Last week was Valentine’s Day.
The holiday that originated from the original St. Valentine likely having been tortured and beheaded on February 14th for helping Roman soldiers marry at the time they were forbidden to by the Christian faith has grown synonymous with showering your special someone with gifts.
Flowers, chocolate, and dinner are the classics.
But most V day’s gifts that were trending in the USA this time last year could be purchased online.
• Online shopping was the go-to gift giving method for 29% of Valentine’s Day shoppers making purchases online in 2018
• The biggest online shoppers of them all are Europeans, accounting for 19% of their total Valentine’s Day spending
• Generally, the number of e-commerce transactions has increased by 37% in recent years
As for who does the shopping…
• The biggest spenders are unmarried men, with 62% of men aged 25–34 claiming to buy a gift for a loved one in 2019, versus only 45% of women
Although the stats might sound heartening/encouraging to any e-commerce store owner, in this blog post, we’ll focus on drop shipping specifically.
Maybe you’ve tapped into the topic of drop shipping but aren’t quite sure what it entails.
Maybe you’ve read the success stories, and your eyes widened with opportunity.
Allow us to expand your knowledge with some background on drop shipping for starters, as a proper 3-course Valentine’s meal should begin.
THE ORIGIN OF DROP SHIPPING
By its definition, drop shipping is a very tell-tale term (that has nothing to do with vessels).
It means to drop off or deliver a product to a customer without ever having to see, pack or ship the item yourself.
Drop shipping first became popular in the 50s with mail order companies mailing catalogs to every corner of the country and receiving orders and payments by mail.
Then those orders would be either fulfilled in-house or outsourced to a warehousing and distribution company, who would pick, pack and ship the goods.
Even IKEA got its start with traditional drop shipping!
However, the term we think of today when we talk about drop shipping became popular after the introduction of e-commerce.
CRASH COURSE ON MODERN DROP SHIPPING
Overall, the standard drop shipping process isn’t that different from your usual web shop, apart from one huge difference:
• A retailer receives an order to their online web shop
• The retailer then forwards the order to their supplier – and does no more physical work in the process
• After that, it’s all in the hands of the supplier who fulfills the order and ships it to the end customer
This means that it’s the retailer’s job to attract the customer to the web shop and sell the product – the sales and marketing part.
On the other hand, the supplier (either the wholesaler or manufacturer) deals with inventory stocking, packing, and shipping.
I know what you must be thinking.
If drop shipping is such a win-win situation for both the retailer and the supplier, why the hell isn’t everybody drop shipping?!?!
EASY PEASY LEMON SQUEEZY?
A lot of people decide to start a drop shipping business because they think it’ll be easy to run.
After all, there’s no inventory, no capital needed to start – and no risk. Right?
Surely, stocking inventory is usually the most significant expense for any new business. Depending on the product you’re selling, you’d need storage or a warehouse to stock your products.
Furthermore, when you’re ordering your entire product offer up front, it’s not very easy to test and see what’s selling well and what isn’t. When it comes to inventory variety, you can only hope you get the product right because if you want to get a good price, you are going to have to buy huge stocks.
On the other hand, drop shipping enables you only to order what you’re actually selling, without having to stock up on obsolete inventory.
START A BUSINESS WITH 0 CAPITAL OR INVENTORY
This brings us to one of the most considerable advantages of drop shipping which is the starting capital – actually the fact that you don’t need any.
Admittedly, the prices you are getting from the suppliers might not be the best ones you could get if you were buying in bulk, but you’re saving significantly more than you’re risking. Moreover, you can just try another set of products if this one isn’t working.
Another aspect of drop shipping that you’ll be saving money on is order fulfillment, not to mention the integration and development of stock-management solutions tied to your online store.
If you had to handle all of the above, you would spend more money and have less time to spend on marketing your products.
Drop shipping allows you to avoid these issues and focus on attracting new customers and building your brand.
As far as communication with suppliers goes, your most important job is to make sure the supplier gets your customer orders.
NO RESPONSIBILITY – NO CONTROL EITHER
While the load of warehousing stock, packing and shipping is not your concern when it comes to drop shipping, it becomes your responsibility if the supplier isn’t doing a good job at it.
If the goods arrive late, get broken or the supplier sends a wrong product altogether, the customer is going to complain to you.
You won’t be able to quickly solve customer issues because you’ll have to deal with your suppliers to solve problems for your customers.
Simply because of logistics, you won’t be able to maintain the personal touch that retailers who manage their inventory can provide the customers.
Speaking of inventory, another thing you don’t have control of in drop shipping is when the supplier is going to run out of stock – because that’s when you run out of stock.
A significant part of your drop shipping success depends on the suppliers you work with, so it’s vital that you are cooperating with high-quality, reliable suppliers with proven performance and ratings.
THE THINGS YOU *CAN* CONTROL
Given that you’ve chosen a reliable supplier, selecting the right niche is probably the most important step when setting up a drop shipping store. While it’s relatively easy to add and remove new products from the web shop’s offer, it will damage the website’s SEO.
For example, just when a web shop started ranking for iPhone smartphone cases, the retailer decides to switch to selling headphones. It will take time and effort to rebuild that visibility.
It doesn’t even have to be the retailer changing the product inventory. Choosing to drop ship a product that’s trending hot hot hot right now is risky because the popularity bubble of that product might burst at any moment.
A recent example of this happening was fidget spinners! So instead of jumping on the trending bandwagon, business should choose a product that’s steady, not trendy. To be honest, people are drop shipping some really wild stuff…
When creating a web shop, pay attention to UI/UX tips that can help the customers convert better. Call the website something memorable, create inviting product descriptions and images, and weave into it the keywords that potential customers might look for.
Depending on your product, you can advertise on social platforms or invest in Google AdWords. Test what works best, then test again. Marketing tools, apps, and software might be a great help in understanding how to target your marketing efforts and budget better.
It also makes sense if you’re inspired to start a drop shipping business, but don’t have the time or the knowledge to do it all by yourself. Don’t let that stop you!
The team at Neuralab have been responsible for bringing to life numerous drop shipping eCommerce businesses. Will yours be next?
Watch a 20-minute video walkthrough for setting up a drop shipping store that sold unicorn phone cases and generated $350+ in the first three days. So fluffy I’m gonna die!