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What is drop shipping? Complete Guide You Should Know To Be a Dropshipper

written by Walter Ponce November 6, 2017

Most people do not know What is drop shipping is and what its advantages are for a digital business, which is not limited to the fact that you do not need to have your own stores to serve your products to customers.

It is a very interesting online sales system that greatly facilitates all the processes of an online sales business, from starting to build an online store until that final step is the conversion.

There are already many entrepreneurs who resort to dropshipping ibecause they have seen in this sales system an easy way to earn monthly income in their ecommerce.

Mega Guide With Everything You Need To Know About The Dropshipping Business Model

In recent times we have witnessed the phenomenon of the online sales boom. Many people saw in this the way to make easy money and was encouraged to mount all kinds of profitable businesses in this environment.

One of the most successful was the dropshipping online store model due to its low initial investment and the ease of managing it on a day to day basis.

But is it as simple as it sounds?

We will address the issue thoroughly to dispel all kinds of doubts about this type of online sales. First lets start by the basics.. you must be asking yourself What is drop shipping?

What is drop shipping?

It is a type of online store that is characterized by the sale of products from a third party, which is the DROPSHIPPER. That is to say:

What is drop shipping? It is the online sale of various items or products that are not owned in our stock, through agreements and negotiations with the manufacturer dropshipper or wholesale. This provider is the one that sends the customers such products.

 

The items are sent to customers with the brand of the retailer, online store or without any identifying mark.

This retailer is a mere intermediary. The business resides in that the cost of the products in the dropshipping shop includes a commission on the price of the manufacturer or wholesaler and thus, with this margin, the profit is generated.

5 Steps to Creating a Dropshipping Service

1 # Do a research for a profitable niche first

The way to create a store type dropshipping in Spain is part of the search for a feasible niche by the retailer.
You should think of a niche that has the following characteristics:

  • No saturation.
  • Do not have much competition.
  • Where there is a need to cover.
  • Make it profitable.
  • It can be positioned quickly to attract traffic to the online store, because after all it is about generating sales online.

The price of the products to be sold should also be taken into account in order to calculate the approximate earnings.

That is, with this system the retailer is going to have a profit resulting from inflating the price that the dropshipper proposes, hence the importance of thinking about the final price of the products of that niche, so that it can compensate for the creation of the dropshipping shop.

2 # Negotiation with dropshipper provider

This point is very important since this negotiation will leave the conditions that will govern the operation of the business, both the prices of the products and the delivery of the orders they will have.

The retailer will always have to try to have reasonable selling prices within the category of the products that they are, therefore, the price at which the dropshipper is bought should be the minimum possible to have more margin.

Regarding the terms of delivery to be negotiated:

Delivery times should be as short as possible so that customers have their orders at home as soon as possible.

It is convenient and advisable to have more than one supplier, you never know that it can happen and may fail or have supply problems.

3 # Creation of the dropshipping online store

Once the negotiations are closed and all conditions clarified, you can create the store.

At this point, if the expertise to build the web portal are scarce you can seek professional help, even though the creation with WordPress or PrestaShop is very intuitive and has a simple management, you can compare different budgets of online store.

There are some companies that offer the exploitation of this type of business and already provide an online store assembled.

You pay an initial fee and then monthly payments, it is an option to evaluate, but the truth is that it is very difficult to sell with these stores, as they are not positioned or optimized for search engines.

These types of stores do not have the visibility enough to generate a number of important sales and to ensure that they have the liquidity to pay those monthly payments.

It is about creating a portal with the catalog of the dropshipping supplier that we have chosen. The treatment of these images and the descriptions should be in accordance with some SEO requirements that we will deal with later.

Once the store is created, it is already available for a user to make purchases online, when this happens, the retailer manages the collection, buys the merchandise to the dropshipper and sends it to the supplier dropshipping the data of the order in question.

It is the duty of the merchant to check the availability of products in stock of the wholesaler, not to sell what is not.

4 # Receiving the order and sending the items

The dropshipper supplier or wholesaler receives the order from the retailer and becomes responsible for delivering the purchased item.

