Because of the launch costs and fulfillment issues, many people are hesitant to open an online store.
But imagine if a supplier offered to cover your upfront inventory expenditures on thousands of goods (for a little more than the wholesale price) as well as manage your fulfillment processes. This is known as dropshipping.
With a dropshipping store, you can simply create and run an internet business from almost anywhere in the globe. Does it sound too wonderful to be true? It isn’t if you know how to start.
In this chapter, I’ll go over the dropshipping tips and benefits, provide two important operating concepts for establishing a dropshipping business, and provide detailed starter suggestions.
The Advantages of a Dropshipping Store
There are several reasons why you should explore a dropshipping business strategy, whether you have a Shopify store or another ecommerce platform. Here are a few of the most persuasive:
- You don’t need any money to get started: The dropshipping procedure makes it quite simple to begin selling online. You don’t need to spend much in inventory to acquire access to thousands of things for your clients at little higher than wholesale prices and sell them at market value.
- Efficiency and convenience: It takes a lot of effort to begin and grow an ecommerce business, especially if you have limited resources. Not having to worry about fulfillment allows you to focus on your marketing strategy, customer service, and operations.
- Mobility: Dropshipping stores can operate their businesses from anywhere they have access to an internet connection now that all physical fulfillment issues have been resolved.
- It’s a tried and true model: Many online companies, including major retailers like Macy’s, use dropshipping websites to provide a wider range of products to their customers while avoiding higher inventory costs.
Principles of Dropshipping
If you’ve never managed a dropshipping business before, this chapter’s information could save you weeks of wasted time and stress. Many of these dropshipping tips & techniques are based on two fundamental concepts for running an efficient dropshipping business:
- Recognize that things can get nasty: Dropshipping comes at a cost, and having an invisible third party engaged in each sale frequently complicates things. You’ll have to cope with fulfillment issues ranging from failed orders to out-of-stock items. If you accept this ahead of time, you’ll be less likely to give up due to irritation.
- Adopt the KISS principle: The dropshipping model will benefit from a KISS (Keep It Simple, Stupid!) approach. Given the inherent complexity of dropshipping, which includes several suppliers and shipments from various places, you may believe you must constantly manage your costs and inventories. But if you try, you’ll probably go insane, spend thousands of dollars on custom development, and never launch a business. Focusing on the simplest answers, even if they aren’t “perfect,” is usually the preferable option, especially when you’re just starting out.
Any owner of a dropshipping store will agree. With these two notions in mind, let’s go over some dropshipping beginning recommendations to assist you build your business and make it work as smoothly as possible.
10 beginning dropshipping tips
- Own your supplier’s mistakes
- Manage your inventory levels
- Fulfill orders intelligently
- Implement security best practices
- Handle chargebacks quickly
- Write an effective return policy
- Adopt simple shipping rules
- Provide great customer support
- Consider phone support
- Focus on marketing
1. Own your supplier’s mistakes
Even the best suppliers make mistakes, and with a dropshipping business model, fulfillment problems are unavoidable. So, what should you do if your supplier sends the wrong item or none at all? Here are three alternatives:
- Accept responsibility: In no case should you blame your dropshipping source for the error. It will just cause confusion and make you appear inept. The customer is unaware that the dropshipper exists. Instead, embrace the problem, apologize, and inform the customer of your plans to resolve it.
- Make amends with the consumer: Depending on the severity of the issue, you may want to offer the consumer something in exchange for the error. This might include a refund of the delivery price (a particular favorite of ours) or an upgrade if the buyer need a replacement item.
- Allow the supplier to pay for the repair: You may have to accept responsibility for the error, but it does not necessitate a reduction in your profit margin. Any reputable supplier will pay to correct its own mistakes, including return shipment charges. However, it is unlikely to cover any freebies or enhancements you provided to the buyer. You must factor in the costs of public relations and marketing.
