Although drop shipping has become all the rage in the ecommerce world over the past few years, there’s a right way and a wrong way to do it.
Grow Your Business, Not Your Inbox
Stay informed and join our daily newsletter now!
5 min read
Opinions expressed by Entrepreneur contributors are their own.
So, you want to get started in drop shipping. You’ve heard it’s a great way to make extra money and are interested in trying your hand at it. Although drop shipping has become all the rage in the ecommerce world over the past few years, there’s certainly a right way and a wrong way to do it. It’s hard to break into the drop shipping world as a beginner because of the fierce competition in the space. There’s a learning curve, and it can be hard to make your product stand out. Don’t let that discourage you.
From my own experience in drop shipping, I know it appeals to many entrepreneurs because they think it’s an easier business model than others. That’s actually not true. And just because you aren’t manufacturing the product yourself, doesn’t mean you shouldn’t treat your drop shipping operation as a full-fledged business — because it is one, and needs to be treated as such to thrive. If you’re a beginner, here are three drop shipping secrets you need to know.
1. Study your competitors at length
All businesses should have a robust understanding of their competition, but it’s specifically important in drop shipping. What distinguishes one product from another is based on marketing. It’s likely that other competitors sell the same exact product you do from the same manufacturer (it’s the nature of the competitive scene within the industry), so how you market it is everything.
Look at the current competitive scene. How are the other products marketed? What are their prices? Do a full sweep of ecommerce platforms like Amazon so you have a full picture. Once you understand the competition, you can confidently choose which product to begin with for drop shipping — and understand how to make your product stand out amongst the noise. This could be with a lower price, an added gift or by adding something helpful such as a well-produced tutorial video for the product. Your goal is to make sure a consumer wants to pick your product when they too are examining the competition, because you offer something that none of your competitors do.
Related: 6 Steps to Building a Successful Online Drop Shipping Business
2. Make sure to find a good supplier
When finding a supplier for the product, look beyond cost. Sure, profit is central to the drop shipping equation. But a good supplier can make all the difference in a drop shipping operation. First, get to know them. Are they willing and able to support your growth if you scale tremendously? Or will they lag behind on production or even run out of products if you sell too many? Make sure to set clear expectations around their capacity.
Make sure to also first complete a quality check. Order the product just as you would if you were a customer ordering directly. Take note of all the basics: timely shipping, packaging and the quality of the product. Use the product just as you would if you were a customer, too. Does it lose its quality after one or three uses? Be as diligent and detail-oriented as possible in your approach, and remain skeptical until every box has been checked. If you don’t suss out potential issues with the product or shipping process, your customer might, which in turn can lead to negative reviews and a mess that you could have prevented.
Related: 3 Ways to Grow a Multi-Million Dollar Drop Shipping Business
3. Test the market first
Finally, adopt the mindset that you’re first testing the market. Once you’ve chosen a manufacturer and a product, don’t invest thousands of dollars up front until you’ve completed a “test period” to make sure it’s a market fit. You have to make sure that people like the product and that it’s of the highest quality, first and foremost. Many drop shippers get excited once they’ve found their niche and a manufacturer and think it’s best to order in bulk upfront because of bulk discounts, but this must be done cautiously. Test first to reduce risk! Once the test is successful, you can proceed with white labeling and ordering in bulk.
An easier method of drop shipping is to wait to order until a customer orders rather than fulfilling shipping yourself. It might make you feel more in control to have the inventory stashed away in your garage, but it’s best to outsource the shipping and distribution, especially if an ad takes off and products start to sell quickly.
The website I’ve Tried That shared several drop shipping horror stories that beginners run into often: angry customers (if the product malfunctions or isn’t what was advertised), major shipping delays and partner problems. Make sure to test out the company you’re ordering from by ordering the same way you would for a customer, but have it shipped to you or your business partner. How long did it take to ship and arrive? Were there any snafus with confirmations or tracking numbers? Starting small helps you plan ahead so you don’t run into any unexpected issues.
Make sure to pay close attention to detail and keep these secrets going long after you’re a seasoned drop shipper. A competitive analysis, abundant reviews and starting small (if you’re expanding product inventory) will always serve you in drop shipping.
Related: 6 Routine Mistakes People Make When Setting Up a Drop Shipping Online Store
