Drop shipping opening new horizons in business
developer | June 24, 2021
“Don’t wait for someone else to do it, hire yourself and start calling the shots”
WHAT IS DROPSHIPPING?
Drop shipping is the entry point for a lot of people for business, e-com and entrepreneurship. It’s the perfect first business. Currently, drop shipping has become a talking point and big fuss and above all a business model that attracts online retailers.
Drop shipping is retail fulfillment method, where products are not in stock, instead item is purchased from 3rd party as per customer requirement and is shipped directly to their customer. This is the lowest risk business and depends highly on affiliate marketing.
The huge difference between drop shipping and standard retailers is that selling merchant doesn’t hold his/her own inventory/stock. In lieu, the inventory is purchased either from wholesaler or manufacturer. It is substantial and prominent business model for entrepreneur and start-ups because of its accessibility.
This helps in trying out different ideas, about choosing and market-in-demand products. Drop shipping comprises of supply chain management system by transferring of order and their shipping details to wholesaler, or retailer or manufacturer, thus further shipping the goods directly at customers doorstep.
But there is no control over product quality, inventory or storage. This farther reduces warehouse maintenance cost, cost of brick-and-mortar storage and extra staff cost.
Drop shipping is common when it comes to expensive goods/products. E-com sites like E-bay and Amazon, here sellers use drop shipping as a method of distribution. Instantly as the customer places the order, the seller gets it shipped from the wholesaler to their respective consumer.
But products listed may not be directly available and hence back-ordered by placing order either to wholesaler or manufacturer which can cause potential delays in fulfilling the order, which is never disclosed and beyond the control of seller and can badly affect the purchaser’s ultimate satisfaction.
“STUDY YOUR AUDIENCE FIRST AND DIG OUT A PRODUCT THAT YOUR CUSTOMERS WANTS”
Who is your targeted audience?
Why is it important to know about buyers? Why you just can’t create a brick mortar store and wait for your profits?
The answer to this is “YOU WILL HAVE ZERO SALES”.
In drop shopping Marketing strategy plays the key role in achieving commercial success. Target audience analysis is the key to drop shipping business success. It should be a part of marketing strategy.
“THERE IS NOTHING REALLY COOL OR FANCY ABOUT THE PRODUCTS THAT IS LAUNCHED,
BUT ITS JUST BECAUSE THE WAY TO PROPERLY MARKET THEM, THAT’S WHY THEY WORK”
You need to have a clear knowledge of your target audience-
1. What do they have in common?
- Most fascinating fact about drop shipping is its GLOBAL REACH. No geographical borders, anyone with any occupation, any gender, age, marital status can place the order.
- Be careful while choosing a niche, stick to one specific niche instead of being general.
- The common lifestyles, location, tastes, preference, interests and hobbies make you reach your target audience.
- More the elements you include in defining your target audience, more narrow and much easier it gets to identify.
2. What are their needs?
- Evaluate the reason behind their purchase of a particular item, to identify their needs.
- Calculating needs and wants of customers is quite complex but useful in the long run, leading to the next question about fulfilling your customers need.
3. Can you meet their needs?
- Once you identify your target consumers interested in drop shipping niche and the reason behind their purchase, it’s time to focus whether their needs and wants can be fulfilled.
- Next, is to identify whether the needs can be satisfied with your resources available and whether the resources displayed on platform suits the customer needs.
4. Can your items be purchased spontaneously?
- Commonly referring to the customers purchasing capacity, affordability.
- Can it be an impulse purchase for the potential buyers?
- Proper price setting and planning is required for the same.
5. What language they speak?
- The right search, search bar phrases, words and expression play an important role.
- Apt descriptions and right advertisement are required to catch a customer.
- Choosing right tone of communication, creating banners, announcements, reviews etc. plays key role.
6. How to reach them?
- Where are your customers, how to achieve the biggest reach?
- Which social networks, blogs, news websites and videos they look out for?
- Knowing which social media platforms to use for promotional activities is of great use.
- Automated drop shipping solutions saves your time and energy.
- Google analytics is great source of information for reaching and targeting audience.
7. How to target them?
- Identification of the most suitable channel, understanding the segmentation lies next.
