DROPSHIPPING WITH SHOPIFY 2019: HOW TO GET STARTED
Historically, merchants often sell goods in a way that requires them to open stores on the street, advertise products, manage everything with the purpose to sell products to consumers. Products sourced can come from suppliers or the company itself. But with the boom of e-commerce in recent years, the dropshipping model is gaining more and more attention because of its fast and easy nature in management. So what is dropshipping and how can Shopify help you do it? Let's find out.
- WHAT IS DROPSHIPPING?
- HOW DROPSHIPPING WORK?
- STRENGTHS AND WEAKNESSES OF DROPSHIPPING
- GETTING STARTED
- CHOOSING A BUSINESS IDEA
- CHOOSING THE RIGHT DROPSHIPPER
- BUILD YOUR ONLINE STORE
- MANAGE EVERYTHING YOU HAVE CREATED
- IS IT WORTHWHILE?
WHAT IS DROPSHIPPING?
Dropshipping is a business model that lets you operate without maintaining inventory, owning a warehouse for products and having to ship products to customers yourself. All you have to do is partner-up with a dropship supplier that manufactures and/or warehouses products. They’ll pack the product and ship them directly to your customer, on your behalf.
HOW DROPSHIPPING WORK?
- Your online store will hopefully have a lot of traffic like other traditional stores, but online. They come to see the product and decide to buy it or not.
- Your store receives the order and forwards it to a third-party supplier. The customer’s order information is routed to your supplier for fulfillment process. You only pay the wholesale price of the item and retain your profits.
- Supplier will pack the product and deliver the order to the customer. That product will be packaged and labeled with your branding if you choose. Customers will not know that you’re dropshipping.
STRENGTHS AND WEAKNESSES OF DROPSHIPPING
Dropshipping sounds great, but before making a decision, we should look at every aspect of dropshipping. Including both strengths and weaknesses to give you a more objective view of this business model.
- The first strength of dropshipping is the ease of preparation to enter the market. All you need to do is have an online store with Shopify, find the right supplier and sell products to customers.
- Secondly, the barriers to enter the market are very low. When opening a traditional store, you have to spend money on facilities, decor and model management. This can be time-consuming and financially cumbersome. But with dropshipping, those worries disappear. The amount of capital needed to start a dropship is usually small, most of it is spent on building websites (store design, themes, apps, etc.).
- The store can be operated from anywhere and anytime. Dropshipping does not require an office, warehouse or staff. The only thing you need is a laptop with an Internet connection.
- The risk of dropshipping is generally low. It is much lower than other types of business models. With low capital, there is almost no time or inventory pressure. In addition, this helps online store owners focus on calculating margins and making smarter business decisions.
- With a low entry barrier, the competition is very high. The convenience of the dropshipping model has attracted many merchants. If these people sell similar products, substitutes or niche products, you will face fierce competition. Nowadays, most dropshipping products come from China and dropshipping merchants also take this route. To face less competition, selling products from other countries, which has some unique characteristics that match the demands of specific set of customers could be a wise choice.
- Low profit per sale is also a weakness of this business model. Because it’s dependant on your product, the supplier will charge different shipping costs for the product which can impact your margins. That means you have to sell more and more products to get the revenue enough to scale in the future, requiring full performance from the store owner to gain customers. But if you dig more into a niche market, you can still find some products that will bring higher profits per sale. For example, Fidget Spinners in 2016, the wholesale price was only $1 - $3 with minimum order quantity of 100 pieces and the retail price was $15 - $25 per unit. But there are some factors that impacted this trend, and it didn’t last for long since wholesalers and merchants recognized the potential of this product. That led to high level of competition and increase on wholesalers price. In addition, the Fidget Spinner didn’t serve a long-term purpose, that’s why the price was bearish after 3-5 months, coming back down to its real value. The lesson is, although dropshipping requires hard-working on sales to gain profit, sometimes, it can bring unexpected opportunities for merchants to gain huge profits. Don’t be impatient for this, follow the criteria “Slowly but surely”.
- Although the nature of dropshipping means you don’t have to keep an eye on the inventory, it comes with less control. Because you can not see the process of keeping or shipping the product, something could happen such as inventory damage or any issue on customers’ experience and you have to take responsibility to make everything right. That’s why the process of choosing a legitimate and professional supplier is very important.
As mentioned, to get set up for dropshipping with Shopify is pretty easy, but everything easy should be approached with caution.
CHOOSING A BUSINESS IDEA
This is the most important place to start with every type of business. The first thing you should do is to brainstorm your business idea and build everything around it such as logo, brand identity, advertising content and collection. Business ideas can come directly from hobbies and passions. Or for others, it may come from market trends, through what they research and learn. For many new to the dropshipping market, the concepts of business may not be solid. So research, test and correct your business ideas until you reach a high level of certainty. There are some tools to help you with this step.
