Before we go into the meat of the content, let’s talk about my experience with dropshipping. A little background about myself, I was working for a corporate company as a Brand Marketer, and I’ve actually doubled a lot into digital marketing in the beginning. Not only that, I went for courses with e-commerce gurus, clickbank gurus, etc.
The first product I’ve actually sold was a weight loss program through writing a single blog post on WordPress. That really changed my mindset when it comes to making money online because that was my first ever sale and it was extremely exciting. So if you have not achieved your first sale, stick with me, and let me try and help you achieve that because when you do so, it will be extremely fulfilling.
For those who doesn’t know what dropshipping model is, It’s a very simple yet powerful business model. There are basically 3 parties in this model, you (the entrepreneur), the dropshipper, and the customer.
When you market your product to your customers, and when they purchase it from you, what you do is that you order it from the dropshipper and the dropshipper will directly ship the product to your customer under your company name and your stipulated address. The customer doesn’t know the existence of the dropshipper, they think that they’re buying from you. I’ve personally ran a dropshipping business, manufacturing business and a trading business before.
But what sets dropshipping apart is that you NEVER ever have to stock inventory. How powerful is that!?
The money that is stuck in inventory can be easily used for other more beneficial things such as marketing, design, improving your services and many more. These reasons are what sets dropshipping apart from other online businesses and makes it so powerful.
Without further ado, I’ve came up with a sure fire way in terms of dropshipping success and it’s called the URBG model.
U – Understand
R – Research
B – Build
G – Grow
If you split up your entire dropshipping business process into this, you’re going to have a very profitable and scalable business thanks to the internet
First and foremost, you need to understand the dropshipping business. Understanding the supply chain and also the fulfillment process is vital to your business. It’s important that you know this so that you know how to structure your business and allocate your resources efficiently.
You would also need to understand the problems and the opportunities when it comes to dropshipping businesses. A common problem that people face in dropshipping is where a customer orders a certain product and when you try to order it from your supplier and they inform you that it’s out of stock.
How can you solve this problem?
You need to understand the kinks when it comes to dropshipping businesses so that you are prepared to solve it. By doing your research when it comes to best dropshipping suppliers and the best practices on running it would bring a huge benefit. You wouldn’t want to be stuck with overselling problems.
2.1. Product Research
You would need to know what products to sell and which products are currently in demand in the market.
A very simple way to do this is to go on KickStarter, GoogleTrends or Wish.com. These website can help you to understand the product in your mind consists of demand or not. On top of that, if the demand it present, what you would need to establish is the profitability of the products.
You would need to know if the margins are high enough or big enough for you to sustain your business. It’s very important to have at least 50% margins when it comes to dropshipping because there are bound to be problems and errors.
In conclusion, you need to make sure your product is in demand, the margins are good enough and lastly, low competition products. When it comes to understanding competition involving certain products, go onto sites such as Amazon and Ebay and have a look at how many people are selling the same product and their pricing.
When you achieve the three criterias which are:
-Products are in demand
-Margins are high enough
That’s when you know you are sitting on a gold mine.
2.2. Researching the right suppliers
You need to find good suppliers and ideally, multiple of them supplying you the same products. Overlapping products is necessary, the reason behind this is because you need to have a backup plan. You wouldn’t want customers to come to your website, place an order and you realise that supplier has ran out of stock on that certain product.
One of the ways to resolve this is to have a very reliable supplier that has your product in stock 99% of the time. You can achieve this by speaking to your supplier’s sales representative, manage the expectations and also have certain terms in place.
For example, If I want to place an order for a certain product, the supplier would have to compensate for the losses. Another way to to resolve these issues is to have multiple suppliers with overlapping products so that if Supplier A doesn’t have it, you can get it from Supplier B as long as they are similarly close.
An easy way to look for suppliers is if they are from China, I would usually look for suppliers at China because their product cost is extremely cheap. You can check out these websites which are AliExpress and DHgate.
