Want to scale a dropshipping business but have no idea how to go about it? Here’s what you need to know.
Dropshipping lets you get into the retail business without the risks traditionally associated with setting up a store, especially with buying substantial amounts of stock to sell that you may have to keep in an expensive warehouse. Instead, you simply work out what products you’re interested in that you’d like to sell — let’s say vitamins — and then set up an eCommerce website and get marketing and selling your products.
When the orders for your vitamins of various brands hopefully come flooding in, it’s then a matter of ordering from the manufacturer or seller and having the items shipped to the customer. You may want to contact the sellers at the outset and work out an arrangement or agreement for third-party sales, or you might want to just go ahead and sell via your website without one.
Either way, the key to successful dropshipping — as with any business — lies in the marketing: getting your enterprise noticed and attracting customers, carving out a part of the market for yourself and making increasing levels of profit. Before we get to how to scale a dropshipping business, let’s look at some reasons why you might decide on this model in the first place.
Why Get into the Dropshipping Business?
Many people dream of starting their own retail business, selling the products they love and growing a business that customers are loyal to and that develops into a successful, and profitable, enterprise. Doing this the traditional way, with a bricks and mortar store, has become increasingly difficult, as online shopping has soared — not to mention the often crippling overheads of leasing a premises, employing staff, paying high rates, purchasing stock and other expenses that can quickly put you out of business.
Attracted by the convenience of internet shopping and generally lower prices and speedy delivery, more people than ever are ditching their local shops and all the effort involved in getting to them and then finding a parking spot and paying for it — and doing it in the comfort of their home instead.
Worldwide eCommerce sales are now estimated at around $25.6 trillion, an enormous figure that includes B2B eCommerce sales but with consumer sales driving most online purchases — and the United States, Japan and the United Kingdom dominating the eCommerce global market.
If you intend to set up an online store, you may still have some of these capital requirements, because you’ll need to lease premises such as a warehouse, or part of one, where you’ll keep your products, and employ staff to handle the fulfilment of orders. Just because you have an eCommerce store, it doesn’t necessarily mean your costs are lower compared to a shop on the high street. But with dropshipping, you have your store but practically none of the expenses — and you can enjoy high profit margins if you select the right products and market your business successfully.
The benefits of a dropshipping business are that the startup costs are low, so entry is easy, and you also have low costs of fulfilling orders because the manufacturer or seller usually does it. One of the downsides with dropshipping, however, is that you have little or no control over the fulfilment process, how long it takes, or when the customer might get their order. Plus, you’re entirely dependent on other firms’ stock and its availability — all of which means you need to choose your products and manufacturers wisely.
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So How to Scale Your Dropshipping Business?
The most crucial aspect of dropshipping, apart from the marketing element, is to select your products extremely carefully. Going for niche products that may be difficult for customers to get elsewhere is a great idea, because if you’re thinking about selling generally available items, why would people come to you instead of large eCommerce stores like Amazon?
When you settle on the kinds of products you want, it’s time to source them and also test them out. Price is obviously a critical issue — as is now much you can add to it (your margin) before turning customers away and pricing yourself out of the market. And you don’t have to fill your store with hundreds of items at the start, because you can test out your concept with perhaps several dozen at the beginning, and see how things go. Some products may be more popular than others, and you might find that some that you thought would fly off the virtual shelves don’t sell at all — just as well you don’t have thousands somewhere in a warehouse.
Next, with scaling a dropshipping business, we come to finding your audience and Google and social media ads? Or perhaps you might decide that a blend of the two is getting traffic to your website. How are you going to get the word out about your great new dropshipping site, and how are you going to attract your first customers — people who may become loyal to your offering and turn into repeat and regular business?
Will you go the organic route and promote your site via blogs and on social media platforms like Instagram and Facebook, or will you opt for paid traffic, in the form of best. The benefit of Pay-Per-Click (PPC) advertising is that you get instant traffic and sales.
Driving Instant Traffic to Your Dropshipping Site with PPC
Getting online ads all set up and running can be a daunting task. As well as continually monitoring their performance and your spend, you’ll need to be regularly tweaking your ads to ensure you’re getting the traffic and conversions you need. If you find it’s too overwhelming of a task and too time-consuming, you can always ask a digital marketing agency’s ad department (like ours) to do it for you.
