You are in business because you want to make some money. There are no two ways about it, and you would go any length to make this possible. Perhaps you need the money for that dream vacation of yours, or make enough to quit your day job – no matter what your aim for starting the drop shipping business is – the bottom-line is you need to turn a profit soon.
To actually run a successful business, you will have to understand what profit is, how to calculate it for your business, and know how to set the right prices for your products that guarantee a healthy margin.
But first, what is profit? A profit is a difference between your products’ selling price and the total cost of selling them. Here’s an equation that illustrates this:
Profit = selling price – cost of selling.
Cost of sales includes the cost of running ads, cost of purchasing the goods, the logistics cost, and all various expenses incurred in the course of running your business.
But, one challenge every dropship seller faces is small profit margins. The fact is – this is an inherent flaw in the model. And it’s not far-fetched why it is so; it costs wholesalers a lot more to offer drop shipping services – they practically take on the responsibility of storing, retrieving, packaging and processing single orders.
Besides most of these suppliers are already running on low profit-margins and only rely on bulk purchases to make any significant profit. So providing drop shipping services leaves them with no option but to increase the individual prices of the products and also charge a drop shipping fee.
So in the light of this, it is important to utilize every channel to maximize your profits. To do these, we have listed some excellent tips to help you add more money to the bank balance.
Don’t sell what every other person is selling
The temptation to join in on what’s hot is great but, if you can hold out and instead sell not-too-popular products, but have decent demand. Then you’re sure to start racking in some dole.
Another reason to take this tip to heart is to avoid entering an already crowded niche and the intense competition that is bound to follow.
Utilize other selling platforms
Sites such as Amazon, eBay, and Bonanzle all offer additional touch points to reach out to your prospective customers. Be sure to check include social media sites such as Instagram, Pinterest, and Facebook in your multichannel marketing strategy to reach even a greater audience.
Avoid back orders
Imagine receiving an order, and your supplier informs you they are out of stock. This could be the most stressful part of dropshipping since it wastes the time of everyone involved in the transaction and you also risks getting a bad review from the customer.
To help you manage the situation;
- You can maintain a small stock of the products you sell at home. That way, you can always fulfill your orders.
- Have a backup supplier to fall back on when your primary supplier runs out of stock.
Define a niche
Instead of selling generic products to the general populace, why not carve out a niche and focus selling to them. For instance, you can sell phone cases to teenagers, or iPhone covers to busy professionals on the go. This way you differentiate your store and can make good killing selling niche products.