It used to be that, if you wanted to dropship, you had to buy large lots of product from (typically overseas) manufacturers. These lots arrived at your home or warehouse and had to be sold and shipped by you. If any product didn’t sell, you lost out on some of your profit (and were stuck with inventory).
Dropshipping has become smaller and more personalized thanks in large part to suppliers such as Milanoo, LightInTheBox, DHgate, and AliExpress. It has also become more automated thanks to automation apps like Oberlo. Finally, dropshipping has become cheaper thanks to ePacket shipping.
For a good review of dropshipping and what it’s about, please first read Dropshipping 101.
The recent changes in traditional dropshipping have led to a revolution in the manner in which some entrepreneurs approach ecommerce and online selling. Furthermore, with advertising platforms like Google AdWords and Facebook Ads offering ready access to targeted product audiences, it is easy to see how marketers and affiliates can reap the financial rewards of this retail model.
So, how can you take advantage of the changing dropshipping landscape?
Understand how AliExpress works.
AliExpress is a subsection of the larger Alibaba ecommerce site and, unlike its parent, offers smaller and even individual dropship options for its customers. Along with suppliers like LightInTheBox, DHgate and Milanoo, AliExpress enables customers to shop much like they would on eBay or Amazon.
Although AliExpress and other suppliers do sell their wares to end-user consumers, their merchants understand that most of their goods are being sold through dropshipping. This is good news for you because it means that your customers will receive their items without the merchants trying to add their own marketing collateral and other self-identifying information. In other words, it will look more like you yourself sent the purchased items, not a third party based (usually) in China.
Dropshippers usually offer a free or reduced price (e.g., $2) shipping option for ecommerce purchases, called ePacket shipping. This shipping option covers most small items (up to 4.4 lbs) and, as of February 2017, reaches 30 countries, including the USA and Canada. ePacket shipped items can often reach their destinations in a minimum of 14 days; other shipped item require up to 28 days (or more).
If at all possible, you want to locate those merchants that offer free ePacket shipping. This way, you can advertise free shipping on your website and not erode your own profit margin by paying for ePacket shipping. However, even if you do end up paying for ePacket shipping, it’s a small price to pay for products that fetch quite a hefty profit. For example, take a look at this offering on AliExpress:
With the free ePacket shipping option noted here as “Seller’s Shipping Method,” you’re paying just $1.57 for a ring that would fetch around $10 in any ecommerce or brick-and-mortar store in the USA. Had this merchant asked for $2 ePacket shipping, you could still charge $9.99 for this ring and keep $6.42 for yourself in profit.
The only deterrent to this set-up is shipping time. Note how this advertised ring has an estimated delivery time of 20-38 days. Thus, you will need to balance paying for faster shipping options yourself with offering cheaper goods for those customers who can afford to wait.
Automation apps are your friends.
You can create a list of dropship products to sell on your own ecommerce website, and then create/customize the postings individually. Once customers buy your listed items, you will need to take their shipping information down and notify your suppliers that some of their products have sold. In many instances, that means you’ll be placing the orders yourself and supplying the recipients’ (customers’) delivery information. Once the products are shipped, you’ll be going back to your customers and notifying them that their packages are en route, as well as supplying tracking info.
Once the products are shipped, you’ll be going back to your customers and notifying them that their packages are en route, as well as supplying tracking info.
At least, that used to be the accepted protocol.
With the advent of automation apps, dropshipping has become more hands-free. For example, the Oberlo app, which is offered through ecommerce platforms such as Shopify, links supplier and ecommerce sites and enables direct import of products to ecommerce platforms.
Even better, with Oberlo Supply Beta, you can now notify the app of a customer order, and Oberlo will notify your supplier, place the order, notify the customer of order fulfillment, and send the customer the tracking info.
Not only does Oberlo make dropshipping a pus-button venture, the app can automate other mundane tasks, such as removing inventory once it’s been sold out, and even adjusting prices to reflect supplier discounts or mark-ups.
Facebook gives you with a ready audience.
The biggest challenge for ecommerce merchants used to be finding an eager audience for their products. Even with Google AdWords ads, one had to pay a pretty penny to serve ads, and unoptimized websites often resulted in CPC rates of $1 or more.
During this time, Facebook has been quietly amassing demographic data on its audience, including its likes, group memberships, and hobbies/interests. Facebook offers ecommerce merchants the opportunity to match its audience with products targeted to their interests- and via a platform that is arguably more conducive to impulse purchasing than the Wide World Web.
Setting up a Facebook promotion of your storefront can be accomplished in one (or more) of three ways:
- Boosted post/page on an existing Facebook page.
- Ads Create tool
- The PowerEditor tool
The easiest method involves #2, creating a self-serving ad via the Facebook Ad Create tool. Here, you can specify your target audience, ad budget, and desired time frame. The other choices involve creating additional collateral (posts and pages), as in the case of #1, or using a rather involved ad tool that isn’t altogether necessary for targeting one audience about, for example, $10 rings.
When you opt to create a new ad in Facebook, you’ll see the following choices displayed. Once you create a targeted audience, you can even save it and use it for a future campaign.
While Facebook advertising isn’t free, its costs can be controlled quite easily, and ad campaigns can be turned on and off at the click of a button. You can test target audiences with a small ad budget of just $5/day; if you discover a strong demand for your products with this audience, you can easily increase your spend.
eCommerce platforms tie it all together.
You might already have a WordPress platform or three and you could sell dropship items there. However, many ecommerce platforms, like Shopify or WooCommerce enable you to accept credit cards, calculate taxes and shipping, track orders, etc. easily and at just one online location. Furthermore, many automation apps are built exclusively for certain ecommerce platforms.
When setting up your ecommerce stores and taking orders, you don’t want to get tied down with ecommerce minutia like finding customer shipping addresses, calculating state taxes, going through refund requests, etc. A good ecommerce platform takes care of these details, leaving you open to more important tasks like finding your next profit multiplying product. Plus, you can’t beat how nice your online stores look when supported by a platform like Shopify.
The future of dropshipping looks bright
Dropshipping is quickly becoming the go-to model for marketers and merchants who want profit margins in the triple and not single or even double digits. There have been numerous success stories about this selling model and how much money it has generated for its adherents, as noted here.
Have you tried starting a dropshipping business? Please leave a comment about it below.