Guide For Dropshipping To Build Monster Traction For Your Startup
One of the hardest things for starting ecommerce startup is building traction. Sales glow in all investor’s eyes. If you want to build the future ecommerce giant, you have to get some traction in order to motivate investors for early stage funding. The problem is that you do not have $100,000 laying around to spend for some early stage inventory. You also don’t want to just have a few items laying around in your store. The best way to solve this problem is to use dropshipping. Some dropshippers make over 2-3 million dollar in revenue per year!
Guide For Dropshipping
A lot of readers are already familiar with what dropshipping is, but incase you aren’t, dropshipping is basically selling items that you do not physically hold inventory for. A buyer goes on your site, finds an item that you like, adds to cart and checks out like usual, then you forward the shipping information to your supplier and bam, you made money off the margin.
If your ultimate startup ecommerce goal is to build an ecommerce empire that sells from multiple brands, then dropshipping is the best way to gain traction. Through dropshipping, you should be able to gain exposure for your site and build monster traction. Each time someone makes a purchase on your site, you have a potential future customer. This is an extremely low cost strategy.
Now that you know what dropshipping is and how it works, it’s time to get started. After setting up your domain, web host, and ecommerce platform, we are ready to search for suppliers. First thing you need to determine is your future goals. For example, are you looking to eventually build a strong fashion ecommerce or is it an electronic ecommerce? Maybe we could narrow it down some more. Is it going to be an iphone case store or a high end fashion store? After you have determined that we could search for those specific suppliers.
There’s a lot of suppliers and a lot of ways to find them, but we will go over the main two. The first one is manufacturers and the second one is wholesalers and distributors. Both are considered cheap solutions. We want the best price on the products because our margin won’t be high. The whole goal here is to build traction for your startup so you can grow.
Wholesalers are people who buy or import directly from manufacturers in bulk and then distributes them out to the public in batches or singles. Buying from either one will require a minimum order. Wholesalers usually has a higher price compared to manufacturers, but the minimum order is much lower. One of my favorites is Salehoo. Salehoo has over 800 quality suppliers that accept dropshipping. It has a 60 day money back guarantee, so feel free to try it out and if you don’t like it cancel it.
Alternatively you could contact manufacturers directly. For example, say you were trying to build an aftermarket car accessory ecommerce site. You might want to contact the people who make Greddy exhaust or Pilot automotive directly and see if you could order a minimum. Usually this minimum isn’t like Alibaba. In dropshipping, the minimum is a hold that they put on your account so that they know you are a reliable customer. All of this can be negotiated and varies between suppliers. Once you have established a good track record, you usually do not have to deal with holdings unless you are working with a huge company.
Great, now that you have contacted a supplier, got the quote, now you are ready to start listing and begin building monster traction! Let’s briefly go through the process of how this works. We will use Nike shoes for this example. The process works like this:
- List a Nike shoe on your website with a marked up margin (For example, Nike offers you the shoe for $55, and you list for 65$)
- Buyer comes to your site and feels that the Nike shoe is an excellent deal.
- Buyer places an order and checks out as usual (they won’t know your dropshipping)
- You receive the money and collect the buyer’s shipping information.
- You then pay the supplier $55 for the Nike shoe and pass the shipping information to them.
- The Nike supplier ships out the item for you and you just pocketed 10$
There’s a lot more to it, but this is an overview of how the entire process works. Basically the key thing to note is that you do not physically hold any inventory and aside from the initial holding fees, you pretty much pay nothing. Honestly though, $10 dollar margin is rare with lower priced items, but imagine if you are making 200 sales a day, then your looking at strong profit. Search through quality listings on your wholesaler website. Again, I recommend using SaleHoo for it’s easy interface and it’s free to try anyway.
Platforms To Use
Nowadays, you could pretty much set up any ecommerce site in less than a day with platforms such as Shopify, Woocommerce, Wix, Weebly, and many more. Choose the one that will fit you best. If you want to eventually bring in outside vendors, you would want a platform that supports multivendor. As of now, Shopify does not offer that, but woocommerce has it’s own plugin that allows multiple vendors to list on your site. Magneto also has this function, but if your coding skills are limited then you should go with woocommerce. Woocommerce is easy and straight forward. Find a WordPress theme you like, install woocommerce and you could be listing in just minutes.
Check out my other article on The Best Ecommerce Platform To Use For Your Startup
Marketing Your Site
You could have the best idea in the world or the best prices for your items in the world, but it is completely useless without good marketing skills. Remember the whole goal of dropshipping is to build traction for your startup. You don’t want to have a bad image for your site because when you finally get a chance to expand, customers won’t come back.
Some tips for marketing and branding your dropshipping startup:
- Sell quality items (don’t just find any cheap thing and list it up. Dig through the supplier’s list and find something worth value for your customers)
- Use social media (unless your planning to blog about your items, social media is the fastest way for deals to convert)
- Have good pricing (if everyone out there is selling Nike shoes for $65, there is no point in you selling it for $67)
- Do your research (Take use of ebay, amazon and other niche sites to research on popularity, pricing, and feedbacks)
Make sure you let everyone know about your site. There is nothing more powerful than traditional marketing. Since it is a product site, you might want to start building your reputation on Instagram and Pinterest as well.
Related Read: Tips For Solid Growth Hacking For Your Startup
Do Not Dropship on Amazon And Ebay
The reason you should not dropship on Amazon or Ebay is because you are trying to build traction for your future ventures. We are not trying to build a lifestyle business on Amazon. Amazon and Ebay might be viable options for regular people that wants to make a small comfortable living, but if you are trying to go big, you should consider dropshipping from your personal website only and develop a brand around it.
Also, Amazon and Ebay have seller fees that can decrease your margin insanely, so be careful with using 3rd party services. Avoid Aliexpress and Alibaba for dropshipping because the shipping time is just too slow and the quality isn’t always great.
Other things to note about dropshipping
It is always smart to work with multiple suppliers. If the supplier does not require a minimum, then sign up with them right away. The reason you should work with more than one supplier is because incase one of them flakes out, you always have an alternative.
Make sure that you check their inventory. Most of the suppliers have a backend database website that shows how much inventory they have left for a specific item. If they only have 10 left, you do not want to list up 12 on your site. That will create a lot of problems.
Dealing with returns might be a hassle. The problem with dropshipping is that you do not physically own or hold any of the items. If a customer receives the item and there is a problem with it, you are the first person that they will contact. The return process can get complicated. To keep it simple, basically you would need to contact the supplier and notify them about the return. You will need to return the customer’s payment back to them out of your own wallet, then you wait for the supplier to pay you back. This can be a hassle and will put you in the negatives, so make sure your return guidelines are set in correct format. You should always provide excellent customer service so that you could work things out with the buyer without having to initiate a return. Try to keep your return rate at a minimum with great customer service.
How To Proceed After Building Traction
Alright cool, now that you have build some traction and brand exposure, it is time to build your ultimate goal. You want to take this slowly and start converting your site to your main goal. For example, if your end goal is to build a massive marketplace where other people can sell their stuff like ebay, then you would want to start contacting individual sellers who are interested in your site.
In your short pitch, let them know about the popularity of your site and how you will bring value for them. For example, you might want to let the individual sellers know that you will do all the marketing work for them and that your site is already a known brand. Slowly move away from dropshipping and start collecting sales commission like how 3rd party ecommerce systems work.
After that, you might want to bring in some investments from investors so that your site will have accelerated growth. Remember sales, make investors motivated, so show them your numbers and show them that you can market. Plan ahead, dropshipping is an excellent start to build monster traction.