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Ultimate Guide to Dropshipping

Shoppify published a 100 page guide on starting and running a dropshipping e-commerce businesses. They provide a nice infographic which is summarized below.

What is Dropshipping? A fulfillment method where a store doesn’t keep the product it sells in stock
Dropshipping Infographic

Pros of Drop Shipping

  • Easy to Scale
  • Low Overhead
  • Flexible Location
  • Easy to get started
  • Less capital required
  • Wide selection of productions

Cons of Dropshipping

  • Low margins
  • Supplier errors
  • Inventory issues
  • Shipping complexities

Characteristics of Fake dropshipping suppliers

  • Membership Fees: Real wholesalers do not charge membership fees
  • Sold to the Public: If you don’t have to apply to become a wholesaler, or your wholesaler will sell to you as a “public” buyer, you are not working with the right supplier

Characteristics of Legitimate Dropshipping Suppliers

  • Pre-order Fees: Most dropshippers will charge a pre-order fee ranging from $2 – $5 per order for packaging and shipping
  • Minimum Order Size: Dropshippers need you to commit to a minimum order size in order to filter out window shoppers

Attributes of Great Dropshipping Suppliers

  • Expert staff and industry focus
  • Dedicated support representatives
  • Investment in technology (product feeds, ordering, fulfillment, tracking, etc.)
  • Can take orders via email
  • Centrally located
  • Organized and efficient

Picking Products to Dropship

  • Picking the perfect product is the biggest factor in success or failure in your dropshipping business
  • Marketing Potential: Know your marketing strategy before you launch
  • Accessories: Products with many associated accessories can increase your cart-size and margin
  • Turnover: Updating products in a dropshipping model is a lot of work, try and find products that do not get updated with new models constantly
  • Hard to Find Locally: Products that cannot be easily found at local merchants will increase your chances for success
  • Size and Weight: Smaller items are easier and more cost efficient to ship to your customers

Finding the Best Target Market

  • Hobbyists: Targeting a base of customers who are passionate around their hobby will help increase loyalty and help you build a refined niche audience
  • Businesses: Businesses will be price sensitive, but represent large quantity purchasers with an opportunity to build repeat business through relationship and loyalty development
  • Repeat Buyers: Try to aim for products that derive recurring revenues and repeat purchases.

Getting Started

  • The most important thing is to start
  • Don’t spend a lot of money getting started
  • DO spend a lot of time and energy

10 Ten Things to Live By in your Dropshipping Company

  1. Accept that things can get messy
  2. Adopt a KISS mentality
  3. Own up to a botched order
  4. Consider multiple suppliers
  5. Manage out-of-stock situations
  6. Route orders intelligently
  7. Stay vigilant with fraudsters
  8. Nail down a fair return policy
  9. Worry more about shipping as you grow
  10. Be constantly invested in support

ECommerce Webinar: Checkout Process Optimization – 11 Steps to Increasing Revenue

Cliff notes from the E-Commerce Webinar entitled Checkout Process Optimization – 11 Steps to Increasing Revenue. View the entire E-Commerce Webinar free. Presenters: E-Commerce Webinar

Presented by Groove Commerce, a Baltimore based full service interactive agency specializing in the Magento Platform. They are also a HubSpot partner, providing award winning services that include web design, development, and online marketing services.

Including Shane Lundy from BuySafe. Buysafe enables online retailers to offer a guaranteed shopping experience that increases conversion and customer satisfaction.

Average checkout consists of 5.08 steps
24% of top 100 e-tailers require account registration – 50% of top 100 e-tailers still ask for the same information twice

Step #1: Ensure pages load quickly

  • Converted shoppers received pages 2x faster than non-converted shoppers in an e-commerce case study
  • Use – to find out how well your site pages are performing
  • Turn on compression
  • Remove unneeded code & files
  • CDN hosting
  • Use Google JQuery Scripts
  • Full-page caching
  • Track Server errors and performance (New Relic – web application performance management tool that shows end to end performance – how fast pages are being delivered, utilization, health of servers, sql errors, PHP errors, etc.)

Step #2: Offer Guest Checkout without Registration

  • 8 of the top 10 US eTailers offer it
  • 25.6% of online consumers will abandon if forced to register (econsultancy)
  • Average cart abandonment is 65%
  • Optimizing checkout is one of the best places where you can improve the top line revenue of your site

Step #3: Keep Forms short

  • Don’t ask if you don’t need information
  • Don’t ask for answers you already have
  • Pre-populate fields if you can
  • Maintain Form Data if errors happen
  • Especially important for mCommerce – simplifying forms and UI will significantly help when people are trying to checkout with mobile devices

Step #4: Provide clear progress indicators

  • Examples include: 25% done, Step 1 of 3, Billing ->Shipping->Payment->Summary
  • People like to see that there is progress in what they are doing
  • What makes people feel more comfortable to purchase from smaller, regional and niche retailers? They may have more variety and depth than big box retailers, but don’t always set the right expectations with the shoppers.
  • One Step vs. Multi-step: A/B tested the accordion checkout vs. one-step checkout module and accordion clearly beat the one-step. Depends on the buying personas – how they shop and how they browse.