Again, even the finest dropshipping suppliers will make mistakes now and then, but be exceedingly skeptical of a supplier who consistently botches your orders. Unless you can persuade the supplier to change (which is unlikely), your company’s reputation will suffer. If this is the case, you should begin seeking for a new supplier.
2. Manage your inventory levels
Most experienced dropshippers would agree that the most difficult aspect of running a successful dropship business is maintaining inventory across different vendors. If you don’t do a good job at this, you’ll be frequently alerting clients that their order is out of stock, which isn’t a good way to attract repeat business and devoted brand supporters.
It is a hard procedure to properly manage inventory across your suppliers and distributors, as well as to reduce the amount of out-of-stock items you sell. Shopify tools like DuoPlane and Syncee, as well as a web-based solution like Ordoro, can assist you in synchronizing inventory on your Shopify site. This is a wonderful alternative when vendors give real-time data feeds, which aren’t always available.
The following dropshipping inventory management methods should help you dramatically reduce the quantity of out-of-stock items you sell:
Use multiple suppliers
One of the best dropshipping tips for enhancing your order fulfillment percentage is to have access to several suppliers with overlapping inventory. If Supplier A does not have an item in stock, Supplier B most likely does.
Furthermore, relying just on one supplier to source your product is dangerous. If they refuse to work with you, raise their pricing, or go out of business, your online store’s future may be jeopardized.
While two suppliers will not provide the identical products, if they operate in the same dropshipping niche or industry, they will most likely stock the bestselling items—and these are your primary focus.
Choose your products carefully
Once your product has been validated, aim to sell things that you know are carried by all of your suppliers. This way, for whatever product you carry, you’ll always have two potential fulfillment choices.
Make good use of generics
Even if they don’t have the exact same item, two vendors may carry products that are nearly comparable and interchangeable. This is especially true for minor accessories and add-ons. If you can establish that two products are almost identical, create a generic product description that will allow you to fulfill orders from either source.
Also, make sure to include the model numbers from both providers in the model area. You can then send an order invoice to either provider without having to make any adjustments.
Check the availability of the item
Just because a dropshipper displays an item on its website does not indicate that item is always available. It’s a good idea to ask your sales representative about the availability of the products you’re thinking about selling.
Is it true that these things are in stock 90% of the time or more? Or does the dropshipper just keep a handful on hand and frequently has difficulty having the product reordered from the manufacturer? You should avoid stocking the latter type of merchandise.
Managing out-of-stock orders
Regardless of how well you plan, you will undoubtedly encounter customer orders that you are unable to fill. Instead of alerting the buyer that the item is out of stock, offer a free upgrade to a comparable—but better—product. Your consumer will be pleased, and you will be able to keep the customer relationship.
You may not make any money on the order, which is fine; after all, you would not have made any money if your buyer canceled the Order.
3. Fulfill orders intelligently
Using numerous suppliers has several advantages, as we’ve discussed: it enhances the possibility that items will be in stock, provides geographical diversity for shorter delivery times, and keeps you from relying on a single source for your products. But, with so many suppliers to select from, how can you know which one is the best? There are several approaches to consider:
Send orders to your preferred provider
If you have a single supplier who stocks the majority of your items and is easy to work with (excellent service, large selection, etc.), you can simply route all orders to that source by default. This is especially simple to implement because you can just add your supplier’s email address as a recipient for all new order confirmations, completely automating the process.
Orders are routed based on their location
If you work with several suppliers, each of which stocks the majority of your products, you may simply direct the order to the provider nearest to your customer. This not only speeds up delivery to your consumer, but it also saves money on shipping costs.
Orders are routed based on availability
If you stock a wide catalog of products from multiple suppliers, you’ll most likely need to route each order based on which dropshipper has the item in stock. If you do it manually, this approach needs more work, but it can be automated with a solution like eCommHub if your suppliers give data feeds.
Route orders based on price
This sounds fantastic in theory, but until one source has much superior pricing, determining which company will be the lowest can be tricky. Any automated solution must take prospective drop costs, real-time shipping rates, and real-time supplier prices into account. While not impossible, implementing an accurate automated system to accomplish this can be tricky.
