If you hope to build a profitable online business, one of the hottest secrets to success is discovering the power of dropshipping.
Instead of keeping massive amounts of stock on hand, you can use a dropshipper to forward goods to your customers upon purchase. You only have to worry about attracting customers to your e-commerce business: a dropshipper takes care of everything from packaging to shipping.
However, before you engage the services of the first dropshipper you discover, it is absolutely crucial you know what you are getting into. There are a number of essential dropshipping facts you need to know and a series of important questions you need to ask.
If you hope to reap the rewards of a booming online business, following are 13 essential dropshipping tips you need to know:
1. Be sure to test a variety of dropshippers before signing a contract with a specific provider.
Test different package sizes and different shipping destinations. Never sign a contract with a specific shipper unless you are 100 percent happy with the services they have provided you to-date.
2. It never hurts to ask for discounted rates when interviewing multiple dropshippers.
You may not qualify for discounted rates, but you won’t get a deal if you don’t ask. Inquire whether lower rates are possible if you use their services for an extended period of time, e.g., six months or one year.
3. When choosing a dropshipper for your online business, ask whether a potential shipper uses a freight forwarding service.
You want to ensure your customers will get their purchases on time. Dropshipping services that utilize a freight forwarding service are likely to have excellent on-time delivery rates.
4. Be cautious of dropshippers that charge membership fees.
A reputable shipper will not charge you a membership fee simply to use their company to send packages to your customers. Dropshippers usually receive a percentage of each purchase a customer makes from your online business; there is no need for them to charge a membership fee too.
5. Speaking of fees, ask in advance if a potential dropshipper charges any additional fees like restocking charges.
You will need to calculate these fees into the price you charge your customers.
6. When interviewing dropshippers, find out if there are any minimum order sizes required.
Minimum order restrictions can sometimes defeat the purpose of using a drop shipper.
7. Reputable dropshippers offer top-notch support personnel.
If a dropshipping candidate can’t guarantee you 24/7 customer support, you might want to think twice about engaging their services. If you can’t get an immediate answer to your support questions, how will you be able to answer customer queries in a timely manner?
8. Ask about return policies.
If a dropshipper is going to refuse returns or charge you exorbitant return/exchange fees, you need to have this information in advance. A customer-friendly return policy is essential when choosing a preferred drop shipper.
9. Inquire about order fulfillment guarantees.
Especially during busy holiday shopping seasons, you want to be able to guarantee your customers that they will receive their online purchases on time.
10. If you want to build a successful e-commerce business using dropshipping, it is imperative you define your business’ niche.
Customers tend to trust an online vendor who specializes in a specific type of product. Unless you are Costco or Walmart, the chances of building a thriving e-commerce business with an extensive array of non-related items is slim. Define your business’ niche early and stick to it.
11. Understand your profit margins may be slimmer when using a dropshipper.
Just because your online store is busy, that does not necessarily mean your e-commerce shop is profitable. Be aware of your margins and your annual expenses to ensure you do not end up losing money.
12. Ask a potential dropshipper what payment options they accept.
Are credit and debit cards your only options or do they accept cryptocurrency payment options like Bitcoin? Ask about payment terms too. Are payments due within one month or do they offer 90-day terms?
13. If a shipping error occurs, make sure the dropshipper will pay to fix the problem.
You do not want to be stuck paying for a mistake that was your shippers fault.
Engaging the services of a dropshipper is one of the most critical decisions you will make when setting up your own online business.
Here are a few resources worth exploring when you are considering the dropship business model:
Choosing the wrong shipper can cost you money and ruin your business’ reputation too.
Will you be paying attention to these tips when choosing a dropshipper for your e-commerce store?