- Segmenting and targeting the audience interested in your offer.
HOW DROP SHIPPING WORKS?
- Trust building through customer reviews, ratings and testimonials.
- Run ads for marketing and promotion through Facebook and Instagram that suits the budget.
- Video content should be used for better targeting.
- Sharing of social videos for driving the traffic and customer engagement.
- Retargeting techniques to be used to redirect the consumers.
- Healthy blogging diverts traffic to your drop shipping business.
- Identify the niche and keep lingering around the relevant groups.
- Attractive email pops help in capturing the potential buyers.
- Techniques like cross and upsell marketing, more sales at checkout works best with shoppers.
EVOLUTION of Drop shipping
Started in 2006 from China, companies offered wholesale services to both businesses and individuals. Widened this was due to use of internet, and ease in procurement of products. China was competitive enough due to improved logistics for small packets and ease of trade barriers.
BOON & BANE OF DROP SHIPPING
Less capital requirement
First and foremost, advantages of drop shipping are launching an e-com store without spending much in warehouse and inventory. No prior purchasing of product unless an order is placed or the payment is done. It’s possible to launch a successful business with little amount of money. Less risk is involved due to no inventory purchased.
Easy to initiate and ignite
With Drop shipping, stop brooding
- About managing and paying for warehouse
- Packing of order
- Inventory tracking
- Managing stock level
- Handling of returns
No inventory, no warehouse management, thus, low overhead expenses. 90% of drop shipping stores are home-based business. Once a business grows, cost is likely to be increased but is very low compared to traditional business.
Pliable and flexible location
Just an internet connection and you can easily run your business. And easy communication between supplier and customers, your business can flourish and managed with ease.
Wide array of products
Seller can offer wide range of products. Pre-purchase of items are not required and does not involve additional cost.
Drop shipping is a beneficial method for launching a new store as well as gathering customer information and appetite for additional product range. The ultimate benefit of it lies in ability of listing and selling products before buying an entire inventory.
Easy to scale
Unlike the traditional method, here you can leverage your responsibilities to suppliers. Ssales growth in turn bugs additional work, mainly customer support but drop shipping provides you the benefit of work load reduction.
Drop shipping also have some stumbling block and pitfalls. Few short comings are enlisted below:
Low margin- Low profit margin is one of the greatest drawbacks of drop shipping business. In an attempt to grow revenue, stores sell at rock bottom prices. Sellers have low quality websites and weak customer services which further adds to its disadvantage. This drawback can be mitigated by selecting a niche that’s suited for one’s Drop
Inventory issue- Sourcing your inventory from outside leads to stock mismanagement. It becomes impossible to keep track record of in and out stock in Drop shipping. Thus, creating a matter of disadvantage. Certain apps have been launched to keep a sync and link with suppliers. This helps in non-publishing your product or displaying “out of stock” for the product unavailable and set quantity to zero. Thus, protecting customers from vague tracking of
Shipping complications- working with multiple suppliers, your product will be sourced through different Drop
shipping. Thus, complicating your cost and business.
For E.g.: If a customer places order for multiple products available with different suppliers, this incurs much shipping costs thus increase your charges. Running a small business with hefty charges causes difficulty to make profits and operate day to day costs.
Supplier fallacy- Even if Drop shipping suppliers commits a fault in order fulfillment the whole and
sole responsibility is to be taken up by the seller. This includes missing items, botch shipments, poor packaging thus harming your reputation.
Is Drop shipping a legitimate and justifiable business?
Satisfying a customer experience and building a brand for right audience is still a key to long term success. But Drop shipping is perfectly legal and lives up to customer experience. As you are aware, most of the products in a retail store you shop are selling products they do not personally manufacture.
So, drop shipping plays an important role in putting this enacted approach and turning it into a fulfillment model, most suitable for an online business. None of the business is perfect and stress free, hard work is always required to start a business.
Drop shipping has its own advantages & complexities. Some careful planning and consideration is required, thus helping you in building a thriving, profitable business.
Some drop shippers found success in winning product while others in marketing strategy. The determination, willingness to persevere and acceptance of failure has lead to success of drop shipping.
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