Advantages of a dropshipping business model:
- You do not need capital to get started
Dropshipping makes it surprisingly easy to start selling online. You do not have to invest in capital heavily in inventory, yet you’ll offer thousands of products to your customers.
- Convenience and efficiency
Successfully launching and growing an e-commerce business is very difficult, especially if you have limited resources. Not to worry about fulfillment is incredibly convenient and frees up your time to focus on your marketing plan, customer service, and operations.
- You are free to operate your business anywhere you can get access to an internet connection.
- This is a tested model.
Many online retailers use dropshipping to offer their customers a wide selection of products to deal with hassles without inventory.
5 dropshipping tips for new entrepreneurs:
- Inventory and management of multiple suppliers
Below are some best practices for inventory management that help reduce the number of out-of-stock items you sell:
- Use Multiple Suppliers
Having multiple suppliers with overlapping inventory is the best thanks to improve your order fulfillment ratio. If Supplier A does not have an item in stock, then Supplier B has a good chance.
- Check on item availability
Just because a dropshipper lists an item on their website, it does not mean that it constantly moves that item. It is a good idea to negotiate with your sales representative about the availability of the products you are considering selling.
2. Suppliers may have spoiled the order
What do you do when your supplier sends the wrong item or does nothing? Here are three possible options:
- Own fault
Under no circumstances should you blame your dropshipper for a mistake. Instead, you need to solve the problem, apologize, and tell the customer what you are doing to fix it.
- Deliver to customer
Depending on the level of fault, you may offer the customer something to do with the error. This may mean that the shipping fee or upgrade is refunded if a new item has to be shipped to the customer.
- Supplier pay to fix it
You may have to take responsibility for the error, but that does not mean that you need to cut your profit margin. Any reputable supplier will pay to fix their own errors, including paying shipping costs to return the items.
3. Dealing with returns in dropshipping
When a customer wants to return an item, the method will look like this:
- A customer contacts you to request a refund.
- You request an RMA (Return Goods Authorization) number from your supplier.
- The customer returns the goods to your supplier, noting the RMA # at the address.
- The supplier refunds your account for the wholesale price of the goods.
- You return the goods to the customer for the full price.
4. Shipping issues
Calculating shipping rates can be a big mess for business owners. There are three types of shipping rates you can use:
Real-time rates — With this method, your shopping cart will use the shipping destination to get the collective weight and real-time quotes of all items purchased.
Per type rates — Using the Per type method, you will set flat shipping rates based on the type of products ordered.
Flat rate shipping — You charge a flat rate for all shipments, irrespective of the type. You can also offer free shipping on all orders.
5. Focus on marketing
Making a sale ultimately depends on the customers finding your store. To do this you need website traffic. As a new dropshipper to increase website traffic, search engine optimization (SEO), Facebook advertising, and Google advertising are generally the best marketing channels to focus on.