Dropshipping is a method widely used by starting entrepreneurs. Investing in stocks and storage space is a major financial hurdle for many entrepreneurs and with this form the risk is quite low. Anyone who negotiates well with the supplier can thus earn money relatively quickly in a simple manner.
Still, dropshipping is not necessarily the goose that lays the golden eggs. It is obvious to start a web store with well-known and popular products, such as laptops or designer clothes.
The disadvantage of this is that various other web shops also have deals with these suppliers, also offer these products and this leads to a price war, whereby the sales price is leading. After all, you are not offering a unique product. If someone goes below your price, you are almost forced to drop in price. As a result, your margin keeps getting lower.
It is therefore important that as a web shop owner you do not offer obvious products. This ultimately ensures the highest margins and you offer clear added value compared to the competition with unique products .
The starters story of Thomas Deters of Azalp is a good example in this respect. It offers ‘affordable luxury for home and garden’, including saunas. These are too large to have in stock – and especially if you are just starting out, you do not have this financial and logistical space – so he used dropshopping.
He was a pioneer from the start, offered unique products, had high margins and could clearly distinguish himself.
What agreements do you make with suppliers?
Because you are largely dependent on the supplier with dropshipping, it is important that you record agreements and build a good relationship with the supplier. You have to be able to trust that the producer sends the products to the customers as agreed, because you are the one who is charged for it.
If you promise to deliver within 24 hours and the producer only does this after 48 hours, you are the point of contact for the customer, who after all purchased the product in your webshop.
Establishing long-term cooperation
Therefore, physically visit the supplier to build up a business relationship. Then you have seen for yourself how the logistics process works. If you receive questions from the customer about this, you can also answer them.
You also enter into a (long-term) collaboration and it helps if you have physically met each other. Short lines are important: if a product is sold out, for example, you must know this immediately and mention it in your webshop .
The last thing you want as a webshop is no selling, this is at the expense of your reliability.
What are the benefits of dropshipping?
A webshop entrepreneur who uses dropshipping does not have to deal with the logistics process. You do not have to manage stock, you do not have to send parcels, so you have more time for the actual business .
Time that you can invest in marketing , for example, to give your webshop even more brand awareness. Because most web shops use well-known products for dropshipping and the competition is fierce, you have to score well on findability. Therefore invest time in SEO and marketing. Make sure you get as much traffic (read: customers) to your website as possible.
At the same time, you have more time for customer service to take the service level of your company to a higher level. In today’s internet era, service is one of the most important pillars of your company.
You want to avoid a negative review, it will do your webshop absolutely no good. Satisfied customers are your best marketing tool. Word of mouth and recommendations via social media are worth gold. No advertisement can beat that.