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What is Dropshipping?
Dropshipping is one of the methods used in the e-commerce industry. Well as famous as this method has been along these previous years, it most certainly has attracted and also pushed a lot of people away. Without a doubt, there are many reasons why dropshipping has been controversial.
Many argue that one of the biggest reasons/downsides is the lack of competitive advantage. Meaning anybody can come in and easily copy what you have done, basically replicate, and kick you out of the market with a slightly bigger budget in the competitors marketing approach. This scenario scares many people and puts their idea to start dropshipping to bed. On the upside, a lot of young and experienced entrepreneurs succeeded doing dropshipping already without prior knowledge (learn as you go) which makes a bigger argument of why most people are very skeptical about it, while others still seem to benefit from it and actually make millions.
There is obviously no single factor that contributes to the success of an online e-commerce dropshipping business. To put simply, as any industry people fail and very few percentages win. That’s just the nature of the game.
Are you more perserve, persistent, hungry, learning machine, in addition to many business and marketing knowledge acquirer
I would be very stupid to try to convince you that I can answer this question in this article in a full view and more comprehensively.
However, understanding dropshipping is vital to the success of the business.
To explain, dropshipping is a method that you don’t have to worry about the logistics of delivering your product, nor produce/design/ manufacture any items. Basically it preexists in the market. Which make easy for grab (the competitive advantage factor shows up here). Most sellers go to Aliexpress to source these items and try to sell it online through their online store using Shopify.
Moreover, dropshippinng is especial technique especially for those beginners and no many leverages in the e-commerce domain. To clarify, if you are trying to boost strapping your own adventure in this model. Starting the dropshipping would be the most feasible way to look at.
- It doesn’t require much of upfront money
- Gets you on board to examine the market in the niche selected more freely
- Risk is low in terms of investment
- Best for beginners in the domain of e-commerce trying to sell. This is because learning is very cheap as oppose to starting a brand, which requires so much investment in the beginning including time, effort, and money.
Note: Aliexpress is one example, there are other alternatives that we have talked about in this blog.
Note: Shopify is one of the most common example, but also Woocommerce, WordPress, and more can be used.
After negotiating the price and selecting your supplier from Aliexpress, you list the product on your site, and simply start advertising on facebook or other social media platforms to get targeted traffic.
A very simple method to copy, especially when you know that you don’t deal with the complication of logistics, and the burden of production and so on.
Still this models works for many business. However, it make require an advance knowledge in Digital marketing OR big pockets to play with perception so that you can sell at high margins to make up for the advertisement spending OR Building a brand OR being more creative and spotting trends before everyone does. The list goes on.
Before we dive in
Let’s talk about business models …
There are two different strategies/models to share with you to consider in building any business and I am going to highlight the favorite method that makes the most sense for dropshipping or at least that’s what I think.
The first strategy is to pick a niche, for example, the beauty industry, and let’s narrow it down to cosmetics.
In this strategy, you are trying to understand your niche in the beginning. What is the product like, what are the margins, what’s perhaps the market share, competitors in the market and so forth?
Whether you produce or source the product, you are only going to learn about your real audience (people who are going to buy from you in details) when you have the business already set up.
Since the market is the market (the invisible hand), you can only and truly understand your market by talking to the demographics that these products are designed for or appeal to. On the digital world though, We tend to use social media rather than going to the streets (just for ease) and also quantity of reach and because you are going to be an online business, so you might as well talk to people online. Hahaha
Pick a niche -> source product -> advertise on Social media -> understand your market more -> advertise more to get more targeted consumers -> conversion.
The second strategy is the other way around. Basically, the reverse engineering of the first strategy. Instead of picking a niche and deciding to put money on it. You start by going to social media and do something called social listening.
How is the second strategy is done?
This method was inspired by the story Oberlo released in 5 May, 2016 by Andrew Roach with 22-year-old Melvin Chee from Melbourne, Australia.
He went on and started hanging around Instagram pages. As most of us know, most of the people on the Instagram especially when it was growing, it was mostly females between the age of 18-25.
He would then follow Instagram memes and micro-influencers at the time to see what people are talking about and what have had attracted engagement among these girls.
Notice here he didn’t pick a niche yet…
100 K product
One of the products that he made about 100k, simply a quote that been shared a lot. The quote is “I speak sarcasm fluently”. He then goes and finds the quote printed on a female T-shirt on Aliexpress. Source it, list it on his site and starts to advertise using one of the Instagram meme pages.
He saw a product that might resonates with these girls and convert very well.
It’s an impulse product. Nothing to solve here. But very smart and innovative way to search for a winning and somehow already proved to gain a lot of engagement product.
Note: there are two types of products to sells. One is the impluse product and the other is the problem solving product. An impluse product, from the name, it triggers an emotion, sense of humor, or simply Wow’s you. on the other hand, The problem solving product is solving a pain people are trying to get rid off.
He builds a simple one product store with 4 SKU’s for different sizes and with a margin of 30 %.
For advertising, he still didn’t spend much. He talked to one of the Instagram funny and jokes meme pages to post this on their feed with little fees.
People started immediately sharing and as a consequence, a lot of traffic drove to the store and more sales were made.
What is amazing about this ad sharing tag technique, it triggered a funny impulse, people always like to share these things. Or find some of their friends that is actually sarcastic and tag them.
The T-shirt speaks volumes and it’s a self relying solo auto selling item. It was also genius not to spend much money on it on advertising. Very creative. Always test the waters with simplest form of the idea.
One product, humble e-commerce page, high profit, with a very easy and simple method of advertising on one of the Instagram meme funny pages.
Understanding the behavior of your targeted audience, and why they engaging and commenting on certain things gives clues and proper ideas of your next product.
understanding behavior by engagement -> conversion clues -> deeper market Research -> finding supplier -> list on your store -> advertise where they hang around – > Test -> Conversion
To get to the bottom (conclusion)
People will always doubt ideas but even if you don’t believe the idea. You ought to be critical and examine this process in your head, and see if it makes sense.
It is Worth Trying
I personally don’t know this individual, but it makes a whole lot of sense since I have been in the e-commerce business for the last 3-4 years.
You either jump on the bandwagon or miss it, it’s your choice. Another thing, reading this could give you a perspective for your next business adventure whether it’s online or not. You don’t have to be on Shopify all of a sudden. These ideas can be implemented across industries. Keep learning. Thanks for reading.