Even if you don’t route all of your orders based on price, you should make your suppliers compete for the best prices as your firm expands. Just don’t try this too soon—as a newcomer, you’re more likely to irritate your suppliers than to gain them.
We tried all four techniques and discovered that there is no “best” way to accomplish it. It is entirely dependent on your store, suppliers, and personal preferences.
4. Implement security best practices
There is no excuse for running an internet business with inadequate security or fraud protection methods in today’s society. Here are some dropshipping suggestions for protecting your customers’ personal information as they shop online.
Storing credit card numbers
Storing your clients’ credit card information makes restocking easier and may improve revenue. However, if you’re hosting your own site, the security risks and responsibility are usually not worth it.
To hold credit card data, you must follow complicated PCI (payment card industry) compliance regulations and undergo security assessments. Furthermore, if your server is hacked or compromised, you may be held accountable for the stolen credit card information.
The best strategy is to avoid storing your clients’ credit card information. Consider offering one or more payment alternatives from third-party providers such as Shop or PayPal, which speeds up checkout, decreases cart abandonment, and frees up your time to focus on marketing and customer service rather than security checks.
You won’t have to worry about any of this if you have a Shopify store. However, if you’re using a self-hosted cart or another ecommerce platform, disable the “store card information” feature in your control panel.
Managing Fraudulent Orders
When you first start out, the idea of fraudulent orders can be frightening, but with some common sense and prudence, you can avoid the vast majority of losses due to fraud.
The AVS, or address verification system, is the most prevalent and commonly utilized fraud prevention mechanism. Customers must input the address on file with their credit card when AVS is enabled for the transaction to be accepted. This prevents thieves from making online purchases using just the raw credit card number.
When the billing and shipping addresses are different, the great majority of fraudulent ecommerce orders occur. In some circumstances, the thief enters the billing address as the card owner’s address and a distinct shipping address for the products. Unfortunately, if you do not enable consumers to ship to addresses other than the billing address, you will lose a large number of valid purchases.
The good news is that fraudsters prefer to follow patterns, making it easier to identify fraudulent orders before they ship. Individually, these indicators will not assist you detect a fraudulent order, but if you see two or three of them, you should look into it:
- Billing and shipping addresses are different. Over 95% of all fraudulent orders will have different billing and shipping addresses.
- Various names. Different names on the billing and shipping addresses may indicate a fake order. Either that or a gift purchase.
- Email addresses that are out of the ordinary. Most people have email addresses that include a portion of their name, which allows you to match a portion of an email address to a customer’s name. However, if you find an address like firstname.lastname@example.org, it’s likely a made-up address and a symptom of fraud.
- Shipping was expedited. Because they are billing everything to someone else’s credit card, fraudsters will frequently choose the quickest—and most expensive—delivery method. It also shortens the amount of time you have before the item is delivered to capture them.
Simply pick up the phone if you feel an order is fake. Fraudsters usually never use their real phone number when placing a purchase. If the order is valid, you’ll most likely have a 30-second conversation with someone who will clarify things up.
If not, you’ll receive a disconnected line or someone who has no idea she bought a 25-foot yacht for overnight delivery. To avoid chargebacks or other issues, you can cancel the order and issue a refund at that point.
5. Handle chargebacks quickly
When a customer calls his or her bank or credit card provider to dispute a charge you made, you will receive a “chargeback.” Your payment processor will temporarily deduct the disputed charge from your account and request proof that your dropship firm delivered the products or services to the customer.
If you cannot provide proof, you will be charged a $25 chargeback processing fee and will forfeit the amount in question. If you have too many chargebacks, you may lose your merchant account.
The most common reason for chargebacks is fraud, but customers will also challenge a charge if they don’t recognize your company, forget about the transaction, or simply don’t like the product they received.
When you receive a chargeback, you may only have a few days to answer, so act promptly! To be eligible for a refund, you must submit documentation of the initial order, tracking information demonstrating delivery, and, most likely, a wholesale packing slip indicating the items you ordered and sent.
