Dropshipping can provide wholesalers with a sustainable way to expand operations without straying too far from their core business. However, setting up a successful dropshipping operation requires thorough preparation. Here’s everything you need to know about dropshipping, and the 3 things you need to prepare before launching your dropshipping services.
First Things First: What Is Dropshipping?
Dropshipping is an e-commerce business model where the vendor doesn’t stock the items they sell. Instead, the fulfillment is handled by another party, often a wholesaler or manufacturer. The customer doesn’t notice: they still place their order and receive their shipment.
This alternative approach to online sales lets companies benefit from the irrepressible rise of e-commerce, even if they’re not interested in setting up a complete e-commerce operation. For wholesalers, this means all the benefits of an additional (often direct-to-consumer) sales channel, without the burden of having to set up, run and market a web store outside your area of expertise.
Is Dropshipping Worth the Investment?
On paper, dropshipping sounds like the ideal solution for wholesalers interested in online sales but not yet ready to commit to running and marketing an online sales operation. After all, if someone else is taking care of the commercial side, all that’s left for you to do is the logistics — and that’s something you’ve already mastered.
As always, things that sound too good to be true usually are. A successful dropshipping service requires more work than you might think — and can require just as much effort as an in-house online sales operation if it’s not set up properly.
However, good preparation is half the work. Follow these 3 steps, and dropshipping can be just as easy as it sounds.
Step 1: Find the Right Dropshipping Partner
If there’s one thing that can doom your dropshipping endeavor, it’s the wrong dropshipping partner.
And we do mean wrong. Of course, you don’t want a business partner who’s objectively not very good at what they do. However, even a partner who is excellent at what they do can just be a poor fit with your company. And finding the right fit is essential, because if dropshipping means one thing, it’s close collaboration.
While both parties are independent in theory, in reality it’s a little more complicated. Your partner’s approach to matters like returns can have a huge impact on the way you do business. That’s why it’s essential that you find a partner who is perfectly aligned with your own wishes and needs.
Step 2: Optimize Your Product Strategy
A rock-solid partnership is essential, but even the best collaboration won’t lead to dropshipping success without a solid product strategy. After all, it’s your products that will draw buyers in and keep them coming back.
Ask yourself: which products do I want to offer? What kind of branding will I use: white label, our own brand, or our partner’s? What kind of product information do I want to provide — or should I let my partner take care of all that? Setting out and documenting a clear product strategy will ensure you and your partner are on the same page from day one.
Step 3: Adjust Your Logistics Where Necessary
You’re no stranger to complex logistical processes. In fact, you’re probably something of an expert — or one of your colleagues is. But that doesn’t mean that you can start your dropshipping operation without the proper preparations.
The most important thing is, once again, making sure you and your partner are on the same page. Review your logistics and see how your new dropshipping activities will affect your current setup, and where changes are necessary. Consider questions like:
What kind of delivery terms can we offer the buyers, and who’s responsible for making sure these promises are met?
How can we ensure that buyers have access to up-to-date inventory level information?
Take your time with this: fulfillment is an essential part of an excellent customer experience. Make sure that your logistics strike a balance between good enough to woo customers and realistic enough that you can confidently deliver on every time. And, of course, that your partner is aware of and on board with your logistical strategy.
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