Does DropShipping work? 5 tips for successful DropShipping
With so much information (both good and bad!) about DropShipping available online, you might well be wondering whether DropShipping actually works or not. The simple answer is yes, it does, but unfortunately, it isn’t quite as simple as all that – it isn’t always easy to make a DropShipping business successful. In this post, we’re rounding up a few tips that really can make all the difference when you’re starting an online retail business.
Find reliable DropShipping suppliers that are in-country
It is a fact that there are many DropShipping businesses that will end up failing. The majority of former business owners that have tried DropShipping put their failure down to their lack of reliable suppliers. Customers have become accustomed to Amazon Prime delivery and the speed that their orders arrive, and so they want all their orders delivered on those timescales, wherever they order from.
That demand for fast service means that working with overseas suppliers, and sourcing from AliExpress can work for certain products, but since they are being sent internationally, orders take much longer. The knock-on of these delays can cause customer service issues, cancelled orders, and returns – all of which can end up causing problems for the business.
Choosing reliable suppliers that have products already in the country means that orders will arrive with customers on the timelines they expect. Not only that, should there be any queries that you need to deal with, there won’t be any issues with communication, either in terms of language, or time zones, and you’ll be able to call the supplier if need be.
Automate as many processes as possible
Handling processes manually doesn’t allow you to scale your business in the way you need to. When you’re starting DropShipping, and you’re getting a couple of sales each day, it can get beyond what you can manage pretty quickly, and you can be left working much longer hours than you ever expected just to keep up with it. Getting the automation you need might mean engaging with a developer (or doing it yourself if you have those skills!) but that gets expensive, and there will be ongoing costs as things change. If you want to keep costs low, then you’ll need our next point:
Find a DropShipping marketplace
If you know anything at all about DropShipping, you’ll almost certainly have heard of companies like DSers, Dropified, and the now retired Oberlo – they all give you access to AliExpress DropShipping. But DropShipping marketplaces aren’t just about sourcing the products that you want to sell, a great DropShipping marketplace will automate as many of the processes that you need for your business as possible. Some of the best functionality you’ll want from a marketplace include:
- Plenty of in-country verified suppliers (saving you the job of finding them yourself!)
- Bulk product sourcing (so you can scale up quickly)
- Listing tools for your sales channels (to make listing all those products faster)
- Listing manager (for product mapping, listings, price & stock updates)
- Order processing (so you don’t have to manage payments manually, and orders go out faster)
- Interactive returns and refunds functionality (taking the hassle out of it!)
- Configurable rules to help you manage and scale your business (so you can set the functionality you need)
- A great support team to help you if you need it (even if you’re a pro, it is better to have it and not need it!)
While there are some marketplaces that will offer some, or all of these things, they might not be right for your business. Be certain to make best use of any trial periods and free accounts, so you know the marketplace has everything you actually need before signing up.
In addition, make sure that the pricing of the subscriptions makes sense as you scale. Your sales should cover the cost of your subscriptions, so you’ll need to do calculations to make sure you won’t be left out of pocket.
Get the right sales channel integrations
Choosing the right sales channels can be a challenge, and contrary to popular belief, it isn’t just about Amazon, eBay and Shopify! But when you’ve identified where you’re going to sell (for now – don’t forget that your sales channels aren’t fixed and should be reviewed regularly, changed when necessary) you’ll need to get the products that you have sourced onto them.
When you’re sourcing from suppliers that are on a DropShipping marketplace (and why wouldn’t you, when they make everything so much easier?!) then make sure there are integrations with all the sales channels you need before you get started.
If you’re just getting started – as in, you haven’t even chosen how your website might be hosted yet – then look for partnerships that you can make the most of. In this case, we’re thinking about the Avasam and BigCommerce Click to Launch initiative, where you can create your online store, with products in the niche you want to operate in, in just 90 seconds. Aside from making getting started simpler, you’ll get a month of Avasam and BigCommerce completely free – so you can start your business, and get your business off to a strong start, absolutely no upfront financial investment required.
Keep on top of your accounting
Getting a business off to a strong start is one thing, but once you’re trading, you need to keep your records straight, otherwise you’ll find yourself in trouble with HMRC, or whichever body is in charge of taxes in the countries that you operate. If you don’t want to end up with fines for not declaring income, then make sure you have ways of keeping track of your income and expenditure. The right DropShipping marketplace will make it easy to export the data you need when it comes to the accounting year end, and you’ll just need your tax identification number to get your tax return done. If you’re not sure what to do, consult with an accounting professional that can guide you through it. This is one element of your business you definitely don’t want to slack on!
There are many, many other elements that you’ll need to take into account when you’re getting a DropShipping business off the ground – we’ve talked extensively about them on the blog. If you only follow one piece of our advice here, it would be to identify the right DropShipping marketplace for your business, because it will help you with all the other points that we’ve made here. Not sure where to start? Read more about Click to Launch here, and check out our YouTube channel to help get on the right track – if you need more help after that, book a call, and we’ll help you get going.