Unfortunately, if the chargeback is for an order with separate billing and shipping addresses, you will almost likely lose. Most payment processors will only repay you for fraudulent orders shipped to the card’s billing address.
6. Write an effective return policy
Before you write a return policy for your dropshipping store, make sure you understand how all of your suppliers handle returns. You may afford to be lenient with your terms if they offer a lax 45-day return policy. A tight return policy from just one provider may compel you to reconsider the terms you can afford.
When a consumer needs to return an item, the procedure will be as follows:
- A consumer contacts you to make a return request.
- Your supplier issues you an RMA (return merchandise authorization) number.
- The consumer returns the goods to your supplier by mail, noting the RMA # on the address.
- The supplier credits your account for the merchandise’s wholesale price.
- You reimburse the full retail price of the goods to the customer.
However, it is not always this simple. Returns can be complicated by the following variables:
Some providers will charge a restocking fee, which is simply a cost for the inconvenience of having to return an item. Even if your supplier imposes these fees, we strongly advise against charging them to your customers because they would make your online store appear old and unpleasant.
Although you may have to pay a fee now and then, you will repay that cost in the form of more clients who choose to do business with you.
Items that are defective
The only thing worse than receiving a faulty item is having to pay extra postage to return it. Most dropshipping vendors will not pay for return shipping for damaged items. They believe they are not accountable for flaws because they did not produce the goods.
If you want to develop a respected firm, you should always pay your clients for return shipping fees on defective items. This is only one of the expenses of running a successful dropshipping business.
If the defective item is reasonably priced, it is often preferable to simply ship the buyer a replacement without having them to return the old one. This provides several advantages over forcing people to return the old item, including:
- It has the potential to be cost effective: It makes no sense to pay $10 to return an item that costs you only $12 from your wholesaler. You’ll earn a $2 net credit, but the hassle to your customer, supplier, and staff isn’t worth it.
- The customer is astounded: You’ll enhance customer satisfaction and potentially drive repeat purchases by providing the convenience of a replacement without the headache of a return. The consumer will also receive the replacement product much faster than if the old one had to be returned to the warehouse before delivering a replacement.
- Shipping costs may be covered by your supplier: While suppliers may not pay for return postage on a defective product, most will pay to have a replacement shipped to the consumer. Most providers will cover the freight on a replacement product that you simply purchase separately because they will be paying for return shipment anyhow.
Most companies would require the buyer to pay for the return freight if a consumer wants to return a non-defective product for a refund. You’ll surely stand out if you’re ready to give free returns on anything (and companies like Zappos have made this part of their unique business plan).
However, universal free returns can be costly, and most customers will understand that you shouldn’t have to pay return shipping rates simply because they ordered a product they didn’t end up wanting.
7. Adopt simple shipping rules
Dropshipping business owners may struggle to calculate shipping charges. With so many distinct products delivering from many places, calculating shipping charges for orders is tricky.
You can choose one of three types of shipping rates:
- Rates are updated in real time: Using this strategy, your online shopping cart will calculate an actual real-time quote based on the total weight of all items ordered and the delivery destination. This is extremely accurate, although it can be challenging to compute for shipments from different warehouses.
- Rates are calculated by kind: You’ll use a per-type dropshipping tips and technique to create flat delivery prices based on the products ordered. As a result, all tiny widgets would ship for a flat $5 charge, whereas all large widgets would ship for $10.
- Shipping is included in the price: You would charge a single flat rate for all shipments, regardless of type, as the name implies. You could even include free shipping with all orders. This method is the simplest to use, but it is the least accurate in terms of representing actual shipping costs.
When it comes to order fulfillment, our dropshipping tips is to remember the primary philosophy of simplicity over perfection, especially if you’re new to dropshipping.
Some dropshipping company owners may spend days, if not weeks, attempting to figure out shipping standards for an ecommerce store that has yet to make a sale. Instead, companies should concentrate their optimization efforts on marketing and customer service, as well as rapidly develop a basic shipping policy that establishes a flat pricing based on your typical delivery fee. You’ll most likely lose money on certain orders while making it up on others.
