Have you ever wondered how e-commerce retailers get by without maintaining huge warehouses and sizable truck fleets? Have you ever wondered how they manage to keep overhead to a minimum? There are different ways to do it, one of which is drop shipping. With a proven drop shipping strategy in place, there is money to be made in e-commerce.
What is drop shipping? For all intents and purposes, it is ordering product direct from a manufacturer or distributor, then having that product delivered to your customer rather than your office. You pay for the shipping out-of-pocket. You pass that cost on to your retail customer.
- Choose a Viable Product Line
The starting point for making money in e-commerce, whether you drop ship or not, is choosing a viable product line. Note that viability is more than just consumer demand. You also have to account for competition, pricing, and so forth. The goal is to choose a product line with a known demand and as little competition as possible. That product should be able to sell at a price high enough to cover your margin.
What is margin? It is the percentage of the total sale price that constitutes profit. Let us say you sell an item for $100. The total cost to you, including material acquisition and shipping, is $75. Your profit margin is 25%. Decide on an acceptable margin while you are looking for a viable product line.
- Choose Suppliers Carefully
Successful drop shipping relies heavily on partnerships with suppliers. Whether you choose domestic or international suppliers, do your best to vet them first. Do your research. Check out online reviews. Ask whatever questions you feel necessary to determine the quality of a given supplier. Do not accept a lack of answers.
- Choose a Reliable Shipping Partner
Some suppliers don’t let you choose shipping method. They work with only one shipping partner and that’s it. Other suppliers will give you choices. Still others will let you arrange shipping on your own. The latter is more common in international e-commerce.
Houston-based Preferred Shipping says there are a fair number of international e-commerce shipping partners to choose from. They recommend DHL Import Express for a variety of reasons. Either way, it is important to choose a reliable shipping partner you can trust to deliver your packages on time and undamaged.
- Aggressively Market Your Operation
Everything you have read thus far deals with the mechanics of e-commerce and drop shipping. But there is one last consideration that goes above and beyond. That consideration is marketing. Many new e-commerce entrepreneurs fall into the trap of assuming that selling online happens all by itself. It does not.
Designing a beautiful, professional looking website guarantees neither traffic nor sales. A website is little more than the digital version of a brick-and-mortar store. You have to get people into that store before they can buy from you. How do you do that? By aggressively marketing your operation.
This is where tactics like SEO and content marketing come into play. If you don’t know how to market in the digital world, you either have to learn or outsource the work to an SEO provider. Just know this: your e-commerce site probably won’t succeed if you don’t market it.
There is money to be made in e-commerce with drop shipping. The drop shipping model significantly reduces overhead costs while simultaneously eliminating the need to stock inventory. It is relatively easy, efficient, and dependable. But that doesn’t mean drop shipping requires no effort from you. You still have to put time and effort into all the things discussed in this post.