“I recommend kicking off a dropshipping business with PPC, and the quickest way to start engaging quality traffic is to start running a shopping campaign through Google Ads,” says the head of Exposure Ninja’s PPC department, Lizzie Cross. “These ads will be cheaper to run and there will be more consumer intent than with search ads.”
Lizzie says it might be a good idea to also run some product ads on Facebook and Instagram, but before doing so, it’s vital to check out what the competition is up to, because if your rivals are spending large sums on PPC and your budget is relatively small, you might not get anywhere very quickly. “Your ads will simply end up lost in a sea of ads from larger businesses, and will therefore be unlikely to become profitable,” she says.
“It’s also important at this point to establish a good ad spend budget and assess how much you’ll be happy to pay per sale in the first few months. I’d recommend being as flexible as possible with both your budget and CPA (cost per acquisition) goals for the first few months.”
She adds: “These months will be key for testing your market and audiences and therefore it’s important to recognise that campaign profitability isn’t going to happen overnight. And that it will take the constant refinement of your PPC campaigns, as well as regularly reviewing how your potential customers are using the site.”
Using PPC for your dropshipping site also allows you to target people who visit your site and leave without making a purchase; it’s called remarketing. Google says of the practice: “It allows you to strategically position your ads in front of these audiences as they browse Google or its partner websites, thus helping you increase your brand awareness or remind those audiences to make a purchase.”
And Lizzie says setting up a dropshipping site is not always a straightforward task if you want to launch paid search to promote it and gain traffic, because the search engines and social platforms have specific requirements.
“There are lots of rules and recommendations around making sure that the site is fit for purpose before setting up a shopping campaign or dynamic product ads on social media. Including having a fluid checkout process, improving the product pages by ensuring each page contains some good-quality product images, having good product descriptions and trying to get some trust elements on the page — perhaps by showcasing some positive customer reviews,” she says.
To advertise via PPC, you’ll also need to make sure your dropshipping site is fully optimised for conversions and there are no obstacles to the user experience that could turn potential customers away. Your pricing needs to be competitive, the checkout journey must be seamless and you should have a unique selling point that sets you apart from your competitors. All this will help to ensure your PPC campaigns are successful and you profit from them, says Lizzie.
“Once you get to the point of your PPC campaigns delivering consistent sales, you can then start to test more advanced and effective bidding strategies, which require conversion data to be optimal,” Lizzie advises. “These advanced bidding strategies will help to start lowering the campaign CPA, which means that you can start reinvesting profits from ad spend to scale up the campaigns and therefore, sales.”
If you want to test out your dropshipping site, even while you’re working on it, you might like to run some Amazon Ads and see how the market responds, says Lizzie, and perhaps gain some initial sales.
“It’ll also allow you to be as competitive as possible, as your products will be shown to lots of people with high intent in purchasing the products you have on offer.” But she says it’s best to have ads running on several platforms so that your offering and pricing gets out to as many people as possible. “The aim should be to have a fully optimised site, alongside the flexibility to run and test ads across multiple paid search platforms, to find the most suitable ad platform for your products.”
What to Do When Your Dropshipping Business Takes Off?
Once your dropshipping business is running and starts to scale, it’s important to automate as many tasks as possible, so that your time is freed up to focus on areas like improving and adding to your product range by researching and sampling new items. You can use all sorts of tools online to help you with automating various processes, including Shopify’s dropshipping solution, which manages stock, packaging and shipping, and CJdropshipping, an online service that sources inventory and also ships it. Other dropshipping platforms and tools include ShopMaster, and you can integrate it with Shopify, eBay and other online marketplaces, and Floship, for global order fulfilment.
Once orders start to flow in and you build up a relationship with your suppliers — demonstrating how important you’re becoming to their sales — you can work out agreements with them so you can get bulk discounts and in return offer your customers even lower prices.
You can also join various affiliate programs to expand your reach and increase sales, and don’t forget about digital marketing. Outsourcing your digital content needs, such as blogs, to a digital marketing agency like Exposure Ninja will certainly free up lots of time, and also give you the high-quality content that search engines and visitors will reward you for.
Have a dropshipping site and want to make it better, and more profitable? Get a free website and marketing review from Exposure Ninja now and see how your sales can soar.