Building a Victorious Drop Shipping Business: The 7 Steps
Ecommerce businesses have exploded in popularity in the last few years. This is due to a number of factors. One of those is the improved technology that underlies online purchases – they’re more secure, and online shoppers have greater confidence in their protection. However, the rise of drop shipping has also enabled more people to open online businesses without having to invest in the infrastructure that usually underpins retail businesses, such as warehouses and the like.
With all that being said, running a successful drop shipping business is easier said than done. While it offers the chance to build success and help you build revenue, you will need to know the right steps to follow. I’ll run through what you need to know in this post.
Make Sure You’ve Got the Right Niche
While ecommerce businesses are thriving, there is a lot of competition out there. Chances are good that you will not be able to run a company that offers something for everyone. It’s just too broad a category, and too competitive with major shopping sites like Amazon, Walmart.com, and even eBay. What this means is that you need to specialize, or choose a niche.
The niche you choose is very important in a number of different ways. It needs to be hyper-focused. It’s not enough to say that you want to focus on gardening, for instance. Instead, you need to decide whether you’ll focus on flower gardens or vegetable gardens. You may also want to go deeper down the rabbit hole. For instance, do you want to focus on the wider topic of organic gardening, or on earth-friendly vegetable gardening tools and products? That’s a great example of a narrow niche with less competition than what you’ll find with gardening in general.
With that being said, you need to make sure that the niche you choose is something that interests you. There’s little point in starting a business focused on something that you are ambivalent about, or, worse, that you actually dislike. For example, if you have no interest at all in gardening, then you will not be able to find the right products for your customers if you chose to start a gardening-related drop shipping business.
In addition to having a personal interest in the niche, you need to make sure that there’s good profitability. Generally, this comes down to two things – the price that you can charge for products, and the amount of markup that you can set over your cost. In general, you can make money in one of two ways.
You can sell lots of low-value products with little markup. This allows you to deal in volume. You can also choose to sell fewer products, with a focus on those with a higher price tag. This allows you to maximize profitability.
While both methods have their utility, my personal recommendation is that you focus on products with good profit potential. Why choose profit over volume? Simply put, you will still need to invest the same amount of money and time to market a product that you sell for $10 as you would one that sells for $1,000. Obviously, there’s more value in the $1,000 product than there is in the $10 product.
Build Your Marketing Expertise
Now that we have touched on the role of marketing in a drop shipping business, we need to explore it a bit more. Your drop shipper will handle warehousing, inventory control, and shipping the product to your customer. That takes a load off of you, but it means that you need to double down on the marketing side of things. Really, you need to become a digital marketing expert, but there are some key areas where you need to focus during the beginning of your business.
Brand – First and foremost, you want to start building your brand. You want something as iconic as possible. For instance, no one questions what Nike does, or Apple. Their brands are firmly cemented. You want something similar. Or, you can take a look at some of the most successful online-only businesses, such as Geek Chic, or Tee Fury. Again, these two companies have a firmly cemented brand that resonates with their audience.
Logo – Get your logo nailed down early on. Not only do you need to think about the shape of the logo, but you need to put some thought into the colors that you use. Not sure why that matters? There’s a lot of psychology involved, but this post from 99 Designs sums things up pretty well.
Explore Ad Programs – There are two ad programs that you need to start using right away. Those are Google AdWords, which allows you to target your audience through the search engine giant, and Facebook Ads, which allows you to target your audience through the social network. They both work similarly, but they are unique in many ways. Take the time to explore these options and learn how they work.
Optimize Your Website – Your website is the foundation of your marketing efforts, and it needs to be optimized to your niche and your audience. You cannot afford a cookie-cutter website here. You need something customized to your unique needs and goals. For instance, is scarcity a driving force in your sales? If so, you’ll need to make sure that your product counts reflect limited availability to drive those clicks. Do your customers want to see reviews before making a purchase? You’ll want to make sure that your reviews are displayed front and center.
Create Added Value
Your customers will come to you for your authority in your niche, but they will keep coming back because of the value that you provide. This doesn’t necessarily mean that you need to offer bottom-dollar discount pricing, though. It simply means that you need to give them more than they expect, consistently, from touchpoint to touchpoint.
How can you do that? Actually, there are quite a few ways. One of those is to offer bundles. You’ve seen these before from other retailers. Think about those retailer-specific Xbox and PlayStation bundles. Each of them comes with specific games not found with other bundles, and they often include specially designed controllers and the like. You can do something similar, even if you can’t strike a deal with Sony or Microsoft. How?
One way to do that is to think about items that are commonly purchased together. Obviously, console systems and controllers, or consoles and games are good examples. However, you can take the same path in any niche. For instance, if you’re in women’s fashion, is there a blouse and skirt combo that sells often? Is there a scarf and glove combo that is popular? You get the idea – combine two or three items that often sell separately into a single bundle and offer that bundle for slightly less than what your customers would pay for all the items on their own.
Make Sure Your Suppliers Are Up to Snuff
In the ecommerce world, it is absolutely essential that you work with high-quality suppliers. Why? They will make or break your reputation. It doesn’t matter how well designed your website is, or how slick your email marketing materials are, if your products suck, or your supplier drops the ball on shipments, then your customers are going to defect to your competitors. Working with low-quality suppliers is the best way to go out of business, fast. Do your due diligence when vetting suppliers based on a number of factors, including:
Delivery time (promptness)
Delivery duration (length of time from order to door)
Dispute rates (number of customer disputes)
Dispute resolution (how those disputes were handled)
Types of complaints (product quality, damaged in shipping, poorly packaged, etc.)
If there is one constant in the world of ecommerce, it is change. Consumer expectations and shopping habits, digital security best practices, even the technology underpinning ecommerce websites can all change very quickly. You need to remain agile and poised to pivot when necessary. This goes for your products as well – you could sell several products that you absolutely love, but your customers never really show an interest in. These will need to be removed and replacements found. You may even need to be ready to pivot when it comes to the niche that you serve.
Go the Distance with Customer Service
Customers today expect the businesses they patronize to provide outstanding customer service. In fact, the overall customer experience has become more important than ever before. As a business owner, you must be prepared to deliver on that expectation. You must be there when your customers need you, and even anticipate when that might be and be there before they realize they need you.
When it’s all said and done, running a successful drop shipping business is not only possible, but it can be done even if you’ve never run an ecommerce company before. However, you do need to go into the process with your eyes open. Choose the right niche, stay agile, be committed to delivering outstanding customer service, and make sure you’ve got your marketing nailed down. If you’re not sure you're ready to pursue success on your own, I invite you to sign up for my 'Six Figure Sunday' course (click here to sign up), where I teach you everything you need to know to earn a six-figure income while working just one day each week.