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Dropshipping 101: All You Need to Know
Dropshipping is a term that you have probably heard of whether you are already involved in eCommerce or just starting your own online shop. Dropshipping has been a hot topic in the industry for the past few years.
In the first half 2021, Wix stores that connect dropshipping to customers’ accounts increased by more than 123% YoY.
Dropshipping allows you to sell products online without having to store, ship or manage inventory. Instead, you work with dropshipping suppliers to source products and sell them online. After customers have checked out, you send the order information to the supplier and the supplier fulfills it.
Dropshipping is a different option to traditional online retail. The merchant does not have to fulfill customers’ orders. Dropshipping saves you the cost and time of manufacturing products, acquiring stock, storing inventory and shipping customers. Dropshipping simplifies the fulfillment process for merchants. Dropshipping can reduce initial overheads, which is crucial for entrepreneurs who want to start an eCommerce business.
Wix stores that add dropshipping products to their websites increase AOV (Average Org Value) by an average of 40% and sales revenues by 79% in the first four months.
To be successful, however, you will need to do your research carefully and choose the dropshipping products and suppliers. This guide will show you how to research and select the best dropshipping products for your dropshipping company .
You might wonder, dropshipper, what is your role as an owner of a business? There are still many things to do. It’s important to research the market and choose the right products. You also need to build your online store, calculate profit margins, manage targeted marketing campaigns, and provide excellent customer service. Wix eCommerce is an all-in-one platform that can help you manage all these steps.
Dropshipping: How it works
Wix and many other all-in-one eCommerce platforms like Wix allow easy integration with a variety of dropshipping suppliers as well as print on demand companies like Printful , Modalyst and Printerify. Here are the next steps after you have connected your app to your supplier.
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- Select products. Dropshipping marketplaces can help you find the best products for your business. You can narrow down your search by using the filters and keyword search to find products that appeal to you and your brand’s values.
- Import items into your online shop, create a dropshipping price strategy, and set your prices. You are in complete control of your listings and profit margins.
- Accept customer orders. Make your dropship products visible to your customers by importing them into your online shop inventory. Customers can now search for the products they are looking for, order and pay online.
- Send customer orders to the supplier. Provide shipping details and customer orders to your supplier. Next, you will pay the dropshipping provider on behalf of your customer.
- Fulfill orders via the supplier. Each order is shipped directly by your supplier to the addresses of your customers. The system will give you a tracking number so that you can keep track of your customers. You can also use your branding on packaging if the supplier offers white-label shipping.
It sounds so simple, right? It really is simple. Dropshipping success is possible, but there are key things you need to know. Dropshipping is a way to put your products supply, and possibly your reputation, in the hands a third-party supplier. It is crucial to find reliable suppliers and high-quality products. This is why we have written a blog post about the best dropshipping products to sell online.
Dropshipping: The pros and cons
You now have a basic understanding of dropshipping and you can decide if it is right for you. These are some things to keep in mind:
Reasons to Dropship
01. Dropshipping is a great way to start selling online with little capital. Dropshipping is a great way to simplify the process of starting an online store. Dropshippers typically need to pre-purchase stock and warehouse it. Dropshipping allows you to avoid the need to pre-purchase and warehouse stock. This means that you don’t have to invest large sums of capital to get started selling online. You can easily set up an online store, connect with a payment provider, and then integrate with a dropshipping company to choose the products you want.
02. You don’t have to worry about stocking your garage. Your suppliers will take care of warehousing your products and shipping them. You will not only save money on storage, but your product range can be expanded as there is no limit to the physical space available or geographic boundaries. You can now focus your resources on marketing and customer services, since manufacturing and warehouse are already taken care of.
03. You can operate your dropshipping business from anywhere. If you have any questions regarding an order, make sure you are able to quickly and easily reach out to your suppliers and customers.
04. Dropshipping allows you to quickly test different products and adjust your inventory according to current trends. You can source products from suppliers without any upfront costs and be more flexible as there is no obligation to sell the product. You can remove a product from your website if it isn’t selling. Dropshipping platforms allow you to quickly see what’s hot and add it to your product line. This allows you to capitalize on lucrative trends much quicker than traditional retail models.
05. Scale efficiently When you have a lot of orders for traditional eCommerce, you will need to do more work sourcing, packaging, shipping and handling the products. This entire process is managed by the supplier. You can scale your business without any logistical problems and with fewer employees. The downside is that more sales means more work in some stages of the supply chain. This could be website maintenance or customer service.
Reasons to not dropship
01. Quality control is a problem when dropshipping. You need to be sure that your suppliers send high quality products to your customers. It’s difficult to monitor every shipment without checking it yourself. Shipping times are also something you can’t control. Shipping times and product quality can have a negative impact on customer satisfaction. To minimize the risk, ensure you only use reliable and vetted suppliers via a dropshipping marketplace such as Modalyst, Spocket, which is integrated with your eCommerce platform. You should also order samples to ensure that your products meet your expectations.
