As consumer shopping habits continue to shift, more people are willing to buy their goods online. Almost everything is available on the Web these days—and if you offer the right items to the right people at the right time—you will make a sustainable profit.
With online shopping enjoying a peak in popularity, many brands are choosing drop shipping to offer a carefully-curated selection of tangible goods to their audience.
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What is Drop Shipping?
Drop shipping is a form of eCommerce where the supplier or brand offering the goods or products doesn’t stock doesn’t stock them in a physical sense.
Instead, drop shipping businesses use dedicated platforms to fulfil orders and supply goods to their customers. This means that someone buys something from your website and once the transaction is complete, the platform or service ensures the item is dispatched.
If you sell an extensive variety of novelty sweatshirts, for instance, you won’t have to sit around drowning in boxes of stock. With drop shipping, you can provide your novelty sweatshirt-loving fans a focused inventory through your website or online store and use a drop shipping operator or platform to supply as well as ship the items you’ve selected for your range.
At present, there are over two billion drop shipping buyers in the world, a number that’s only going to keep growing.
Drop shipping is set to become a saturated space, but by choosing your inventory wisely and taking the right approach to your digital marketing efforts, you can stand out in your niche.
Here we’re going to explore a mix of valuable drop shipping business ideas, but first let’s consider the value of drop shipping in our existing eCommerce climate.
Is Drop Shipping good for eCommerce?
If you’re looking to sell a mix of products through your eCommerce store, drop shipping will help to build your brand without all the challenges of shipping, stock management or a set geographical location. That is to say, as long as you have a laptop and an internet connection, you can drop ship anywhere.
With the ability to secure items virtually and supply them to your consumers, you can focus on your branding, communications, USPs, pricing, and marketing efforts—the key ingredients to sustainable eCommerce success.
Drop shipping platform suppliers (like Shopify) take their cut for shipping, service and logistics, making your profit margins lower than if you were selling products independently. But if you succeed with your pricing and your digital marketing activities across all touchpoints, revenue will be yours for the taking.
Here’s an example: Inspire Uplift (an eclectic kitchenware, merchandise, and gadgets brand) recently switched from Shopify to Magento, and sees somewhere in the region of 730,000 website visitors per month—coupled with a growing social media following and a consistent flow of revenue. And, they’re just one of many drop shipping brands thriving in today’s eCommerce climate.
How to make your drop shipping business work: top business ideas
The potential value of drop shipping is clear, but how do you stand out in your niche? Let’s look at some examples and explore the drop shipping business ideas that will accelerate the growth of your brand.
1. Pick your niche
Migrating from a miscellaneous eCommerce store to a purveyor of personalized gifts, drop shipping business Bluecrate saw solid growth in engagement and traffic, particularly through Instagram.
Rather than casting a wide net and adding an endless amount of disjointed shopping categories to your store, you should choose a niche.
Whether it’s quirky pet supplies, outdoor boots and socks, funny cups and mugs, retro-style t-shirts—or anything else for that matter—settling on a niche will help you streamline your inventory choices while giving your branding, content, and messaging a clear-cut direction.
Quick Tip: Establishing a firm niche will give you the opportunity to claim your market share while creating marketing content that will offer direct value while improving your search engine rankings.
2. Choose your suppliers wisely
Before you sign up to a drop shipping platform or supplier and make a firm commitment, you must carry out comprehensive research to source the service(s) that are right for your business niche.
Take the time to consider your brand’s specific mission and objectives, thinking about the items or categories that align most with the kind of business you are, as well as the value you’re looking to offer your audience.
Look at supplier comparisons, analyzing things like pricing models, specific platform features, and user reviews. Consider which suppliers or platforms your competitors are using and look at their recent traffic and engagement numbers using SimilarWeb. Quickly, it will become clear which suppliers or platform are likely to offer your brand the most value.
3. Don’t underprice your products
When you’re not dealing in physical inventory and you’re hungry to stand out in your niche, it’s tempting to cut down your profit margins to beat the competition. Don’t!
In terms of drop shipping, your profit margins are usually a little lower than a traditional eCommerce model, so to make a healthy profit, work out your average order price (AOP) and this will help you understand your overall target profit margins while taking outgoings, such as marketing spend and platform fees. Here’s a handy average order price calculator to help you.
It’s important to offer value for money and to remain competitive, but if you slice your prices down too much, you’ll leave little room for offering your customers deals or discounts on peak seasonal dates or other occasions (like Black Friday, Valentine’s Day, consumer birthdays, etc.) while working hard for little revenue.
Once you’ve calculated your average order price (AOP) and set your product prices, you can use the bundling technique (a form of digital upselling) to boost your average order value (AOV) and boost your profits.
Amazon is a prime (pardon the pun) example of product bundling. By featuring products that complement the item your customer is considering at the right time in their journey, you stand a chance of enticing them to add extra items to their cart, making extra drop shipping revenue in the process.
Quick tip: Offering free shipping is an effective way of offering your consumers value without significantly eating into your profit margins.
4. Keep up to date with emerging market trends
By taking the time to keep your finger on the pulse of emerging market trends related to your niche or industry, you will be able to tweak your on-site merchandising (your featured products as well as the order of items on your category pages) to showcase the products that are most likely to result in conversions.
You could also create relevant product guides to share with your customers through your blog, email channel, and social channels to boost brand awareness while driving more traffic to your store.
In addition to on-site promotion and merchandising, staying up to date with the latest industry trends will give you ideas for marketing assets including social media content, blog articles, industry case studies, email marketing campaigns, and paid marketing selections (any content that will help you build authority across channels and improve your search rankings).
5. Stay Connected
To remain on top of emerging niche or industry trends, you should:
- Join relevant groups and discussions across your most active social media channels.
- Read a selection of online industry publications and listen to podcasts related to your niche or business.
- Check in with Google Trends and BuzzSumo to understand which subject matter and content people are engaging with in your industry.
- Follow your competitors’ journeys by subscribing to their email lists and following them on social media.
- Regularly analyze your website engagement metrics and Google Analytics data to identify emerging product trends and see which items or categories are performing the best.
- Check in with drop shipping publications or forms like SalesHoo and the Oberlo Blog to keep up to date with the latest news, updates or industry shifts.
If you choose a niche you believe in, lay solid foundations for your store, get your pricing right, and take a consistent approach to your digital marketing activities, you stand to enjoy great success as a drop shipping brand.