dropshipping profits

5 Ways to Increase your Dropshipping Profits in 2020

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.

But let’s just with order: 

Why are so many eCommerce owners adapting the Dropshipping business model? Why is this fulfillment method so popular?

These might be the two major questions that people who want to start their own Online Marketplace Business might be curious about. So, let’s go ahead and see why it has and is still the most preferred business model. 

  • Location flexibility
  • Less capital investment
  • Least overhead expenditure
  • Easy to set up
  • Easy to scale and test

These are the main pointers that are considered while setting up an online business. But, in order to start an online business, one should be responsible for the below as well.

  • Product development
  • Inventory management
  • Setting up warehouse and
  • Shipment management

Dropshipping is the business model for the ones who do not have the proper resources to manage all the above responsibilities. By adapting to this model, you can directly deliver the goods to the buyers through a manufacturer or a supplier. Dropshipping model is a three-party business model where the buyers place an order on the website of the Business Owner. He then forwards it to the supplier or producer to deliver it to the consumer directly. Also, in this model there is no need to worry about managing warehouse, inventory or shipping.

Even the eCommerce Giant- Amazon uses this very model for its worldwide operation. 

According to a people survey conducted by Statista regarding the main channels through which dropshipping business owners and aspiring entrepreneurs first find out about Dropshipping,

  1. Most of the aspirants got to know about dropshipping through various social media platforms compared to the 31% of the people who already owned such a company.
  2. This study also shows that the primary reason to start a Dropshipping Business is the want to make more money. And, thirdly
  3. Around 24 percent of the respondents who already own a Dropshipping Business mentioned that the greatest advantage of using this model is that they can become an eMerchant from any remote location and supply goods to any part of the world.

This fulfilment method could be potentially considered as the Golden Goose of the eCommerce world. And hence many eCommerce owners uses this model and easily start their own businesses. All may seem smooth from the outside, but once you start, you will get to know that there is a lot of competition out there which in turn leads to a dent in the profit-margin and cut down your dropshipping profits.

Getting to know the root-cause of any issue the basic necessity to solve it as efficiently as possible. Hence, here are some of the major reasons that cause tight-profit margin.

  • Shipping from different suppliers
  • Competent product pricing
  • Dealing with return and refunds
  • Payouts to inventory and delivery partners

and many more.

In this type of consumer oriented market, success comes to people with innovative approaches and efficient workflows. Below we have discussed a few tips which will definitely help put you on the track of achieving higher dropshipping profits. 

Increase your dropshipping profits

1. Bulk Shipping

Shipping plays a pivotal role in not only dropshipping in every other online eCommerce business. This is one section of the online marketplace business which requires high maintenance charges. There are many shipping related scenarios which may prove not to be in your favour or. Some of them are:

  • Paying shipping fees to your drop shipper while you are will have to offer free shipping service to your customer
  • Drop shippers also tend to make mistakes, as there is no guarantee that they will fulfill their orders perfectly.
  • The dropshipping process requires you to pay the real cost of logistics, packaging, and shipping. This means that shipping costs are bound to rise as the sales grow.

In order to minimize your shipping costs, you can always ship more items in the same package. Through this you will not only save on shipping but also be increasing the average cart value too.

2. Private Label Products and Packaging

In simple words, private labeled products are those that are manufactured by one company and sold under another company’s name. This technique is always considered to be a win-win for both the manufacturer and the seller.

For the manufacturers they get diverse sales platforms and as for the retail seller they get to sell products which may not be feasible for them to produce. Thus, both the parties get to expand their margins.

So, you should be really careful while selecting your manufacturer. Compare manufacturers and test their products yourself.  Know your market, the target audience, and your competitors so that you can choose a manufacturer that will boost initial investment. Also, take your time to negotiate with them and get the best possible products for your money.

Read Also: Dropship Private Label Products: How to Do It

3. Up-Selling and Cross-Selling

The devil is in the details. There is a very slight difference between up-selling and cross-selling and they always go hand-in-hand. All of the dropshipping business owners will want to increase their sales and these are the two best possible sales techniques to achieve it.

Up-Selling is nothing but getting your customer to spend more by buying an upgraded or premium version of what they are going to purchase. For this you will have to understand the needs of the customers. And apparently Up-Sells are 68% more affordable than acquiring a new customer. The best practice is to implement-

  • Adjacent comparison to show the difference between the products
  • Display a good range of products with a similar criterion of the ones the customer is looking for. However, be mindful that you don’t overwhelm the customer.
  • You could also show some alternate products other than what the customer is searching for

Whereas Cross-Selling is a sales strategy which sells a totally different product to the customers. Combining products of different profit margins is the best way to capture the interest of the customer and pitch the sales of those products. And this tactic is becoming very popular and is said to be contributing about 35% of overall revenues in Amazon. 

4. Be Updated with the Trending Product list

Online marketing is a highly volatile market and an unpredictable one too. You always have to be up-to-date with what is happening in the industry. Market research is one of the most important aspects of running a successful online business. Finding the niche and right products to sell on your website is the most important part of the decision making.

As predicting in this market is not an easy task you will have to seize any given opportunity when you see a potential in a certain product and make sure you stock it.

Manufacturers are the ones from whom the suppliers or the wholesalers buy their load from and further sell it to the retailers. And once you find a bestseller, go ahead and buy stock from your supplier and negotiate a good deal with them and get guaranteed discounts.

5. Avoid back orders

This is the most concerning reason as it is one of the most costly affairs to deal with, that could potentially cut down your dropshipping profits. Some of them can be fixed, but some are off our control. A few reasons for backorders can be:

  • Running out of stock
  • Unpredictable product demand
  • Under or over safety stock levels etc

This leads to a bad impression leading to a negative feedback and rating on the online store. This will prove critical while expanding the consumer base of the store. However, some of these can be avoided by keeping the following pointers in mind:

  • Keeping a periodic check on your store’s inventory
  • Stock your products by researching and forecasting the market to the best of your abilities
  • Always have backup suppliers from your regular ones
  • Be as transparent as possible with your customers from the very beginning. Though this will not prevent backorders, it will at least help in getting positive reviews and ratings.

Last but not Least: Choose your suppliers wisely

Now that you are aware of how you can work around your tight profit margins, you will be able to effectively plan and execute your business and increase your dropshipping profits. Think before you leap is an apt saying for this situation. You can use any of the methods mentioned above or even a combination of them which you think will suit your business plans the best. Always be very mindful of your business and all the aspects surrounding it, especially when you choose your suppliers.

They will be your partners who will have significant weight on the success of your business. As we mentioned above, you must do your best to make sure that the products that you sell online can be actually sourced and shipped to your clients without any problems. 

If you sorely rely on AliExpress sellers, you might find yourself in an uncomfortable situation, where the seller could very well fail to provide you with the product sold or ship it to your client with the slowest method available. 

Instead, you should choose a supplier who has connections to several producers of the actual products, so that should one run out of stock, they can get in touch with a backup one, so that your business can continue without any problems. 

The perfect supplier for this job is Yakkyofy:

with us not only you will have access to a tool that can assist you in sourcing, in mere minutes, over 12 million products on the Chinese market, but you will also have the guarantee that your parcels will be shipped to your clients with the agreed method.

From sourcing to fulfillment, Yakkyofy offers a comprehensive all-in-one solution to run your dropshipping business, so what are you waiting for, are you ready to boost your dropshipping profits with us?

SIGN UP today!


Jessica Bruce

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

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