On top of that, if you are using Shopify, which I STRONGLY suggest you do, Shopify makes dropshipping so simple. You can connect with apps like Oberlo, Dropify and not to mention, they are also already linked with DHgate and AliExpress and you could upload products in a matter of minutes.
When it comes to dropshipping and dealing with suppliers, you need to accept that there is a trade off, you don’t have to hold inventory, your dropshippers hold it for you. However, you need to know that dropshippers aren’t perfect as well, they may mess up some of the orders and ship to the wrong address. Unfortunately, you would have to own up to these mistakes, because in the customers’ eyes, they are only dealing with you, they don’t know that your dropshipper exists.
So it’s very important to be aware of this and you need to take FULL responsibility for your supplier’s mistakes when it comes to customer service. ALWAYS try to get compensation from your suppliers because if they mess up, they would have to pay up for it, right?
Have all these kind of things in place and pre-discuss all these with your suppliers before you choose to work with them.
2.3. Researching sales channels
You would need to know which platforms or websites to sell your products.
The easy way to do this is to go on Amazon or Ebay. Look for demand data so that you know how many people are searching for these products. A fantastic tool to do so is JungleScout, it allows you to study the demand on Amazon and Ebay etc.
I always believe in building up a long term perspective for your business. In the end of the day, you should always try to sell it on your own website because it is the only thing that you truly own. If you go onto Amazon and Ebay, the owners could double up commission on these websites and there’s nothing you could do about it.
However, if you’re just starting out as a dropshipper, I would strongly suggest that you go onto Amazon or Ebay just to get some traction and some sales because in the short term, it is very beneficial. Your end goal should be always trying to drive sales back to your own website. If you put it out on Amazon, any Tom, Dick and Harry could come in and sell it at a cheaper price.
However, with your own website, if you do fantastic marketing and add a lot of value to your own website, you’re going to do a lot better compared to selling it on Amazon and Ebay.
First of all, I strongly suggest that you use Shopify because it makes dropshipping so simple. Hook it up with Oberlo, Dropify and if you’re a creative person and you’d like to take it to another level, use apps such as Printful and Pillowprofit where you can design your custom products.
These would increase the barrier of entry towards a whole new level because if you’re a graphics designer or a photographer and you want to print your designs or your work onto T-shirts and sell them, these websites are the best apps out there that can help you do so.
This is also another section of dropshipping that is called print on demand dropshipping model whereby you create your design, brand and products but when someone places an order from you, you place an order from Printful. They print your design on a T-shirt, mug, pillows or even a sock and ships it directly to your customer.
This would add another significant advantage to your business if you’re creatively sound or if you have a graphics designer as your business partner. Personally, I think the print on demand model works a lot better than sourcing products from Aliexpress or DHgate because anyone can just come into the market with the exact same product that you’re offering but with apps like Printful, you can create your own pattern and design, and you can also patent the design and copyright it and do whatever you want with it.
That would definitely take a little bit more work, but I definitely think it’s worth it especially if you’re creative in sound and you like to develop your own brand (which i strongly suggest you do).
The print on demand model is definitely something you should look into as well.
By focusing your efforts on dropshipping, you’re able to use all of your time and resources into marketing, SEO and customer service.
When it comes to the dropshipping model, you should always try to add value. Improve the customer experience, the shopping experience and the whole story that your company tells. You need to tell stories or else you would just be involved in a price war and that will not be good in the long term.
Not only that, I strongly suggest that you specialize and focus on a certain product. For example, if you dropship home and decor products, don’t go into pet food all of a sudden just because the margin is good. You don’t want to spoil your brand and you want to tell a consistent, focused story that your customers could relate to and build a long term business.
Because dropshipping offers you the opportunity to free up so much working capital, you need to focus on providing outstanding service.
Make your customers love you, not just your products. They could buy your products elsewhere if you’re a traditional dropshipping model.