If you are wondering how you can raise your dropshipping profits then you landed in the right place. In this article we will share with you 5 tips on how to distinguish yourself from your competitors and how to catch your potential clients’ attention.
What is dropshipping and why is it convenient?
But let’s start with order. You may be wondering why so many eCommerce owners are adopting the “dropshipping” model and why you should use it too. Well there are various factors that make this sourcing method very interesting:
- Easy to Start
- Minimum Initial Investment
- Simple to test
- Easy to scale
- Flexible time and geographic location
As a rule, those who decide to start an online business should:
- Product development
- Inventory management
- Setting up warehouse and
- Shipment management
With dropshipping all this is not necessary, and that is why it is a perfect business model for those who do not have the adequate resources to manage the entire supply chain.
By adopting this model, in fact, it is possible to deliver the goods directly to buyers without having to manage them personally. That is without having to take care of the warehouse and shipments.
In fact, when the customer places an order on a dropshipping store, the owner sends the order to the supplier, who ships the goods to the final consumer.
Although many don’t know this is a widely used model, he thinks about 33% of Amazon sellers use dropshipping as a method of refueling.
The challenges of dropshipping
Dropshipping can be considered the Golden Goose of the eCommerce world and that’s why most people who try to open an online eCommerce start with this replenishment model.
But don’t get the wrong idea. While it may seem simple from the outside, starting a dropshipping business is not a breeze. If you decide to continue with your project you will soon discover that you have a lot of competition and also rather small margins to deal with.
However, not despairing, knowing the challenges that lie ahead is the first step to tackling them as efficiently as possible.
The main causes behind the reduced margins of dropshipping are:
- Different shipments for different products: it is not possible to accumulate more products in the same shipment if they come from different suppliers
- High competition: because of the unbranded (common) products, so much competition and little chance of emerging in the crowd.
- Reduced margins: as mentioned before, if you sell common products you will have to adapt to the sale price offered by the market.
- Returns and refunds: you must always calculate a return rate that in this case is at your expense.
In this type of consumer-oriented market, success comes to people with innovative approaches so we decided to share with you some tips that can help you stand out from the crowd and create a successful dropshipping business.
5 Ways to Increase Your Margins with Dropshipping
1. Multi-product shipping
The shipping process plays a key role both in dropshipping and in any online sales activity. Order fulfillment and delivery is one of the most complex tasks, it has high handling costs and in dropshipping it is totally in the hands of your supplier.
For this reason it is essential to find a reliable partner who can offer you not only stable and fast shipments, but also the possibility of fulfilling orders with multi product shipping.
One of the main factors that allows you to increase the margins of the eCommerce sector is to increase the average shopping cart, that is, convince your customer to buy more products in the same order.
In fact, an eCommerce shipping multiple products in the same package saves both shipping and order fulfillment costs.
A very common tactic to increase the average cart is to offer free shipping when reaching a certain spending threshold.
Well, in dropshipping it can be difficult to use this opportunity to earn, in fact if your customer buys products that are located at different suppliers you will necessarily be forced to make different shipments and therefore pay more for the delivery of your orders.
However do not despair, there are dropshipping product providers like Yakkyofy that offer the ability to realize multi product shipping and consequently increase your margins.
2. Up-sell and cross-sell
Multi-product shipments allow you to earn even with two sales techniques very common in eCommerce: up-sell and cross-sell.
Up-selling is all about convincing your customers to spend more by buying a better version of the same product or buying more products together with a 3×2 style promotion.
The Cross-sell, on the other hand, is a sales strategy that aims to increase the average shopping cart by offering complementary products with the one selected by the customer. If a person is about to buy a vacuum cleaner, you can offer them, for example, bags or replacement brushes with a discount on the total.
The best tactics to follow to succeed with these two sales strategies are:
- show the two or more offers side by side
- underline the advantages of the up.sell or cross-sell offer
- highlight (already clicked) the option you want to push the most
- have to reject the offer with a click using phrases such as: “I am not interested in a 50% discount”.
3. Constantly update your catalogue
ECommerce is an extremely changing and unpredictable sector. Every day, sales trends are born and die and products that used to sell well stop being requested.
For this reason it is extremely important to be always updated on what is happening in the sector and conduct continuous market research to spy on the competition and find new emerging trends.
If this is true for the whole eCommerce industry it is particularly relevant when it comes to dropshipping. In fact, in this sector the key to success is precisely that of constantly changing the product offered according to market trends and riding the trend until its exhaustion.
This is why finding the niche and the products to see is the most important part of a dropshipper’s job. You always have to look for new products and update your store catalog constantly if you want to sell in this sector.
4. Avoid backorders
One of the main problems that dropshippers face is that they cannot control the order fulfillment process. In fact, in dropshipping this process is demanded from a third party supplier who must therefore be reliable.
In fact, it often happens that dropshippers find themselves having accepted orders on their store, but not having merchandise to fulfill them.
How’s that possible? Remember that in the basic dropshipping process you are only sending your orders to the supplier after receiving them and that this supplier has several customers. So it may happen that today he has 100 wifi headphones, but tomorrow he has zero because he sold them to a customer who made the request before you.
In these cases two things can happen:
- find another supplier in a short time and still manage to process your orders even if they reach your customers late
- you cannot find a supplier and you are forced to refund the orders you have received
In both cases, there is a risk of bad reviews from unhappy customers, a risk of having to refund returns and a risk of penalties from platforms such as Paypal.
To avoid this type of problem you must have a good compliance strategy. Choose only reliable suppliers with whom you can have a direct relationship.
Differentiate between product testing and scaling, when you test a product you can buy it one at a time, but when you find a winning product that receives several orders a day buy a stock of goods from your supplier, to be able to cover your needs for the following days without problems.
5. Products and packaging branded with your logo
The last piece of advice I want to give you to increase your dropshipping sales is to create a real brand. Once you start your business you can think of sending your products in branded packaging with your logo, insert discount coupons in your packages to increase the return rate of your customers or think of dropshipping branded products with your logo.
In this way you can increase the perceived value of your products and ask for a higher price than selling generic products.
If you do a good job, you can also generate customer loyalty: a customer who loves a brand will return to buy the same product because they are sure they have a good quality item in return.
Returning customers will allow you to generate sales at a lower cost of new leads and thus help increase your margins.
For more information read also How to sell in Dropshipping products in Private Label.
Earning with dropshipping: choose your suppliers wisely
We hope that thanks to the tips we’ve given you above you will now be able to start and plan a successful dropshipping business.
Don’t worry you can use any of the suggestions mentioned above or even a combination of them, which you think best suits your situation.
Always try to be very careful in the organization of your business and especially in the search for your suppliers. In fact, your supplier will have the entire process of fulfilling your orders in hand, so it must be reliable.
The strategies listed above are not possible with all suppliers, in fact many do not allow multi product shipments or do not allow you to pre-order stock without paying for the warehouse space.
It is also extremely difficult to find suppliers who can offer customised products or packaging branded with your logo.
But don’t worry about all these services and many more are offered by Yakkyofy.
Connect your store to our platform, we will only offer you quality products from China, delivered with fast shipping and we can be close to you in all the most challenging times for your business such as Christmas to help you better manage your product flow.
We also offer quality control on merchandise and 3D files to show you actually augmented products to your customers.
So what are you waiting for?
I am a professional blogger, guest writer, Influencer & an eCommerce expert. Currently associated with ShopyGen as a content marketing strategist. I also report on the latest happenings and trends associated with the eCommerce industry. Follow me on Twitter @Jessicabruc