Have you ever tried eCommerce Dropshipping?
Dropshipping is a digital business that has gained popularity in the last year and is known by a variety of names: dropshipping, dropship, dropshipping business, eCommerce dropshipping or dropshipment.
eCommerce itself has become one of the most popular topics in the last 2 years. Nowadays there are between 12M and 24M ecommerces in the world and 20% of these are dropshipping websites. Which poses the question: is eCommerce dropshipping actually profitable? Quite truthfully, it depends.
How does eCommerce Dropshipping work?
There’s currently different tools, such as Shopify, that allow us to create a dropshipping website very quickly and easily. The initial investment to start dropshipping eCommerce is quite low. It’s for this reason that it has become so popular, because anyone can start this digital business from home and at a low investment. Some people even start dropshipping businesses with less than $200.
Let’s review the most relevant points of dropshipping eCommerce:
One of the most difficult things when starting a new dropshipping eCommerce is choosing the products for your website. This may seem like an easy task, but finding a winning product is complicated and will be the key to success with dropshipping business.
There are several theories about what makes a winning product. However, for the most part, a winning product must meet 3 requirements:
- Solves a problem or covers a necessity for a relevant segment of the population.
- Is a product with a good supply-demand relationship.
- It must be a product with a perceived value greater than the purchase price.
When it covers all of this, it can obtain profitable margins in a dropshipping website.
Once we have selected the products that we are going to sell, we must establish the profit margins for the dropshipping business. When using dropshipping business, our value proposition as far as the product is concerned is very low or even zero. Which means it’s best to add value in other ways, such as pre and post sale service.
Therefore, the sales price will generally be 2 or 3 times that of the cost price. However, if the product sold has a low sales price and is purchased in quantity, it can have smaller margins thanks to the large volume of orders that it will receive.
Receiving traffic on a dropshipping website
Bringing traffic to a dropshipping website is relatively simple, but surely there’s a best way to do it. The idea that Facebook and Instagram Ads are the best channels for dropshipping eCommerce is widespread. However, there may be better ways.
This is because the cheapest way to get traffic is not always the best. Many people who start dropshipping eCommerce are beginners and don’t know how to create marketing campaigns, as was my case when I started. Now that I’ve tried several customer acquisition channels, Facebook has not given me the best results. It’s true that the CPC on Facebook is generally cheaper and the potential reach is greater, but the traffic is of much worse quality compared to what I obtained with my Google Ads campaigns. The result is that of the $100,000 sold in the last 8 months, 80% of the orders come from Google Ads Campaigns. In addition, the average CPA obtained with Google is 35% lower than that obtained with Facebook Ads.
Dropshipping suppliers: choose the best!
It is also very important to select good dropshipping suppliers. One of the weak points of dropshipping business is the null logistic control, which leaves trust in dropshipping suppliers to do their job as effectively as possible. In almost all platforms that allow dropshipping ecommerce, dropshipping suppliers have their own quality score. This makes it so people can know the real feedback from other dropshipping websites and select the best dropshipping supplier.
Therefore, it is better to have trustworthy dropshipping suppliers even if the cost of the product is a little higher.
With all this being said, it’s important to note that dropshipping eCommerce is not a long-term sustainable business. In fact, 99% of people who start a dropshipping business fail. And the remaining 1% that have a successful dropshipping business, manage to evolve it into a private label eCommerce. Remember also that for your business to thrive you need to run eCommerce Ads campaigns.