The Basics of Creating a Successful Dropshipping Website

cnxt_dev
cnxt_dev
2018/10/15 08:00

dropshipping basics

If you’ve ever thought about developing a dropshipping website, here is what you need to know.

Dropshipping is one term that you will definitely encounter if you’re considering starting an online business.  

Dropshipping makes it a lot easier to start out in the e-commerce space but it is also a business model that comes with its own set of pros and cons.

This brief guide will help you understand these pros and cons and what it takes to run a successful dropshipping website.

Dropshipping: A quick recap

Dropshipping is a business model that allows someone to operate a business without owning or stocking products.

Basically, a retail partner will partner with a dropship supplier who manufacturers or stocks a specific product. When an order is received via a retailer’s online store, the order will be forwarded to the dropship supplier who will package and send the product to the customer on the retailer’s behalf.

Pros and Cons of Setting Up a Dropshipping Website

While the dropshipping business model is very effective, it also comes with a few cons. This is what you need to know.

Pros

  • Set up is easy. Developing a dropshipping website isn’t rocket science. All that you would need to do is find a supplier, develop the website and start selling to customers.
  • It’s a low-cost business model. If you look at a traditional retail business, a large amount of capital is required to set up and run the stores and manage the inventory. In the case of a dropshipping website, the opposite is true. The only major costs associated with this business model are the costs associated with maintaining your website. Even overheads are incredibly low since there’s no need to pay for a warehouse or a large office space with several staff members to make this type of business work. The low cost of running this type of business is one of the reasons why it’s so attractive.
  • Risk is greatly reduced. Dropshipping website owners don’t need to worry about losing money if certain products don’t sell because they never purchased the inventory to begin with. There is also no need to worry about goods getting damaged during delivery as the supplier handles this.
  • Owners have the option to be mobile. You can operate your dropshipping website from anywhere in the world since there’s no need for an office, employees or a warehouse.

Cons

  • Profits margins will be lower. Some suppliers and vendors will charge you slightly higher prices for specific products, which can affect your profit margins.
  • You will need to take the blame if something goes wrong. Even though your supplier will be handling the products and the shipping, customers are still going to contact you if something is wrong with the products or if something went wrong during delivery, which you will need to sort out.
  • Less control over quality. When you don’t have any contact with the products that you are selling, it becomes a lot harder to control the quality of the packaging and it’s not possible to add freebies or personal touches that might set you apart from your competitors.
  • Competition is fierce. The dropshipping business model is very popular, which means that you will be faced with a lot more competition unless you are in a very specific niche.
  • Inventory management is tricky. The only way that you’re able to keep track of stock is to get updates from the supplier, which can sometimes be difficult. There is software that can make this process easier but this will result in additional costs.

Tips for Creating a Successful Dropshipping Website in 2018

dropshipping analysis

If the idea of creating and managing a dropshipping website appeals to you, here are a few tips that will increase the chances of it being a success.

  • Find the right products to sell

Choosing the right products to sell will naturally make a big difference in the success of your dropshipping website. It’s important to do your research before you decide on the products that you want to stock. This means that you can’t choose products based on your own likes and dislikes and you should definitely not follow any trends that you know will leave you fighting for your business’s life.

It’s also vitally important to not waste your time selling knock-up products that customers are just going to be unhappy with as this won’t get you very far. Here are a few factors to look at when deciding on products to sell:

  1. Price. Knowing the retail and wholesale prices of potential products will ensure that you can offer it to your customers at an attractive price that will also generate profits.
  2. Weight. How heavy or large a product it will impact on the cost of shipping it. If you want to save on costs, it might be better to pick products that are smaller and lighter.
  3. Durability. Stocking products that are renewable or disposable means there’s a higher chance that you will have repeat customers.
  4. Cross-Selling. Stocking cross-selling products is a great way to boost your sales.
  • Understand your target audience

Running a successful dropshipping website means having a thorough understanding of who you’re selling to. When researching your target audience, you need to understand what their needs are and how they make decisions. Knowing how your customers spend their time online will also help you with your sales and marketing efforts. Taking the time to develop several customer personas will also help drive your product selection process.

  • Know who your competitors are

The only way to beat your competitors is to know who they are. Start by looking at competitor websites, the products that they’re selling and the journey that their customers will follow on their site.

Next, look at how your customers are communicating with their target audience. Which platforms are they present on? Are they running paid advertising campaigns? Are they doing anything unique that customers are really responding to?

  • Find the right suppliers

The suppliers that you work with can have a monumental impact on the success of your dropshipping website. As a business owner, you need to know that you can rely on your suppliers. This means trusting in the quality of the products that they stock and the processes that they follow.

It’s important to choose suppliers that have excellent communication policies and fast turnaround times in place, two elements that will be crucial to the success of your dropshipping website.  

Experienced and reputable drop shippers that work with the latest technology are always the better choice. Do your research before you make a final decision.

  • Use your website analytics

The only way to improve your dropshipping business is to know what’s working and what isn’t. Your website analytics is your most important source of information. Not only should this be one of the first things that you set up before you launch your website, but it should also be a tool that you use every week.

Your analytics will tell you which products are the most popular and which product pages don’t see much traffic at all. It will also give you valuable insights into your buyer journey, allowing you to optimize the sales process to increase conversions.

Dropshipping is a flexible and effective business model that when implemented and managed correctly, can be the source of great business success.