This delivery must be made within the deadline agreed upon and, both the package and the articles, will bear the mark or mark of the retail, or nothing in its defect.

In case you have negotiated with the retailer include invoice, so will be done. He is also in charge of managing the returns.

5 # Satisfaction Control

The final part of the online sales process of such a model is that the retailer conduct a control of customer satisfaction in order to evaluate the operation of their service. At the end this  is what is drop shipping.

A call, an email with a brief survey or a question showing interest in social networks, can be examples of how to contact the customer to know if the result of your purchase has been positive.

Otherwise, your feedback will be worth to us to correct the errors that have been made.

In this business model, the person in charge of giving face at all times is going to be the retailer.

From the dropshipper supplier the customer will never know anything, therefore, any problem or incidence with the shipment, will have to be managed by the retailer even though the responsibility lies with the supplier, hence the importance of trustworthiness.

This knowledge and concern for customer satisfaction is highly valued by them, especially in an online environment, where the deal seems more impersonal.

When you receive a good service and above show interest in knowing the perception that the customer has had of the experience in ecommerce like, which will be able to retain customer loyalty and make recurrent purchases.

What is drop shipping

What is drop shipping

Advantages of What is drop shipping

► The retailer should not make a strong initial investment to create this business model, it is a way to create a cheap store. No expenses are incurred in facilities, supplies or distribution of the same.

► The headaches typical of the preparation of the packages and dealing with the logistics companies for the distribution of the articles disappear in this type of business.

► As a business, the fixed expenses it generates are considerably lower than if the store were physical. Variable expenses are subject to the success of sales, so you assume little risk by creating this business.

► As a store in the online field, it has an open horizon for the sale of its products, scalability is a fact.

► It does not entail personal expenses, since it does not have a warehouse, it does not require personnel to be able to manage it and keep it up to date.

Disadvantages of the service

► A poor web positioning will make the store have mediocre sales. It takes a little dedication to work SEO and SEM to be able to promote sales.

► If the retailer has two or more dropshipping suppliers, the disadvantage is that they buy a couple of items from different distributors and thus have to send two different packages.
This entails assuming a double shipping expense and advising the customer that their packages will arrive independent of each other.

This question (What is drop shipping?) makes the profit margin that could be obtained with the sending of a single package is reduced to being two.

► As much as the retailer strives, gets traffic or offers excellent after-sales service, the business also depends on the seriousness and commitment of the dropshipping provider.

Failure to comply may result in a disastrous customer experience that makes you go to the competition the next time you shop online.

Responsibility for the reputation of the store is shared, however the final responsibility to the customer rests solely with the retailer.

In fact, this would not have to happen, the dropshipper is benefiting from a new sales channel and it is not good for him to land it as many times these types of suppliers are only engaged in wholesale.

► Being a high growth business, the competition may suffocate us, which may force us to lower the profit margin in an attempt to raise sales.

Hence the great importance of the initial decision to choose a profitable niche, with demand but little competition.

SEO Strategies What is drop shipping Business

The main activity of the retailer creator and owner of the dropshipping store is to get traffic to your website to encourage sales.

We must implement an SEO strategy to enjoy a good positioning and thus gain visibility, because, however beautiful and prepared we have the web portal, if you can not sell, nothing makes sense.

Turning visits into sales should be the main goal of the strategy.

Strategies in the Blog

It is very advisable that the sales portal has a blog section. This will contribute value to the users or clients with post related information about the articles on sale, promotions, curiosities and any other theme according to the end of the page.

The important thing is to be able to introduce contents with keywords, both in the articles and in the photos of the catalog and descriptions of the products, to work the SEO.

To comment on blogs of similar themes or to solve doubts in other pages contributing the knowledge that they have, also help to make us more visible.

Strategies with Email Submissions

When you already have a number of moderately powerful customers, you can distribute a newsletter with the aim of promoting sales, giving you the latest news, best selling products section or related news.

Another option that does not require much expense that will enhance the strategy is email marketing.

