Nowadays making money on the internet seems to be a pretty accessible and easy thing to do. If you type on google “drop-shipping” a thousand of ads will re-target you on how to do it and why you should do it and how this magic pill can fill your bank account. Seems fast and easy. But based on my experience working with big ones in China and seeing also the big approach, I am giving my perspective on the things we all should know. Because this is what I partially do for a living.
Drop-shipping is really old, there are companies that have been doing this from China since 2009.
How does it work?
- You decide where/when/how to sell an item.
- Customer places an order on your store.
- With the money of your customer, you place an order to the supplier
- The supplier ship directly to your customer
- First, I want to say that this article is my own personal experience. Not all of the companies I have and keep working-partnering with, are on the top of the game or make good revenue or have outstanding branding. Every e-commerce project is different, every store also. So this is written for all of those who are interested in starting this type of trade. Because this is what it is.
- Second, I want to point out that I am writing this for the ones who want to grow a fructiferous business with good prices and good items, this takes time. If you want to make fast money don’t read this, just keep selling cheap stuff on the internet sphere.
- Third, Let’s go to the point.
1. The product.
There are millions of items on the internet from small affordable phone gadgets to shoes (one of the most difficult ranges to sell). Many products have an extremely saturated market and are not worth pursuing, most of all because there are millions of suppliers of the same products and you have so many competitors which make it risky or none profitable. Your product doesn’t need to be cheap, the best thing to do is find a balance between a reasonable profit margin, and product sales, focus always on the product and the supplier. The supplier (source) is key for sales.
Most of the people care most about the price of the item or the profit margin than the product itself. People can know you do drop-ship and they do not care about this if you actually provide something good. Keep in mind the product. A good delivery is the most important thing at the end of the day.
Everything that you see these days on social media comes from a Chinese factory, even hottest products on Amazon or Ebay. Everything. The global master of the industry is Alibaba, here you can everything that can cross your mind, from the weirdest sex toys to the last makeup palette of your favorite brand. I am writing this seriously because I have contacted and tried them myself, besides the Alibaba platform allows you to connect with companies, suppliers and even go to their factories as I have done previous times. Alibaba is a bliss, but we need to work and put more effort into looking up for the real suppliers and find good, trustable ones.
Sourcing is key to a successful business. Beware of many suppliers that say they are manufacturers BUT they also drop-ship items. Alibaba has many ways to let keep your money safe and help you to avoid scammers, read and document yourself. Keynote here, is to ask for samples, mostly they do without any hesitation when it’s a serious company, you can even take pictures previous to sell for your website or social media also when they charge money for the sample, they always refund it when you place the order.
“sell something that you like and you are passionate about”
People often perceive Chinese product as bad or crappy, that’s not true. If you buy a product for $1 just because you want high sales profit is really different from you buying the same item for 10$ or 20$ with a sustainable supplier which hold last technology on the production line.
One true thing -I learn from my first job in China. In a factory- is this: people don’t have any idea of how the product they are buying is made, people often see the price they don’t focus on the product. That famous saying that preaches “sell something that you like and you are passionate about” is true if you like and know your product you will see this is crap when dealing with the supplier.
Last, 95% factories in China include a factory cost on the item. Imagine you pay the raw material + production line + the factory cost = your product. Now imagine the quality of a thing that cost you $1.
You can sell on eBay, Amazon, WordPress, Shopify, Facebook, Instagram. Almost everywhere on the internet. The key assets on the internet are the quality and the reputation of your store, all your customers are online and basically, with a little good research, there is almost everything about you and your company on the internet. I would recommend asking for honest reviews, also make sure you can solve all or at least 90% of the issues of your customers.
Dealing with factories and suppliers directly can help you with returns, most of the suppliers accept returns and all of the trustable ones do the replacement for damage with no cost. Also, the supplier should accept the return and credit your account back with the amount. Most suppliers won’t pay for return shipping and so on occasion, you will cover the cost. Some may charge restocking fees for returning an item.
My advice, never charge your customer restocking fees, return fees, or anything you know is 55% more your fault than the customer’s fault. It will ruin your reputation in the blink of an eye.
“with a little good research, there is almost everything about you and your company on the internet”
5. Learn and repeat.
I know you care about profit, sells are crucial, we don’t live from likes and followers. But is the CR or Conversion Rate on your website the real number that determines when your website is good or not. Don’t think is about the profit, is about the product and how much your website can convert. I did not know this 2 years ago. if your product is good then stick to the supplier, find other products they do or products they are developing that you can be one of the first on selling. They always have a catalog, go for it.
Last but not least, if your store was a physical store you would see obligated to read the daily sales report. This is the same. Reading the numbers of your website and how it works, plus all the Facebook, Instagram or any other small or powerful tool you use to cash out on the internet make sure you know how it works, you can track it or read it.
As I wrote in my previous article about Tommy Hilfiger, he did not know how to read numbers when he failed on his first business, so he took time to stop, learn and go back in business. Learn, practice, be wise about what you are delivering and repeat.