“Dropshipping! Drop Shipping! Step right up! Find your ultimate freedom as a business owner – sit somewhere on the beach and coordinate your whole business remotely with little effort!” – this is probably what a snake oil salesman would sound like if they were to ever preach drop shipping…
However, setting the preaching aside, there's something that you should know before you throw yourself into drop shipping and build your whole business around it.
In this complete guide, we'll cover all the ins and outs of drop shipping as a business model that you should know if you're considering it the path for you.
Chapter #1: What Is Drop Shipping?
Drop Shipping often attracts those of us beginning to get into working online due to the low risk nature and obviously the flexibility that comes with working for yourself online! The basic difference from a typical E-Commerce website (Fig,1) is that you're not buying in bulk and then selling a product; you find the customer and make the order on behalf of the customer. This means you don't have to house any stock or worry so much about the shipping costs or logistics.
Sounds great, right? Well, as with anything, it's not for everyone and you'll make a lot of decisions early on that you'll at least find a quicker/cheaper short-cut for a few months down the line. With that in mind we've put together everything you need to know right here, including some of the more technical solutions so bookmark this page for later! 😉
Chapter #2: Drop Shipping Truths 
Did you know that according to E-DSS.org, around 27% of retailers on the web have transitioned to drop shipping as their primary method of order fulfillment. So why would they do this? Well there's a huge infrastructure required when it comes to retailing; analyzing buying behaviours, buying the stock, shipping the stock, storing it, distributing to your stores... Eurgh! It makes the head spin just thinking about it! As mentioned earlier, drop shipping relieves some of that stress and certainly expense!
#1 The Chinese Can Be Really Good Business Partners
You can write a whole book of fairy tales about drop shipping. There is now a whole folklore of legends about the apparent dishonesty and unreliability of Chinese businessmen.
Think for a couple of minutes and you will probably know a story told by a friend of a relative of a neighbor of a person who was tricked into some bad deal with a Chinese seller.
According to McKinsey, the Chinese economy was already worth $10 trillion in 2014 and had a 7% annual growth. The Chinese government encourages foreign trade because it is the main pillar of the country’s domestic economy and is ever more reliant on foreign trade outside of the US due to the more recent sanctions!
Statista.com reports that since 2005, exports contributed more than 20% to the GDP of China. As a result, in 2015, the country took the second place globally among the countries with the largest GDP, only following the US. Quite curiously, in 2016, the United States was China’s main export partner and accounted for nearly 18.4% of total exports from China. The second largest export partner of China was the European Union: these countries purchased 16.2% of the country’s total output. This means the trading lines are already setup so there's less of that bureaucracy than with other countries.
#2 People Don’t Mind A Long Delivery Time
It's no secret that orders from AliExpress or Alibaba aren't as quick as the likes of Amazon. But don't fret, you can beat them on price and this is what customers care most about now which is why E-Commerce is so big!
Really, if they can’t get these items from any other place at your price, they are fine with waiting.
So don’t think that it will stop your customers from visiting your drop shipping store. Just be honest and tell them how long the delivery will take. Remember that the quality of your customer service can make a huge difference.
#3 Chinese Manufacturers Produce High Quality Items
Sure, this may not have been the case 20 or 30 years ago but the quality of products coming out of China is as good as anywhere else now! It's all dependent on who you choose as your supplier. Think about a high street where you are now...There'll be products in stores that are of poor quality and some which aren't, yet are from the same supplier...
Still don't believe us?
Here's a little bit of the history...
A few years ago China's State Council announced a new national plan called ‘Made in China 2025’. This strategy was aimed at advancing Chinese manufacturing over the next 10 years, with the government supporting more progressive technology development. Also, it will encourage initiatives that reduce environmental damage and create an ‘intelligent’ approach to manufacturing. As a result, the country has already matched the rest of the world in terms of quality and is set to become even more competitive on the global production stage in terms of new technologies that reduce the impact on the environment.
#4: 3000% Markup Is Real With Drop shipping
As with any other business, the reason you start a drop shipping business is money. After all, why would you run a business that brings you no income?