Even if you could implement a system that passed on additional shipping fees based on supplier location, would you? Most clients are put off by exorbitant shipping costs, especially when they believe their product is coming from a single location.
Instead, choose suppliers with overlapping inventory and be judicious about the things you sell to limit duplicate shipments. This is a far more practical and straightforward long-term option.
International shipping has gotten more convenient, yet it is still not as simple as domestic shipping. When shipping overseas, you must consider:
- varying countries have varying weight and length restrictions.
- Suppliers may charge additional fees for processing foreign orders.
- The additional cost of handling problematic orders as a result of higher delivery fees
- Excessive delivery expenses for large and/or heavy items
Is the trouble worth it? It is determined by the market and the margins earned. If you sell small things with higher profit margins, the additional market reach may make the bother and price of offering foreign shipments worthwhile. Others, particularly small business owners that sell larger or heavier things, will find that the additional benefit is not worth the money and difficulty.
Choosing a shipping carrier
Choosing the appropriate carrier is critical because it can save you a large amount of money. In the United States, the most important choice will be between UPS/FedEx and the US Postal Service.
- UPS/FedEx: These privately owned behemoths are ideal for shipping large, heavy cargo within the United States. Their pricing for large shipments will be much lower than the USPS’s.
- The United States Postal Service: If you’re delivering tiny, lightweight things, the USPS rates are unbeatable. Following dropshipping expenses, the cheapest UPS shipping fee you’re likely to see is approximately $10, although you can frequently ship things for $5 or less through the post office. For mailing foreign shipments, especially smaller ones, the post office is usually a preferable option.
Consider categorizing your shipping options by shipping time (“Within 5 Days” or “Within 3 Days”), as this allows you to choose the carrier that is most cost-effective for each order and delivery period.
8. Provide great customer support
Take it from us: as a dropshipping company owner, organizing all of your client emails, requests, and returns in an Excel spreadsheet is not ideal. Similarly, when your company and team expand, maintaining assistance with a single email account gradually breaks down, resulting in difficulties and service gaps.
One of the finest dropshipping tips and strategies for ensuring exceptional support for your consumers is to set up a help desk and write FAQ pages. Helpdesk software comes in a variety of flavors, but they all give a centralized area to host a FAQ page and manage customer support letters and concerns. Most help desks make it simple to assign issues to team members and track conversation history among all parties involved.
Some prominent choices to consider include:
- Scout, please assist me: Help Scout handles each issue as an email and removes all of the normally appended ticket information that consumers see with support inquiries, making it less crowded than other desks. Instead, support tickets appear to clients as ordinary emails, offering a more personalized experience. Plans begin at $15 per month.
- Zendesk: Zendesk, one of the most popular help desks, is highly flexible and powerful, with a wide range of tools and integrations. It requires some tweaking but is quite strong once tailored to your firm. While the app is free to use, a subscription to the Zendesk Support Team Plan, which starts at $19 per month, is required.
- Gorgias: Gorgias, which was designed exclusively for your Shopify business, organizes all of your support queries in one location, allowing you to cut response time and boost customer support efficiency. Gorgias features automation tools that allow you to personalize responses to your most frequently asked inquiries. Plans begin at $60 per month.
- HelpCenter: Save time by accessing all client inquiries from email, Live Chat, and Facebook Messenger in a single platform. It’s simple to build a FAQ page from scratch to enable clients self-serve and find solutions to their problems. There is a free plan available.
- Richpanel: Each ticket has order data next to it. Without leaving the help desk, you can send tracking information, alter orders, and issue refunds. Create self-service scenarios in the help center and rapidly respond to frequently asked questions. There is a free plan available.
9. Consider phone support
You won’t be able to incorporate phone assistance for your dropship business if you’re bootstrapping a business while working a 9 to 5 job. However, if you work full-time on your ecommerce business, it may be a viable alternative.
