When you are setting up a dropship e-commerce store, there are a few important things that you need to consider. A bit of preplanning before you get started is far better than waiting for a few months down the track after everything has been set up and then working out that you should have done something differently. Generally changes after you have set everything up, will cost you a lot of wasted time and a lot of waste of money.
We have created a list of things to consider before you decide on a niche to sell in and products to list for sale.
The reason this is so important is that creating a successful online store does take some time and work so you need to make sure you are interested in the topic and niche before you even get started. To find out a bit more about this be sure to check out our page called ‘Picking a niche that is of interest’.
Another thing you should also consider is that there is actually a demand for the product you are wanting to sell. You may think selling the latest Abacus board would be amazing, however the demand for this product is very small and you may struggle to generate any meaningful sales.
A great market to get into is one that has a wealthy customer base, can offer a repeat customer sales, and where there is a wide range of complimentary/add on items that you can also sell.
You can do some market research before getting started, a great tool to do this is provided by Google for free and is called Google trends. You find out a bit more about this tool and how to use it at ‘Finding what is popular with Google trends‘
The price of the individual items you are selling is very important especially when you drop shipping. You want to be able to source the item for a price that is cheaper than what other people are currently selling it for. The reason for this is you need to add your own markup to this product to make any money (i.e. the difference between the buy price and the sale price is delete your revenue).
The price does also determine how you sell a product, the customers that you’ll be targeting to purchase the product, and the type of after sales service you will need to provide. For example people expect better after sales care for $1000 item compared to if they only spent $5.
For higher priced items (generally those over $250) you may need to offer some sort of pre-sale phone support, so you need to make certain the money you receive from the sale also covers this extra workload and cost.
In general a product priced at $100 or below would be considered an impulse purchase item and involve less thought from the customer to buy.
MAP (minimum order price).
Some suppliers force a MAP (or minimum order price) for everyone who is reselling their products. The reason a supplier may do this is to ensure that the price of the product in the marketplace does not drop below a certain level. This is a specially important for items that are easily drop shipped as it ensures seller can still receive a decent amount of revenue.
The supplier you are going to use.
Before you get started with your new dropship store it is very important to find a suitable and reliable supplier. Drop shipping is unique sales process the whole idea of following a dropship model is to free up both your capital and your time.
If you go for the wrong supplier, you either get ripped off or have endless amounts of customer complaints. This is the reason you need to make sure you find a reputable supplier who is reliable already knows how to dropship items, and can help you and your business growth. It is also well worthwhile to do some due diligence by completing some test orders.
The products themselves.
The products themselves are very important in the dropship model. Generally when drop shipping it is important to consider if the item can be sent to a different country or get seized by customs. In general any form of food items or drugs is a definite no-no.
The sizes also very important to consider as in today’s day and age everyone expects free shipping or at least discounted shipping option. If you are trying to sell something to be like a TV you may struggle to find a supplier who will ship worldwide for free. Compare this to something smaller like a MP3 player, you will find most suppliers will send very quickly and cheaply anywhere in the world (if not for free).
You also need to consider how fragile the item is. The last thing you want is our customer to receive the product they have been waiting for damaged. The best way to think of this as you put yourself into your customer’s shoes.
You looked for so long and became excited as you click the buy now button for that perfect item that has taken you ages to find. You eagerly wait a week for it to arrive. The courier driver finally knocks at your door and gives you the package that you have been holding out for. You sign for it, then hastily rush inside to unwrap it. Your little children are watching and see how excited you are so they become excited too. However once you've unwrapped it you see that it has been smashed into pieces. You waited all that time for nothing...
It is so easy when running an online business to forget that the people viewing the store and buying from us are real people with real thoughts and feelings. Occasionally putting ourselves in their shoes will help you to create better processes and to think things through before taking money from someone.
You can find out a bit more information in our article titled The best customers to target.
Not available locally or are hard to find.
Some items may be only available in limited quantities or have limited availability. An great example of this is comic books, especially limited-edition ones. In this niche you will find that hard-core fans are willing to pay well above average prices to obtain something that they can’t find elsewhere.
Another way to think about it this, as that not every location in the world has a local Walmart or discount store. People in small towns or out of the way places can save a lot of time and money shopping online so can be well worthwhile targeting.