How to boost your dropshipping profits and sales

Why are so many eCommerce owners adapting the Dropshipping business model? Why is this fulfillment method so popular?

These might be the two major questions that people who want to start their own Online Marketplace Business might be curious about. So, let’s go ahead and see why it has and is still the most preferred business model.

  • Location flexibility
  • Less capital investment
  • Least overhead expenditure
  • Easy to set up
  • Easy to scale and test

These are the main pointers that are considered while setting up an online business. But, in order to start an online business, one should be responsible for the below as well.

  • Product development
  • Inventory management
  • Setting up warehouse and
  • Shipment management

Dropshipping is the business model for the ones who do not have the proper resources to manage all the above responsibilities. By adapting to this model, you can directly deliver the goods to the buyers through a manufacturer or a supplier. Dropshipping model is a three-party business model where the buyers place an order on the website of the Business Owner. He then forwards it to the supplier or producer to deliver it to the consumer directly. Also, in this model there is no need to worry about managing warehouse, inventory or shipping.

 

Increase your dropshipping profits

  1. Bulk Shipping

Shipping plays an extremely important role in not only dropshipping, but in every other online eCommerce business. This is one section of the online marketplace business which requires high maintenance charges. Here are a few shipping scenarions that you should try to avoid:

  • Paying shipping fees to your drop-shipper while you offer free shipping service to your customer
  • Drop shippers also tend to make mistakes, as there is no guarantee that they will fulfill their orders perfectly.
  • The dropshipping process requires you to pay the real cost of logistics, packaging, and shipping. This means that shipping costs are bound to rise as the sales grow.

In order to minimize your shipping costs, you can always ship more items in the same package. By doing this, you will not only save on shipping costs, but you will also be increasing the average cart value too.

  1. Private Label Products and Packaging

In simple words, private labeled products are those that are manufactured by one company and sold under another company’s name. This technique is always considered to be a win-win for both the manufacturer and the seller.

For the manufacturers, they get diverse sales platforms and as for the retail seller, they get to sell products which may not be feasible for them to produce. Thus, both parties get to expand their margins.

 

So, you should be really careful while selecting your manufacturer. Compare manufacturers and test their products yourself.  Know your market, the target audience, and your competitors so that you can choose a manufacturer that will boost initial investment. Also, take your time to negotiate with them and get the best possible products for your money.

  1. Up-Selling and Cross-Selling

Don’t these two mean the same exact thing? Nope. There is a slight difference between up-selling and cross-selling, but the thing to keep in mind is that they always go hand-in-hand. All of the dropshipping business owners will want to increase their sales, and these two techniques can help.

Up-Selling is nothing but getting your customer to spend more by buying an upgraded or premium version of what they are going to purchase. For this you will have to understand the needs of the customers. Here’s how to correctly implement up-selling to your customers:

  • Adjacent comparison to show the difference between the products
  • Display a good range of products that are similar to the one that the customer is looking at. However, be mindful that you don’t overwhelm the customer.
  • You could also show some alternate products other than what the customer is searching for

On the other hand, cross-Selling is a sales strategy which sells a totally different product to the customer. Combining products of different profit margins is the best way to capture the interest of the customer and pitch the sales of those products. And this tactic is becoming very popular and is said to be contributing about 35% of overall revenues in Amazon.

  1. Be up-to-date with all trending products

Online marketing is a highly volatile market and an unpredictable one too. You always have to be up-to-date with what is happening in the industry. Market research is one of the most important aspects of running a successful online business. Finding the niche and right products to sell on your website is the most important part of the decision making.

 

Being predictive in this market is not an easy task, so you will have to seize any given opportunity when you see potential in a certain product.

Manufacturers are the ones from whom the suppliers or the wholesalers buy their stock from and further sell it to the retailers. And once you find a bestseller, go ahead and buy stock from your supplier and negotiate a good deal with them and get guaranteed discounts.

  1. Try your best to avoid backorders

This is the most concerning reason as it is one of the most expensive affairs to deal with, that could potentially cut down your dropshipping profits. Some of them can be fixed, while others are out of our control. Here are a few reasons why you should avoid taking backorders:

  • Running out of stock
  • Unpredictable product demand
  • Under or over safety stock levels etc

This leads to a bad impression leading to negative feedback from your customers.

To sum up

By following these five important tips, we are certain that your dropshipping business will start booming. Keep in mind that you always have to keep your customer(s) happy, and this can be sometimes difficult when dropshipping, as you aren’t always in control of what’s happening and how is it happening.