Strategies in social networks

Social networks should be used as a platform to disseminate our product catalog.

It is not advisable to open all profiles and have, only those that best match with our business model in this system.

They can be used to publicize the latest news, promotions, product information or even as a channel of after sales service and thus to attract customers.

Advertising Investment Strategies

What is drop shipping and when starting the business, it is advisable to carry out a campaign of positioning of payment that provides us an initial push while the SEO strategy does not bear fruits.

It is about getting more sales, so, even if the investment is small, it is very necessary.

We can use Adwords to gain visibility on the results page of search engines, Google Ads, banners …

How Do I Choose Dropshipping Providers?

It is important to make sure that the supplier with whom you are negotiating is the official and that there are no other in the middle that engorden the price of the articles in each link of the chain.

The most relevant dropshipping suppliers usually have sales representatives who will resolve any doubts and show the catalog according to the interests of the market niche in which the store is to move.
Careful with this

Important: Some ask for a sum of money by closing these agreements as a supplier. But, good dropshipping suppliers will never charge for the association, they charge for every order.

Supplier Location

Another important factor when choosing a supplier is the location of the supplier.

Usually they are usually foreigners, since the dropshipping providers are not common that they have competitive prices.

Being outside, shipping costs are higher and we also find customs, and that is a very factor to take into account as to the profit margin left for the merchant.

Many dropshipping suppliers are from countries like China or Japan, but with the issue of shipping costs, it may be more cost effective to work with wholesalers closer and with faster delivery times that will also impact on the customer’s ultimate satisfaction.

On the Internet there are several pages with lists of dropshipping suppliers, but you can start the search in the local market, since there may be companies with products according to the niche that we exploit and desirable prices.

With the economic crisis, many companies have rethought their sales channels and you can find wholesale suppliers closer than you think.

The truth is that this would greatly simplify the issue of negotiations for shorter lead times and the resolution of possible incidents.

Packaging and shipping

The dropshipper should be aware of the importance of the details in terms of packaging:

  • Have tracking service of the package.
  • Include invoice or not.
  • The reverse logistics in case of returns.

All are aspects that have to be agreed beforehand and rigorous compliance to generate trust in customers.

On the other hand, it is also usually signed a clause that collects various aspects on the processing of personal data of customers who make purchases. The dropshipper can not use them to communicate with him, or for his own benefit.

This is also related to anonymously sending the order to the customer, without any distinctive sign other than the retailer’s.

How to recognize a serious supplier?

One more symptom to recognize a serious vendor is that it is accessible, that is, the information between the retailer and it will basically flow through Internet connections.

It must have a web page full and with speed, quick response to the email, have the company endowed with a technological system that indicates that the orders will be received correctly and the operations or doubts are resolved with agility.

What is the difference between a dropshipping website and an affiliate?

The truth is that these two models of stores work in a very similar way. Let’s look at the differences.

► In the online affiliate shop: the merchant who owns the online portal charges a commission for every sale that is made from their sales portal, but does not close any sales, simply redirects customers to the website of the affiliated companies.

► What is drop shipping store: yes that deals with closing the sales, although it is also selling third party products. Therefore, you must have payment gateways to charge the customer and then be able to pay the provider.

The closure of sales, that would be the substantial difference between one business model and another, since otherwise, all are similarities:

  • They sell products from others.
  • They do not have to have stock and, therefore, storage.
  • They require little initial investment.

In practice, many affiliate stores end up in dropshipping stores as profit margins are higher in this latest business model and the remaining advantages continue to be maintained.

CONCLUSIONS: What is drop shipping and it’s profitable?

After this reading, we can conclude that creating a dropshipping sales system is a cheap and interesting option if you intend to set up a business and try to live on the Internet.

It is quite accessible, even without technological knowledge, since management and investment is minimal.

Getting the portal position to generate sales is the only thing that requires a little more time. We must get the brand spread and proclaim the goodness of buying our articles before in another web competition. Now you know What is drop shipping it’s time to start!

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