If you’re bootstrapping a business while working a 9 to 5 job, you won’t be able to incorporate phone help for your dropship firm. It may, however, be a viable option if you work full-time on your ecommerce business.
However, if you’re selling things in the $25-50 area, most buyers won’t require phone support if you’ve created a decent, information-rich website.
If you wish to provide phone support, plan ahead of time. Placing a huge 800 number at the top of each page may result in an overabundance of low-value phone calls that cost more to maintain than they’re worth. Instead, consider including your phone number in places where you know the visitor is likely to buy, such as the contact and shopping cart pages.
Fortunately, there are numerous third-party services available to assist you in setting up a toll-free phone number and sales line, including:
- Grasshopper. Grasshopper offers phone services and is geared toward smaller businesses and entrepreneurs. You can get a toll-free number, three extensions, call forwarding, and voicemail for a reasonable monthly fee (around $26).
- Aircall. Aircall offers an essential plan that gives you phone, email, and help center, effectively making it basic help desk software. It allows you to have a toll free number and unlimited calling in the US and Canada (international rates apply). It also integrates with other popular help desk software, like Zendesk.
10. Focus on marketing
Customers seeing your dropshipping store online is ultimately what determines sales. As a beginner dropshipper, here are some dropshipping tips & techniques to assist you enhance website traffic.
Begin with SEO
SEO is the process of optimizing your website so that it ranks higher in search results for relevant keywords.
Ideally, you want your product pages to rank for keywords so that customers can find them naturally through search engines. While most keyword searches are two to three words long, they are more competitive and crowded, making them difficult to rank for.
Instead, concentrate on long-tail keywords that are three or more words long. Long-tail keywords have lower search volume but are considerably easier to rank for due to a lack of competition.
These can be found using technologies such as Google Ads or keyword.io. When you enter the name of your product into the tool, you’ll see a list of related inquiries that you may include in your product descriptions.
Use Facebook Ads to get the most out of social media
Many online store proprietors use Facebook as a social media channel. With over 2.6 billion monthly active users, it is brimming with potential for you to reach new clients and bring them to your online store. Creating Facebook advertisements gives you direct access to a large and active social media user base.
All of the likes and connections generated on Facebook build extensive user profiles that advertisers may use to focus their adverts. The benefit of Facebook advertising is that you can target social media clients based on their demographics, interests, and habits.
You may match the products in your dropship store to a huge number of social media users’ interests, traits, and behaviors using Facebook’s Ads Manager platform, increasing your chances of finding the right consumer in your target market.
You can then bid to put your goods in front of a user. Experiment with several ad formats for your Facebook offerings (image, video, carousel, or collection) to find which paid campaigns convert the best at the lowest cost.
Customers can be targeted with Google Ads
Google Ads allows you to target your ideal consumer directly on the two most popular search engines, Google and YouTube. Google advertising provides features similar to most other ad platforms, such as the ability to set a budget and a maximum daily expenditure, as well as pay-per-click advertising, which charge you only when someone visits your site. These features make it an excellent entry-level advertising platform.
What distinguishes Google Ads is its ability to reach customers in three distinct ways: search ads, Google Display Network ads, and YouTube ads. The main allure of Google Ads is the ability to target your audience based on specific behaviors, how they’ve previously interacted with your site or brand (from visiting a specific page to abandoning their shopping), demographics, interests, and other characteristics.
You might use Google Display Network to “retarget” users who have recently visited specific products in your online store by combining some of these characteristics. These users will see the products they looked at previously while they explore websites that use Google’s display advertisements network, giving you more chances to convert them into clients.
Are you ready to start your dropshipping business?
While starting a dropshipping business is one of the quickest Dropshipping tips and methods to get a business up and running, keep in mind that it is not a quick path to passive income. A successful dropshipping business requires active work to expand in order for clients to be satisfied and return. However, if you follow the dropshipping tips listed above, you’ll be off to a good start.
See More: Easy Dropshipping Tips for Success