Good Practices for A Successful Dropshipping Business In 2019

By Simona Ferrazza on July 29, 2019 - Fact checked by Dumb Little Man

by Simona Ferrazza July 29, 2019

These days, a lot of online gurus portray dropshipping as a cash cow, promising quick profits with minimum investment. If that’s true, then even a hundred dollars is good enough to get going. Unfortunately, not all that glitters is gold and not all dropshipping tips work. There are things that may or may not work for you.

Building and running a successful dropshipping business is possible. To avoid pitfalls, it is better to follow some successful strategies, like the ones we’ll be explaining below.

Niche Selection

A narrow niche, preferably a small niche with low competition, should be selected. In the past, dropshippers created single-product stores that they close after the trend of those products fade.

Nowadays, nobody can afford to lose all leads every time and start off again with every new product. Marketing campaigns and, especially Facebook campaigns, are getting more expensive every day. Therefore, the only way to make a real profit is to retain old customers.

On the other hand, a broad niche or a general store requires a huge marketing budget and quite often eventually leads to failure.

Advertising Methodology

Facebook ads are the most common tool for dropshippers to promote their items. A normal strategy to start testing new products is the one that I’ll describe below.

Paid campaigns were set up for selling products at the test store.

The page title usually is the store’s brand name or a generic phrase that can give an idea of what kind of niche we are talking about.

Selecting ‘Snowboard Mania’ as the Facebook page’s title increased the audience’s likelihood of interacting with the page’s content.

Users who interacted with a combination of the product’s video and images ads were later retargeted for product sales through a carousel campaign or an Instant Experience ad.

Product Research

An experienced dropshipper performs preliminary research to find winning products: an item that can have high volume sales and low advertising spend ratio guarantees profits.

Product research involves running Facebook campaigns for different items to find the most profitable ones.

Normally, multiple tests are run before one finds a winning product. The Facebook Pixel connected to a page garnered millions of view and information about a niche. The pixel learns and, in time, finding the same niche customer became easier. With this in mind, it is useful for product discovery analyzing competitors within a niche.

Product Procurement

Until there is considerable sales volume, AliExpress retailers are a reliable source for product procurement. Newcomers usually start with manual order assignment moving to automated process at later stages with supplier apps like Yakkyofy. They can assure faster and more stable shipment time than AliExpress and consequently a low complaint ratio.

Customers – Repeat orders or Chargebacks

The majority of dropshippers face quality issues as products come from remote suppliers and customer complaints claiming product not meeting descriptions are not uncommon. The high return shipping costs makes returning the product to the shipper unviable. Thanks to mail subsidies, Chinese suppliers manage to ship the product to the customer at a fraction of the return shipping cost.

The consequence of this complaint is that several customers end up registering a dispute or a chargeback with the payment processor or credit card issuer. Before, this wasn’t a boundary but only a nuisance but today, the industry-standard maximum charge-back rate has become 1%. Over this, the account of the dropshipper can be frozen with all the money inside.

For this reason, it is important to limit complaints with good customer care. The product quality has also another repercussion: repeat orders are almost non-existent. They can result in a low lifetime customer value.

Product Return Rate

The standard eCommerce retail return rate is around 35%. It is surprisingly lower within a dropshipping model.

Dropshippers usually adopt a return policy which holds the buyer liable for the return shipping costs unless the item is defective upon arrival. The return shipping costs are high. At times, it’s more so than the purchase price rendering the process unfeasible.

Dropshippers based in the country where their primary customer base is located have an obvious advantage. They could accept returns domestically and maintain a buffer stock to expedite shipping.

Optimization – Increasing Sales

Understanding why your customer leaves your website without buying anything and correcting the problem is the key to success.

The global shopping cart abandonment rate is 67.9% and the commonly cited reasons include return policy-related issue, a slow website, and high shipping costs.

Increasing the checkout rate is desirable and optimization involves identifying the underlying causes and rectifying them. Visitor recording tool like Hotjar capture videos of user activity, which help understand the rationale behind cart abandonment.

Follow-up email sent to customers who leave their email address before dropping out results in recovering otherwise lost revenue.

Scaling – Boosting Sales

Scaling a best seller product is the main goal of every dropshipper. However, it is the most difficult challenge in this business for many reasons.

For one, it involves managing a stable and reliable order fulfillment process and also preparing your business structure to sustain the number of sale with a good customer care and a good website infrastructure.

Increasing the ad budget without a proper strategy can be counterproductive. It will make your ROAS (Return on Ad Spend) decrease. Targeting new interests to reach out to a different set of audience is one way to maintain ROAS. Data from Google Analytics and Facebook Pixel provide insights for better targeting.

Lookalike and Custom audiences are scaling tools which are usable once the desired volume is reached. A custom audience is simply the set of users who have performed a specific task. Lookalike audience tool is part of the Facebook ad panel. It creates an audience similar to the existing one.

Conclusion

Dropshippers are limited by short-term success unless the fundamental obstacles are taken care of. So, you have to choose a niche of product, build customer loyalty, and increase the quality of the products. Don’t forget about customer care services, too. These dropshipping tips will take your business a long way.

To achieve those things, you can use supplier apps, like Yakkyofy, that allow dropshippers to automate the fulfillment process. They are important in having stable shipping and quality check on the products.

This kind of app creates a hybrid model where you can automate the dropshipping process and preparing to scale by purchasing products stock.

This kind of sourcing app puts a dropshipper in contact with many different suppliers. Being the main interlocutor, they take responsibility for shipping delays, checking the quality, and shipping samples. All these tasks are more typical of a fulfillment center than of a dropshipping business.

This system also gives you the possibility to source for new products fast. In fact, item research is an ongoing process and what product may sell right now may not sell as well in the near future.

This makes one thing clear: dropshipping does work if proper strategies are followed and a planned implementation is carried out. That said, it isn’t as undemanding as many within the industry might want you to believe.