Guest post by Manish from E2M Solutions
When many online entrepreneurs start the research process for launching an online business, they are often given the advice to look into drop shipping. On the surface level, drop shipping sounds almost too good to be true. Essentially, it allows you to run a profitable online business without ever purchasing or even touching your inventory.
Someone else does all the hard work, while you sit at home on your laptop keeping your website running. Furthermore, you can even use drop shipping to run your Amazon or eBay store, eliminating the need to create a website of your own for ecommerce.
However, drop shipping is not all feathers and unicorns. There are certainly some risks that come along with it, and if you are not prepared to handle them, it could eat significantly into your profit margins. Before you decide to partner with a drop shipper for your online business, be sure that you weigh the pros and cons. Let’s discuss everything that you need to take into consideration beforehand.
1. Niche Store or General
The type of store you choose to run impacts everything from the name of your business to how you design your website and formulate an SEO strategy. Before you launch, you will need to conduct lots of research to make sure that your product is actually going to be bought by enough customers to make you money.
Online companies can be broken down into two general categories: general and niche. A general ecommerce business is going to sell an item that is common, popular, and appeals to most consumers, such as t-shirts, cosmetics, or sunglasses. A niche e-commerce store is far more specific and sell to a smaller segment of consumers who share the same interest. Niche products would be something like Star Wars themed pet costumes or vegan snack items. While those items may not appeal to the masses, there are certainly pockets of customers that will pounce on them.
Drop shipping can be a great option for some products and a terrible choice for others. One of the greatest advantages that drop shipping offers is that you can essentially “resell” items for a higher price, but this can mean that the profit margins will vary depending on the product. Moreover, some items will be of higher quality than others and will sell better.
The type of products you intend to sell can be an indicator of whether or not drop shipping will be a good choice. As you try to narrow down your product selection, you will want to consider the items that certain drop shippers offer. If those items are poorly made or more expensive to customize, it could be a sign that drop shipping is not going to be a good fit.
2. What Defines a Trustworthy Drop Shipper?
Since you never have to physically see or touch the product you are selling when using a drop shipping system, it can open up the potential for many risks with the process. Unfortunately, people get scammed by shady drop shippers all the time. Inventory may never actually ship, or the product that the customer receives could look totally different than what they were promised.
Unfortunately, when a customer is upset with their order, they will complain to the business owner (you) and leave bad reviews, hurting your reputation even though the fault lies with the drop shipper. So, before you go into business with a drop shipper, you need to know the good indicators, as well as the red flags when forming partnerships.
If their prices and promises seem too good to be true, they probably are. If they don’t ask for lots of information about your business or offer much about theirs, it could be a sign of a scam. It is also important to note that reputable drop shippers will not charge a recurring fee for their business. If a drop shipping company requires that you pay a monthly or annual fee on top of orders, it is a sign that they are not to be trusted. Be sure to do your research and see what other retailers have to say about the drop shipping company. There are plenty of sites that offer contact information for certified drop shipping businesses to make the process easier for you.
3. Nailing Down Customer Service
With so many people trying their luck in drop shipping, customer service is one of the best ways to differentiate. As you try to find a drop shipper to partner with, you will want to make your company as easy as possible to work and communicate with (both for them and customers).
You also want to make customer service a competitive advantage as you run your online business. Remember that if a customer is unsatisfied with a product, they will contact you, not the drop shipper. Some drop shipping companies do not accept returns or offer free exchanges, so you must have a plan in place to be able to handle this issue.
Consider developing a robust FAQ guide on your website to answer the most common questions about the product itself so that customers know what to expect. Go into detail about the size, dimension, appearance, and overall look and feel of the products on the description page. You may also want to consider more self-service options, such as chatbots that can instantly help customers with any questions they have before or after a purchase.
Drop shipping can be a great strategy to help launch a successful and profitable e-commerce company. However, this tactic is not without risk and it is certainly not a fit for every single online seller. If you are considering this type of partnership, make sure that you know what you are getting into. Weigh the pros and cons, do your research, and make sure that you have a system in place to handle any issues with ease.