Step #5 – provide shipping costs early and often.

  • Show the final price before checkout
  • Confirm availability
  • Remove customer concerns and set expectations. The A-players go above and beyond to set expectations on when something was shipped, when its available, what is the price for shipping, etc.
  • Reassurances if anything goes wrong.

Step #6 – provide clear calls to action

  • Differentiate checkout/continue shopping button colors
  • Make next step button with arrow indicators >>
  • Customers should be clear on how to proceed to the next step in the checkout – The Blur test – step back in the room, blur the screen and I should be able to see the three most important buttons on the site – product page add to cart, cart page proceed to checkout, and checkout page “submit your order” are the three most important buttons on your site.
  • Enable back-tracking without losing form data
  • Test color and font options, different verbage, typefaces, to find what fits with your buying personas

Step #7 – Minimize other navigation

  • Remove anything not needed…keep them focused without any distractions
  • Use jQuery popups for assurances
  • Most e-commerce sites convert between 2% and 4% so eliminate anything not needed in the checkout process. Most people rarely go to the privacy policy, so why distract the purchase process?

Step #8 – Provide a guaranteed shopping experience

  • Provide reassurances of personal security information
  • Merchant is reliable and underwritten by 3rd party.
  • Customer is getting the best price.
  • Many different types of buyers – some are very savvy and others are very concerned with shopping online. Concerns of these types of buyers:
  1. Security of their personal information
  2. Reliability of merchant – product will be delivered on time
  3. If something goes wrong, you will honor all terms of sale
  4. Assuring the consumer is getting the best price from you
  • An industry-wide problem – the structure of the Internet creates a disconnected purchase experience and shopper concerns
  1. 73% of consumers say that shopping online is riskier than shopping offline – Visa/Cybersource
  2. 98% of consumers will bounce from the site and make the purchase elsewhere if they have concerns
  3. Signal to the consumer that you are a reliable merchant: McAfee Secure, Norton Secured, TRUSTe, Verisign Secured, BBB Accredited, Google Trusted Store, BizRate, BuySafe
  4. BuySafe provides guaranteed shopping experience:
    • $10,000 blanket identity theft protection
    • $1,000 purchase guarantee
    • Same store low price guarantee – if you buy today and the item goes on sale, BuySafe will reimburse you for difference in price.
    • Standard conversion lift is between 6% and 10%

Step #9 – provide help options

  • Make phone easy to find
  • Extend customer service for peak holiday times
  • Don’t make users leave cart to use live chat
  • Proactive chat with your best customers
  • Cart-based rules for chat (Velaro – live chat tool with cart-based rules – if x $ are in a cart, you can proactively reach out to help close that deal)

Step #10 – Multiple Payment Options

  • Different payment methods help appeal to as many potential customers as possible
  • Leads to increased sales & revenue
  • Gift cards, Amazon Payment Gateway, Paypal, Google Checkout, etc. – make as many available as possible
  • Take friction out of the buying process to increase shopping cart conversion rates

Step #11 – Provide a Final Summary

  • Provide a full summary before final submission so customers can ensure they entered everything properly
  • After checkout, the order confirmation should include order summary with order number, contact information, shipping details, social and sharing icons

Bonus Step – Consistently review your data

  • Review funnel tracking data within your analytics – Fooman analytics extension for Magento helps you setup additional Google Analytics funnel tracking
  • Refine & test top exit areas – figure out what the money pages are – what generate the most money and what lose the most money
  • 2 types of testing & analytics: Single Page: Buttons, colors, banners, font, text, verbage
  • Site-wide: Site wide test to turn on and off trust building icons, payment option icons, shipping offers, etc.

About 25 minutes of Q&A, plus polls should be watched in this ECommerce Webinar

Improving the Online Shopping Customer Experience

The following are the Internet Marketing Cliff Notes from a webinar put on by ComScore and UPS on August 21, 2012. You can download the slides by clicking the following link: UPS Comscore Webinar: Improving the Online Shopping Experience

  • Online retail up 15% in 2012 – $80B
  • 8.7% of all consumer spending goes to online retail
  • Apparel is top category
  • According to the Online Shopping Customer Experience Survey conducted by ComScore and commissioned by UPS, 55% of consumers would cancel transaction if there is no free shipping once they get to the end of their purchase process.
  • Nearly three-quarters of shoppers surveyed want to see free shipping as an option at checkout
  • Mobile or Tablet purchases constitutes 9% of all e-commerce dollars
  • 60% of online orders are over $50
  • It is important to show the shipping costs as early in the shopping process as possible to avoid shopping cart abandonment
  • 42% of shoppers surveyed abandoned their cart because of the estimated delivery date – in addition to shipping costs, show the estimated delivery date as early in the shopping process as possible.
  • 60% of shoppers look at the return policy before making a purchase.