Dropshipping is a way to sell products without the need for a warehouse.
You do not need to buy the product until the customer buys it from your online store. In this way, many risks are reduced.
The point is to be able to get the maximum benefit out of it, since companies that do dropshipping usually impose conditions and we do not always know the costs we will have.
In this post we will give you some tips to increase your profits with dropshipping, since we know that it is not easy if you have a business that depends only on this source of income.
Ideas to get more benefits with dropshipping
One of the problems that online stores that do dropshipping have is the lack of a sufficient profit margin. This is something you can see in your business management software in a very graphic way.
The tips we are going to give you, are important aspects to take in mind if you want this not to happen to you.
1. Set realistic prices
You can’t dropship if your profit margin is so minimal that it leaves you barely enough liquidity to trade. If you want your online store to work, you will probably have to invest in SEO and advertising, so it would be important that you have enough financing.
In this sense, it is recommended that you look for profit margins of at least 60 or 70% so that you really get enough profit.
2. Don’t get into a price war
If everyone can do dropshipping, what is your added value? If you get into the price war, you will look for the customer to stay with you because you give them a cheaper price.
But this strategy has a very clear limit, and that is that you can’t keep lowering the price to the point that you have hardly any profit margin left and sooner rather than later everything will be expenses.
To prevent this from happening to you, you have to provide added value beyond the price. Service, customer care, information you give your customers about the product, etc., everything must be done so that your customer is happy with your brand and not just with your product.
3. Don’t depend so much on market places
Some may be tempted to take advantage of marketplaces as the main instrument for selling on the Internet.
The problem with this, even though it exposes you to a very large audience, is that you will become dependent on marketplaces, their commissions and derived expenses, which will also end up reducing your profit margin.
You must also take into account that companies like Amazon also sell their own products, so it will not be easy to find a profitable niche where you do not compete with Amazon.
We are not saying that you should not take advantage of market places, but we are saying that you should not put all your eggs in one basket. Promote your online store, which is the only site that will not charge you commissions for your sales, as long as you have it in your own hosting.
4. Analyze well the products you sell in Dropshipping
Some people think that, as in dropshipping, you don’t have to buy stock in advance, as you can add as many products to your store as you like. Although this is possible, the main problem is that it can be detrimental to your customers.
Keep in mind that if you add products that are of very poor quality, for example, or that have negative reviews, you may well have more dissatisfied customers and more product returns.
Returns always incur costs if you are the one who pays the shipping costs, so it is advisable to try to reduce them as much as possible.
5. Analyze well the dropshipper you work with
Not all sellers give you the same possibilities and conditions in terms of price. In this sense, you’re going to have to know your dropshipper very well.
There will be some who have reasonable prices and others who don’t. Some will impose a series of conditions on you (which can be good for limiting competition) and others who don’t.
In either case, you should take a good look at your dropshipper, the way it works and its conditions.
This way, you will be able to work only with the best, which will allow you to reach an acceptable level of sales, without having to face too many returns or unsatisfied customers because they do not receive their orders.
Selling with dropshipping requires, like everything else, experience, trial and error, constant learning and a lot of perseverance to continue exploiting and getting to know your market better.