- Google Trend
Google Trend is a great tool for knowing if a market is trending up or down. It is not to assure that this market has potential in the future or not, but the numbers can help you to calculate and predict trends, thereby finding the right product for your business.
- Google Keyword Planner
Google Keyword Planner is the second tool that helps you learn more about a specific market. This tool can tell you beyond trends, what customers are learning about around them. It can give you insight into niche markets.
Niche markets often being considered by experienced merchants who understand the market and process of dropshipping like a pro. But gaining knowledge about niche markets is also important for long-term dropshippers.
- Check the trading volume of goods
CHOOSING THE RIGHT DROPSHIPPER
Once you have a business idea and a detailed plan in place, the next thing you need to do is find the best supplier for you. For dropshipping, finding a good supplier is essential because this is the second most important factor for the success of this model. Legitimate and quality suppliers often have the following characteristics:
- Expert Staff and Industry Focus
It is important for a supplier to have a large number of experts in many markets. This makes it possible for beginners to explore and ask suppliers questions about some of the markets they want to explore.
- Support Representatives
A quality supplier usually has a sales support representative ready to take care of and answer any questions merchants have. This is essential because problems such as return orders or trouble in the processes are real. In order not to interrupt the sales process, these problems need to be addressed immediately. Therefore, having a sales support representative is very important.
- Invested in Technology
Investing in technology is extremely important because the process from receiving orders to delivering to customers needs to happen extremely quickly. In addition, investing in technology such as real-time inventory, a comprehensive online catalog, customizable data feeds and an online searchable order history to increase merchants' enjoyment of working is another way to increase the legitimation of the supplier.
- Organized and Efficient
Reputable suppliers often go hand in hand with a logical order and delivery process that ensures the speed and quality of the order. You can try delivering test orders to check the smoothness of the process. Pay attention to how they handle the ordering process. Tracking the process to answer of are products shipped quickly? How to track package information and the quality of the package when delivered.
BUILD YOUR ONLINE STORE
To turn your plan into action, you will need an e-Commerce platform. Choosing the right one for your business is like setting up a traditional store. The themes have to match with the concept of the store, being easy to view product and find information about it. All of these are for the purpose of improving every customer’s journey. Make them remember the store. This is the last of three important factors to start dropshipping. Here are a few pointers on building a website.
Shopify is the most comprehensive e-Commerce platform on the market. With new features, tools, resources and apps being added regularly, you’ll find that it’s easy to use and run a business on the platform. Plus, if you get stuck you can reach out to a Shopify guru who will personally guide you through any steps for free.
- Shopify Theme
Shopify themes are a way for you to decorate your online store and are sold a lot on the Shopify Theme Store. Initially, while you are only testing out free topics, a free theme will get the job done. Once you start earning some money, you can invest in buying a new theme to design a better store.
- Install Orbelo
Most people agree that the Shopify/Oberlo combination is the simplest way to start a dropshipping business. Oberlo allows you to find products online that you can sell the same day. You will be able to find products in a number of popular niches. If you have any questions, you can contact Oberlo for help, social media sites or Shopify support.
MANAGE EVERYTHING YOU HAVE CREATED
Now your has been built. From a business perspective, the way it works is, the supplier and the website are integrated. Your next job is how to market your product and start earning your first profits. Because you are a beginner, you should use simple tools at low cost and gradually familiarize yourself with the model, going up with certainty:
- Setting Up Email Marketing
Shopify integrates this functionality through apps on the Shopify App Store. Create a list of sales emails. Build content to advertise your product. The content could be regular commercials, product reviews or promotions.
- Setting Up a Facebook Shop
Facebook is a social network with the most users and also an indispensable sales channel for any business. Create a Facebook page for your store, integrate product listings from Shopify. The last thing is to create posts to increase interaction within your community.
- Setting Up Instagram and Pinterest for Shoppable Posts
It's the same social networks as Facebook but Instagram and Pinterest will help your customers buy products directly from your posts. This increases the percentage of orders received. Shopify App Store has apps that support this ability.
- Learning SEO
Search Engine Optimization (SEO) will help your website rank higher on the search engines and this is one of the most important things to advertise your product. You need to learn SEO tactics because more than half of online sales usually start by a search keyword on Google.
IS IT WORTHWHILE?
Finally, dropshipping is a business model that can help you make money without doing much. But with its easy nature, the appeal to all those who want to make money is huge. High competition requires you to have the right tactics, and a quick thinking mind to change when unexpected situations may occur. In addition, though simple, it is necessary to acquire more knowledge about marketing tactics, sales tactics and customer needs to survive in this market.
The strengths and weaknesses of this model are outlined above. Refer to it and maximize on the strengths as well as transforming the weaknesses into opportunities. There are many good examples of Successful stores with dropshipping for you to look at and learn from. Dropshipping is a good model in today's e-commerce era and is well worth a try.