Drop Shipping 101: A Quick Start Guide to Drop Shipping Business

Drop Shipping 101: A Quick Start Guide to Drop Shipping Business

Inventory and warehousing products are one of the most difficult aspects of owning a store. You need to have various stocking processes in place to keep track of everything, as well as hiring reliable personnel who can manage them. The actual thought of having to hold inventory, handle customer orders and run a real ‘brick and mortar’ business is more than enough to give any budding entrepreneur a headache or stress attack — hence why the world of affiliate marketing has become such a successful and attractive venture for many.

However, there is still massive opportunity and wealth in the world of selling physical products — even without the need to purchase, hold and ship products of your own. This is where drop shipping comes into play, which is another new type of warehouse management that has helped change the way businesses think about inventory.

This article is going to explain the need-to-know information about drop shipping and how it can help your business.

What is Drop Shipping?

Drop shipping is a method for selling physical products without needing your own warehouse, storefront or having to buy inventory in bulk while still getting wholesale prices from your supplier. It’s a method for retail fulfillment that doesn’t require the storeowner to even carry the products on hand. Instead, when a store sells an item, the business will purchase the product from a third-party organization and have it shipped directly to the customer. A drop shipper can sell anything from tube socks to PlayStations and never have to worry about warehouse space.

In many cases, drop shipping based businesses are quite similar to affiliate marketing, in the aspect that you are still marketing for customers, sales and leads, but you are actually keeping that consumer information and growing your own brand. Depending on the products you are selling, there is also potential for much greater profits as well. In short, if you have found success with affiliate marketing, there is a great chance you could find success with an e-commerce site powered through drop shipping as well.

Benefits of Drop Shipping

Starting up a inventory-based business requires a lot of hard-to-obtain seed money that will require some serious investment. However, it is much cheaper to start an ecommerce business and drop shipping helps lower costs even further. When you follow the drop shipping model, you don’t have to purchase any products until you’ve already made a sale and been paid by the customer. (ie: You get paid by the customer, then use their proceed to pay for the actual product from the drop shipper)

When it comes to overhead, you can’t really beat the one-two punch of ecommerce and drop shipping. Since you don’t have to worry about managing your inventory on-site or dealing with the hassle of a warehouse, your overhead costs can be relatively low. However, depending on the ecommerce platform you choose, which may come down to a comparison between Shopify Plus vs Magento Enterprise, your overhead will likely rise as a result of expansion.

Not to mention that an ecommerce business following the drop shipping model can be opened from anywhere on the planet with Wi-Fi. As long as you have the ability to communicate with customers and suppliers, you’re in good shape to run your business.

Again, for any experienced affiliate marketers, the transition to an ecommerce or drop shipping based business shouldn’t be hard to accomplish. At the same time, having such experience in the world of online marketing will help scale out your business even more. Adding email marketing, retargeting, Facebook Ads marketing and blogging into the mix, you may just find your ecommerce site quickly scaling past your other affiliate marketing efforts and earnings.

Downside to Drop Shipping

While drop shipping is a great way to keep your overhead costs down, it also comes with some challenges. Chief among these challenges is the issue of inventory. While not having to keep physical products on hand is a great way to save costs, it also means that you are at the mercy of third-party warehouses. For example, say that you only sell hand sewn tube socks and you only have one supplier of this product. If that supplier runs out of tube socks and you still have customers ordering them, you are going to have to either find a new source for tube socks, wait for the supplier to get more in stock or refund the cost of the items to the customer. A reliable drop shipper will have several sources for each other products listed on their page.

Drop shipping also puts you at the mercy of your suppliers. If they make mistakes while fulfilling orders, the onus falls on you to take responsibility and apologize to your customers. In today’s age of instant communication, being known for bad customer service is not something a fledgling organization can survive.

Ultimately, your methods for procuring product are entirely up to you. However, if you are looking for a low-cost, effective way to manage products without a warehouse—look no further than drop shipping.

Where to Find Drop Shipping Products to Sell

With all of this now in mind, the most important thing for any ecommerce or drop shipping based business, is to find the right products to sell. In previous years, this was quite task. Many online sellers have deals with direct distributors and privately purchase and ship items on drop shipping deals. Now the game has completely changed, thanks to sites like AliExpress. With millions of products on the site and thousands of merchants to choose from, there is definitely something for everyone on this site — most of which are easily set up for drop shipping based businesses.