02. Customer service problems Customer service can be difficult If you don’t have extensive knowledge about the products you sell you may be unable to answer questions. You will need to be able to communicate with suppliers directly in order to solve these problems. You will also need to manage exchanges and returns. You may also need to manage the refund process yourself, depending on how your supplier handles it.
03. Dropshipping is highly competitive. Dropshipping is attractive because of its low entry barriers, low overheads, and easy setup. Dropshippers often source products from the same large and independent marketplaces. You’ll likely notice other dropshippers selling similar products to yours at a lower price. This is a great way to get customers and establish a market presence. However, it will result in lower profits if you try to compete with the dropshippers. Before you launch your business do some research on your competitors to find out what they are selling and charging. Then, calculate which products could be sold at a higher margin. There might be a niche that offers greater profit potential.
04. Shipping considerations: If you ship internationally or source internationally, shipping costs can vary depending on where your customer is located. Shipping costs will increase if your customers live far away from the warehouse where your products are stored. If you have multiple dropshipping platforms that you connect with and your shopper orders items from different suppliers (e.g. a Printify t-shirt and Modalyst leggings), you will incur separate shipping charges. These costs can be borne by your business or passed on to your customers.
05. Dropshipping is limited in customization You don’t have any control over the look and presentation of your product when it arrives at your door. It will be difficult to differentiate your product offerings in a saturated market without customization. Dropshipping suppliers that offer white-labeling can help you fulfill your orders and ship your products with custom branding. Printful and Printify are two examples of print-on-demand suppliers that allow you to create unique designs that cannot be found anywhere else.
Dropshipping: How can you make it work for your business?
Dropshipping can be used in many ways to grow or improve your eCommerce business. You can:
Only dropshipped products. The number of Wix shops selling online through dropshipping increased by 84% in the first half 2021. Top seller BWSSFIT uses a direct to consumer (D2C), model to sell high-quality fitness equipment to customers who want to stay fit and recreate a workout at home.
BWSS stocks similar products to other websites, but they have made a strong stand in a highly competitive market. The website is easy to navigate and features strong imagery, useful fitness content, and honest customer reviews. Their transparency about their D2C business model and international suppliers, as well as shipping estimates, appeals to shoppers who want to trade faster for greater value.
Dropshipping is a way to increase your store’s inventory. A coffee roastery might sell dropshipped espresso cups online to boost their sales. A clothing shop could sell bespoke t-shirts that are printed on demand. This route is perfect for merchants who realize that they could gain additional products but don’t have enough time or money to purchase them.
Sweet Mana offers a wide variety of skincare and lifestyle products. The company’s philosophy is all about relaxation, mindfulness, and healing the spirit. Their main product is handcrafted botanical skincare, but they also use dropshipping to expand their offerings to other avenues like travel photography prints.
Increase your eCommerce business’s revenue by selling print-on-demand merchandise. Perhaps you offer a service. You can still diversify your offering.
Little Tail Farms is an animal farm or brick and mortar business located in Dunlap, Tennessee. They use dropshipping to increase their revenue streams. Visitors to this website might want to book a farmstay, or farm tour. They can also visit the farm’s online shop, where they can buy a variety of branded merchandise from phone covers to hoodies as a souvenir of their stay.
Is dropshipping legal?
Dropshipping is legal. Dropshipping is legal if you have permission from the suppliers to sell their products. Make sure you run honest marketing campaigns. Be compliant with the online sales tax laws .
How do dropshippers make a profit?
Dropshippers must balance their revenue and costs. Consider the wholesale price of the products that you source and your marketing efforts. Price your products carefully to ensure you are making more money than you spend on dropshipping.
How can you make smart dropshipping profits? Keep your prices competitive. You want to be able to pay your expenses and still make a profit. You should research the prices of your competitors to find a range that is reasonable. Then, choose a profit margin that will win you customers.
How much does dropshipping cost?
When starting an online dropshipping business, there are three main costs:
- Wix offers a eCommerce platform plan for $17-$35 per Month
- Your website domain: $5-$20, depending on your domain name. Your domain will be free the first year you upgrade to Wix’s Business or eCommerce Premium plans.
- Your marketing strategy will determine your success. Every Wix Business plan and eCommerce Premium plan includes professional marketing tools. Additional costs such as targeted Facebook ads can cost around $79 per Month.
Will dropshipping be a profitable business in 2021?
It’s your choice. Make sure you do your research before choosing the best dropshipping products. Also, make sure to put your best marketing ideas forward. Learn about the benefits and drawbacks of dropshipping.
Dropshippers are at minimal risk. Dropshipping is a low-risk investment that allows you to explore new markets and doesn’t require any commitment to minimum orders. Best case scenario, you start a successful online business.