Go on to AliExpress and just check out the prices. You will see that the sellers don’t ask much for their items in comparison to Amazon Sellers. They cost probably 10–20 times less than in an ordinary store.
What does this mean?
Choose any item for your store, and increase its price several times. 5 times? Okay. 10 times? Good. 20 times? Even better.
You will still get a lower price than most of your competitors. It will still be a nice deal for your clients, and for you it will be a nice profit. Everyone gets their benefits!
Chapter #3: Picking Your Niche, Market & Suppliers
Another misconception when it comes to drop shipping is that you can start in any niche you can image and make a profit regardless of your experience.
This is not true.
Remember that regardless of which market you join, you're always going to come across competitors who will have much more experience than you...possibly established in the niche for many years...with a better understanding of your potentials customers and their needs too!
The fact that your initial costs are low – due to the drop shipping model – doesn't mean that you are going to be able to compete with them effectively. They may be going from the same source you are!
Choosing a niche based around a topic that you are passionate about solves the bulk of this problem. If it's a passion you have had for many years then it's likely you can beat your competitors on the knowledge side of the equation...if not, then acting on your passion will allow you to beat them on the motivation side.
Here's a simple checklist when choosing your niche:
☐ You're a consumer in that niche yourself – you've bought a number of products in that niche, and you understand what's good/bad about them, and how to make things better.
☐ You have professional or academic expertise in the niche which allows you to approach it from a more professional/credible level.
☐ You've already done research in that niche – even if just among your friends and family, but the point is that you have some first-hand understanding of the target audience.
☐ You've witnessed first-hand (perhaps in a previous job) other businesses in the niche rise and fall leaving you with the knowledge of the major mistakes + how to avoid them.
Having some sort of understanding of the niche will not only help you to compete and cater to your customers better, but it's also important when you're dealing with your suppliers who send products directly to your customers. Without any knowledge about the niche, you won't have the ability to pick up on anything fishy about the quality of the products, the process, the pricing, or anything related and will AT MINIMUM lose a lot of money when starting out.
Now most people reading this will have skipped straight to this section of this guide...why? Simple, it's THE most important part. Finding the best and lowest cost suppliers is a gold mine for anyone and the reason you won't hear many outside of Alibaba and AliExpress which we've already mentioned. However, the key is the method. Everyone who's ever found a supplier that is a cut above the rest has thought seriously about the problem and what they're aiming to achieve, instead of simple scrolling through pages and pages or the afore mentioned sites and hoping to stumble across some kind of holy grail...
Bearing in mind we run quite a few e-commerce stores for clients ourselves and are well accustomed to thinking in terms of problem-solution, we've picked up a few patterns of how to find those suppliers to die far.
Okay, so how to find those suppliers:
1. Think Local
This can't necessarily apply to all niches but sourcing locally cuts out those delivery costs which can get heavy if you're using suppliers from afar. You'll also find that you can build up a great relationship that can open up so many unimaginable doors when you're first starting.
This doesn't even strictly have to be set up as a drop shipping agreement... you can discuss with the local supplier that you're setting up an e-commerce website and would like to sell there product on it...If you make a sale you'll come and pick-up the product(s) saving them the delivery costs which they're likely to put some kind of "management/administration" fee on.
It doesn't stop there either. The marketing you can do with local suppliers gets crazy results if done correctly and not just for you either! Remember, you're making sales for a supplier whichever way you're looking at it and that's what business is all about. If you boost a suppliers sales by 10%, 15% or even 20% they're going to do what they can to keep you on board with them...instead of the other way around. Essentially, the position of power shifts in your favour!
2. Lesser Known Online Suppliers
- Worldwide Brands
- Sunrise Wholesale
- National Dropshippers
Specialized drop shopping companies found on the web are great to find suppliers with more competitive prices or to find niche products that may not exist in your local area too. We'll constantly be updating our list here so once again bookmark this page or subscribe to our newsletter to get those coveted suppliers before everyone else jumps in!
