What is drop shipping?
We're gonna tell you today on The Journey.
In our hyper-connected digital age of mobile shopping,
social media, and superior access to product information
all out there, there has never been more opportunities
for savvy e-commerce businesses to make their mark
and generate a healthy long-term profit.
So for an e-commerce business,
dealing with a large inventory
can provide some problems, right?
Particularly if you don't have a great deal of space,
like the small room (laughs).
But drop shipping eliminates this issue all together.
So if you sell a range of stock,
drop shipping may well be for you.
Let's not forget the opportunity to sell online nowadays,
given 67% of millennials and 56% of Gen Xers
prefer online shopping to physically going in store,
and that they account for a huge portion of the population.
So that's a lot of people who may well
wanna buy the products that you have to offer.
So what is drop shipping?
Basically when a drop shipping store sells a product,
they purchase the item from a third party,
and has it shipped directly to the customer.
Now, if you're selling handmade products,
beautiful products that take you hours, maybe days to make,
drop shipping most likely not for you.
However, if you're looking to sell a variety of products
through your online store, drop shipping will help
to build your brand or grow your business exponentially,
by eliminating the challenges of shipping
and stock management.
Exactly, and for example, if you sell or wanna sell
a large variety of t-shirt designs,
but you don't want to have to be the one to make
or ship them, drop shipping allows you to skip those steps
and still get paid.
Sites like Redbubble or Society6
are great examples of this.
By adopting a drop shipping business model,
you can offer your customers a large inventory
through your website or online store,
whereas the third party drop shipping operator to do supply
and ship the items that you selected.
So, let's talk about the benefits of drop shipping.
One, less capital investment, as you don't have to
buy your stock right up front,
far less capital is required to set up
and launch an operational business.
So you can get started almost immediately and start selling.
Another benefit, lower the overhead costs.
With drop shipping, you won't have to deal with
purchasing an inventory or the challenges
of warehouse management which means
that your overheads will be minimal.
And all you need is a good home office, like this,
I know I knocked it earlier, but a good home office,
you're drop shipping software or service,
and are reliable web hosting, and stacks of
self-motivation people.
And when you drop ship, you're not necessarily
bound to one physical location.
So you can run your business on the move
or relocate with ease.
Additionally, by harnessing the potential
of drop shipping suppliers, rather than
storing stacks of stocks, stacks on stacks on stacks,
scaling your business will be far easier
than a traditional e-commerce model.
And it's clear that for the right small business owner,
drop shipping has an enormous amount of potential.
And at this point, it's worth noting that
as drop shipping suppliers naturally take
a cut of your profits for shipping, service, and logistics,
your profit margins will be
lower than if you were selling independently.
But, if you get it right and keep your business flowing,
you won't lose anything in the long run.
So to help you on your quest for a drop shipping success,
we have five essential tips to go through,
starting with select your suppliers.
Now, before you commit to a drop shipping platform
or service supplier, you should conduct
ample level of research.
Yes, research, it's so important.
Don't skip over it.
It's going to help you find a service that's right for you.
Now, consider your business aims,
consider your business objectives,
and think carefully about the products that you want to sell
as well as your brand message and the kind of service
that you're looking to offer.
And also conduct supplier comparisons.
Looking at pricing models, key features,
and the benefits too, of course,
and you'll quickly understand which service is best for you.
Our next tip is to find your niche.
The great thing about drop shipping is that
you can really sell almost anything
through your online store with ease.
But for sustainable drop shipping success,
you should, and as we mentioned above,
decide on your niche and core value proposition.
By offering a solid range of products in a particular niche
as opposed to being just a general store,
you'll give yourself a greater chance
to stand out from the crowd and hone in
on specific target audience.
This approach will offer you a true long-term value
rather than a flash in the pan sale or two.
Another tip, market your business.
In the digital age, the consumer is king.
And to reach out to your prospects on a personal level,
you must have a solid marketing strategy.
Delivering personal, engaging, inspiring
and value driven content on a host of promotional channels
and touch points.
Next up, avoid underpricing.
As we mentioned, with drop shipping
your profit margins are often slightly lower
than a traditional e-commerce model.
So, to ensure that you do make a healthy profit,
you should work out your average order price,
and consider your overall margins
as well as associated business costs,
such as marketing or outsourcing
when coming up with those magic retail figures
for your products.
You should always be competitive,
but you should never undersell yourself.
There's always gonna be someone
that's going to sell it cheaper,
and you don't want to be the second cheapest
because you'll always lose.
So just don't.
And I want to end on this note,
and that as a reminder to you to remain motivated.
Now, despite the fact that you don't have to deal with
inventory management and shipping,
you're still running an online business.
So you need to still focus on staying motivated
and keeping up with your social media on a daily basis.
Don't forget to nurture
the relationships with your suppliers,
keeping on top of customer service and admin
in developing the business for growth.
So with that, I always encourage, manage your time wisely.
What does that look like?
Well, make sure you're consistent
and enjoy being your own boss.
It's hard work, but it certainly has its perks.
And you can say that again.
And even if you don't want to change
your current fulfillment processes just yet,
you can at least explore your options
so you can start when the time is right.
And we hope that our dropshipping tips
have helped you to take those first big steps
for your e-commerce business
and the success that you will have.
That's a wrap.
You just learned what is drop shipping?
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This is The Journey, we'll see you next time.