the assortment.
- There is no need to stay in one city or even country. You can manage the process from anywhere in the world.
- A wide range of products that can be sold under the dropshipping scheme.
- High markup. For some categories of goods, it is possible to set prices several times higher than the retail price.
- Dropshipping can be the basis for testing products. For example, having tried to sell this or that product, you can determine what is in demand and open your own production.
And the disadvantages of this way of earning money:
- No total control. You cannot influence the retail price, the availability of products in stock or the quality of goods.
- All the “bumps” go to the retailer. Low-quality goods, a mistake with the delivery address, poor packaging, damage to products and much more. In any case, the buyer will demand explanations and compensation from the seller.
- A big risk to the reputation of the online store. This point follows from the previous one. There is a possibility of losing your customers because of someone else’s mistake.
- Profits may not meet expectations. Beginning businessmen may not be able to cope with the promotion of goods, which means that sales will be low. And don’t forget that dropshippers need to sell more than regular salespeople, as they only get a commission, not a full payment.
- High competition. This is a problem not only for dropshippers, but for the entire field of commerce in general. In any niche there will be competitors, especially the most profitable products.
Conclusion
There are many trends in the sales industry. One of them is dropshipping. In the article, we looked at what it is and how it works in Russia. I hope the information was clear and useful to you.
Finally, I want to say that anyone can engage in dropshipping. But you need to be prepared for failures and lack of profit at first. At the same time, I still believe that it is worth it to try this type of business. But first you need to learn how to attract customers. If you have this skill, then the business will go uphill.
Thank you for your attention to the publication!