- Uniqbe Electronics
- Cost Tag Electronics
- Reiko Electronics
- Laptop Plaza Electronics
- Novatech Electronics
- Hypercel Electronics
- Albany Distributing
- D&H Electronics
The good news here is that there are really more supplier sites than you can shake a stick at... The world leaders, AliExpress and Alibaba offer the biggest directories of Chinese suppliers, while platforms like Salehoo or Oberlo not only connect you with suppliers but also provide further value. They key is to remember the business processes suppliers go through. Suppliers are looking for sales but also want reliability. Some believe that the big sites such as Alibaba and AliExpress aren't worth the time when it comes to drop shipping...Many though understand that a few sales in the first month can morph into a sizable amount 6 months down the line...We've found these are often on those industry supplier sites!
Chapter #4: Add Value!
This is an area we think many of the current e-commerce sites in general will start to be fazed out of the market. The fact is, many of the current e-commerce (drop shippers included) believe that they can simply be middle men and have no need to do anything more. What many of our competitors finally starting to realize is that you must ADD value, which mostly comes down to content.
Here are 4 possible approaches of adding value to your e-commerce/drop shipping store:
Method #1: “Peacocking”
So if you're thinking this sounds familiar, you've probably read some PUA books and can probably guess the concept when applied to e-commerce...If not, think in terms of a Peacock spreading it's brightly coloured feathers to stand out for all the...Feacocks? Female Peacocks!
Ensuring your e-commerce site stands out from your competitors in a positive way is key. DON'T over-complicate it, stick to the marketing fundamentals though and you can't go wrong. Be unique and authentic. Podcasts and video reviews are a good place to start.
Method #2: “The Personal Method”
Let's run through an example for this one. You're selling exercise clothes in your store. You have a waterproof jacket that keeps you cool/dry no matter the weather like no other product on the market today...It's the best yet! Obviously you should mention this in the specs as it's a great selling point. However, giving reviews of where it's best used with drawing titles such as "Best Jacket For Monsoon Weather!" helps make it that much more personal that anyone reading and considering taking some long hikes in some wet places will be drawn to this product above others. You can do something similar in most niches.
By providing potential customers with tailor-made plans, you're taking an angle in a niche. At the end of the day, you're selling something similar to your competition, but you've invested your time to find out what really suits your target customer.
Top Tip: There's a key opportunity here too. If I'm coming to a store looking to get a jacket perfect for monsoon weather, I'm probably going to look for ultra-waterproof everything else too! Match up products that are going to work well together and you'll pull what we call the "collection sales".
Method #3: “The Cleanex Method”
This method is great if you're in a complex niche or one which people have little knowledge about. Many suppliers sell products that don't have a well-defined purpose or target market. Other products have unclear user manuals, or even unclear sales materials, so that the customers don't know what they should do with them, or even why they should buy.
You can make the product specs and uses all that clear which will also draw huge traffic amounts from search engines too!
- Create a “Getting Started Guide” for the product.
- Create a “Best Setup” package where you tell the customer what the best way to set up the product is (while dealing with technological tools, machinery, or even vehicles, for example).
- Offer additional support and customer service packages.
- Video review the product. Upload this to Youtube and other social media platforms too and you'll bring in a nice bit of traffic in the process!
Chapter #5: Getting A Website Set Up For Drop Shipping
So now the fun bit, the practical part! The key thing to look out for is features to help keep you on top. You don't want a site on a platform or theme that will be out of date in a few months.
Consider these few points when choosing a platform you're going to build your e-commerce website on:
- Do you control the categorize your products go into completely so your customers can view them easiest?
- It's where you collect payments from the customers. What payer's does your platform accept?
- It's where you manage the orders.
- What marketing features are included in your chosen platform?
- It's where you can configure the pipeline to then send those orders to your suppliers.
- Is your platform growing and keeping up with the newest features?
Now, before I scare you off, building a high-quality website for this very purpose isn't difficult anymore, you don't necessarily need to hire a designer or another “website pro.” You can do most of the work yourself. And now for the shameless plug...
Our platform is built with all the greatest features to drive sales to your store, how do you think we have such happy clients ourselves?
SO here's the discount code as promised for our E-Commerce Pro & Business packages: LETSMAKEMONEY
See You Soon!