11 Tips New Entrepreneurs Must Know About Dropshipping

Retail eCommerce represents a $220 billion dollar market in the US alone. It’s growing by about 17% a year. The retail industry, of which dropshipping is a subset, is anticipated to reach over $350 billion by 2017 in the US alone. 22-33% of Internet retailers have already chosen shipping as their main method of order fulfillment.


Dropshipping can be defined as an eCommerce model, according to which a store doesn’t keep the products it sells. This means when selling a product, a store purchases items from a third-party vendor and has it shipped directly to the customer. This way, the store owner doesn’t see or handle the product.


Dropshipping businesses are classified as high risk. If you’re interested in opening a low-cost and secure merchant account for drop shipping, you should turn to a trustworthy high risk credit card processor to get the best for your business needs.


Tips to Grow Your Dropshipping Business

Below you can find 11 important points to focus on when starting your dropshipping business:



  • Niche


Have a specific niche for offering products. You can’t sell everything to everyone. Focus on what you’re passionate about and the top trends in the industry. You can narrow down your niche through the evaluation and analysis of the market, competition, and demand.



  •  Competition


Look at your competitors, analyze them, and learn from them. Your future product ideas, positioning, branding, and pricing should be based on such analyses.



  • Supplier


According to 84% of online sellers, establishing a dropship supplier or wholesaler relationship is the main hindrance associated with starting an online business. Your supplier should be reliable and trustworthy. Look for reviews, compare their product prices, and guarantees.



  • Website


Your website should be correctly optimized for the user and SEO. Product descriptions should be of high quality and error free. Don’t forget about high-quality product photos, as well as clear shipping and returns policies. Your site and/or checkout should have trust badges.



  • Traffic


Build excellent marketing strategies. Advertise professionally. Use offers and promotions. Google AdWords, Google PLA (Product Listing Ads), Facebook Ads, retargeting, email offers to past customers, and niche blogs can be of great help.



  • Business Registration


Your business should be formed and registered with the proper government agencies. Be aware, most suppliers will require an EIN (Employer Identification Number) and Sales Tax Exemption Permit.



  • Dropship Agreement with Suppliers


Call and email all the suppliers on the list you’ve compiled from your competitors. Decide on launch dates and determine firm timelines. Figure out whether you’re going to pay upfront or on terms.



  • Calculations


Take into account the numbers:

  • Sales Revenue – Cost of Goods = Gross Profit
  • (Gross Profit – Expenses)/Revenue = Profit Margin



  • Customer Service


Value and respect your customers. Be responsible and focus on your customers’ wants and needs so that to boost customer satisfaction.



  • Returns


If you want to receive returns yourself, you’ll be able to offer better customer service. The downside is associated with the logistics of receiving, storing and then reselling returned items.



  • Automation


Your dropshipping business should be automated as much as possible. This can be done through AdWords automation, inventory management automation, and social media automation.


Up to a third of online retailers, including those on Amazon and eBay, have switched to dropshipping simply because it enables them to avoid a lot of headaches associated with stocking, packaging, and shipping. With the right product, supplier, payment processor, as well as marketing strategies, you can grow your dropshipping business successfully.


Author Bio: Electronic payments expert, Blair Thomas, co-founded eMerchantBroker in 2010. His passions include writing/producing music, and travel. eMerchantBroker is America’s No. 1 drop shipping merchant account company, serving both traditional and high-risk merchants.