If you wanted to get started with a drop shipping business of your own, all it would take is setting up an online store (using a platform like Shopify), integrating your products (user Oberlo) and then setting up a payment/shopping cart system (Samcart / Paypal) to accept payments and you are ready to go.

How to Start a Drop Shipping Business in 2017

As you can see, there is a whole world of potential out there when it comes to selling online, and drop shipping is just another option for you to consider. My best advice for anyone looking to get started, is to make sure they have a business model and marketing plan in place. It’s one thing to have an online store where you can sell products, it’s another to know how to market it and acquire new customers at a profit.

Must Have Tools for Running a Successful Drop-Shipping Business

Must Have Tools for Running a Successful Drop-Shipping Business

Drop shipping offers a great way for you to make money from home, to start your own business on a shoestring, or to attain financial independence. You don’t have to purchase inventory to get started, and you can sell virtually anything so long as you can find a reputable wholesaler to provide it. You can run the business while you are still working, or you can drop everything and put all your effort into making the business a success.

At the same time, there are plenty of Facebook groups and free resources online to help you get started with the process. In short, it’s definitely one of the most sought after methods for starting an online business right now and many newbies are finding success in the process.

For the more seasoned entrepreneur and online marketers, many people have made their fortunes on drop shipping. You just need to be persistent, use the right tools, and make the right choices for your business. Here are some of the top tools you should be using to be successful in your drop-shipping business:

Inventory Management System

Your inventory is everything. You need to know how much you are selling and how much is available. If you are drop shipping, you won’t have inventory on hand. But you will need to keep track of how much inventory is available through your wholesaler. You don’t want to disappoint or anger a customer by telling tell them that you don’t have the item available and sending a refund instead.

Over time, you may decide to grow your business by having the inventory on hand and selling in person at a store, a trade show, marketplace, or elsewhere. It is important that you have the right systems for inventory management so you always have what the customer needs in hand. Inventory management is also essential to make sure you don’t order items that you already have and cut into your profits.

Customer Management System

Sales don’t just appear out of thin air. In addition to running ads and other promotions, you need to generate leads and nurture them through your sales funnel. A good customer management system will help you keep track of your leads and where they are in the funnel.

Any time you get a lead – such as through a list serve sign up or a sale – you put that contact information into your CMS. You then keep track of all contact you have with the customer, including emails, phone calls, and sales. Over time, you build up quite a lot of information about your customer so that you have a more complete picture of what the customer wants and needs, and so you have more demographic information. You can use all that information to create better pitches that have a higher likelihood of success.

Content and Blog Management System

Just as important as the products and listings on your actual store, a blog can compliment your brand, service and increase sales in the process. This is something we are seeing many of the top e-sellers and dropshippers finding success with today. It’s no longer about just having an online store and listing products for sale, it’s about creating engaging content that grabs the interest of an audience and makes them want to buy.

This can all easily be setup with a WordPress blog, which is quite easy to learn — even for someone that’s never had a website or blog. Once you’ve added a blog to your online store, be sure to add social sharing buttons and also link back to your product pages whenever you reference something that can be purchased on your site. To see examples of how some of the top brands and e-commerce sites are already doing this, simply visit the ‘blog’ section on any of your favorite online stores.

Payment Processor

Paypal isn’t the only player in the game for payment processing. You have many options for accepting payments from your customers and for making payments to your vendors. It is important that you explore all your options so that you get the best terms. Even a small difference in fees can add up over time, cutting into your profits.
You must also consider whether the payment processor collects the payments that are most popular amongst your customers, and how good the customer service is. If your customers don’t like the payment process, you’ll also lose money.

Payroll System

When many people get started with drop shipping, they have a one-man operation. But once you start to make a little money and can grow your business, you may want to hire a few people to help you out. You may start with one assistant, but you may eventually have several people processing orders and answering customer inquiries. Once you have any kind of staff, you’ll need a system to help you manage payroll, from calculating hours and pay to determine the appropriate taxes. A good payroll system will do everything from issue checks to report taxes to the IRS.

Using the right tools for your drop-shipping business is more than a matter of convenience. Using the right tools can help you enhance your customer service, keep your costs low, increase your sales, and maximize your profits. Right after you find the right wholesaler to work with, you should start looking for the right software tools for your business – even before you have your website set up. The right software will help you create a solid foundation for the success of your business.