Chapter 6: The Most Important Aspect of Business
When caught up in entering the world of online business, many fresh entrepreneurs seem to forget the one essential skill required to build any business regardless of what you are offering. This skill is the art of sales. When you think of sales you might think of the typical salesman wearing a suit and an overly enthusiastic attitude. However sales is much more than this. In fact the very essence of sales is to connect a product or service with a customer and ensure that the customers needs and met and their desires are satisfied.
With this in mind it is important to build your business on the correct platform for what you would like to have distributed. While there are a number of channels open to use, they each have their advantages and disadvantages and as a beginner, it is important to focus on just one or two to really master how drop shipping works before opening up to the more unique platforms.
The other side of sales is of course what it can do for your business. The more sales you can generate the faster your growth. You will find that the more customers you start fulfilling the more compounding growth you will experience as you will find more repeat customers, word of mouth referrals, more revenue going back into the business and of course more organic traffic as your platform becomes increasingly noticed.
Amazon FBA
This one is highly recommended as the best place to start. Not only is it easy to use, effective and loaded with benefits it also offers some of the most competitive prices in the drop shipping sphere. The fulfillment system is quite simple. You can add the FBA element to your seller's account on Amazon and start creating product listings. Products are added to the amazon catalog either one at a time or in buik. You are also able to integrate your own inventory management software with Amazon’s API.
Your customers will order your products while Amazon picks, packs and delivers the items. Customers enjoy fast free shipping all the while receiving tracking information from Amazon. In addition to this Amazon provides customer support on all products you sell, taking care of any inquiries, refunds and returns on orders through the Amazon marketplace, 24 hours a day, 7 days a week.
Advantages
Products are eligible for Amazon Prime Free Two-Day Shipping - This one is particularly great for beginners since it takes out the hassle and stress of delivering to your new customers on time. It can be an immense benefit to building your reputation when delivering products within just two days AND providing free shipping.
Customer service and Returns - Another benefit to beginners. Taking out the customer service and returns element of your business can save a massive headache particularly when starting out. There are bound to be hiccups along the way and by having a professional customer service team taking care of your business, you can save both time and effort.
Cost Effective and Simple - With Amazon FBA you are paying as you go. The only charges you incur are for storage space and orders fulfilled. Shipping costs are all included in these fees.
Multi-Channel Fulfillment - This allows you to fulfill orders from other sales channels while still storing inventory with Amazon fulfillment centres. This means you can effectively grow your business while maintaining a stable fulfillment system.
Small and Light Products Eligible for Free Standard Shipping - This is great for those who are selling smaller, cheaper products in large volumes. Not only are the fulfillment costs much lower, the standard shipping will be free to all customers. Another great way to build reputation and convert customers with ease.
Disadvantages
Tighter Profit Margins - Of course FBA comes with fees. These can eat into profit margins and can put a strain on your business particularly in the early stages. It is important to keep in mind the larger, heavy and inexpensive items can be a disadvantage when using FBA.
Inventory Management - Unlike simple drop shipping suppliers, FBA requires a little bit of inventory management skills, which in busy times can be difficult to measure how much stock you need to fulfill demand.
Competition - Amazon is quite a large market. With any products you are selling there is always the chance that there are people out there who can do it a little bit cheaper. This is why it is important to focus on price penetration in the beginning and avoid products which are traded in high volumes by competitors with greater market share.
Ebay
Ebay is one of the most recognised marketplaces in the ecommerce world. You are able to reach a huge audience of potential customers and if your product stands out from the crowd you can be quite successful. Ebay has been the choice of many online retailers for a number of years due to its ease of use, simple user interface as well as a list of protective feature for both customers and sellers.
Ebay is a must for any beginner looking to set up shop in drop shipping. Due to the simplicity and low barriers to entry, it is possible to start making money in a very short amount of time if the the right product is put up for sale. An issue many drop shippers experience with ebay is copycat products. Due to the fact that many suppliers ship their products from China, it is possible to see multiple ads for similar products all from different sellers. The issue here is not that the product is the same, it is the fact that these sellers have a much larger market share and are able to sell huge volumes of their products are at an extremely low profit margin. This is why it is important to think outside the box when determining what to sell.
Advantages
Ease of Marketing - WIth eBay's huge volume of buyers, marketing is quite simple. With some great keywords, high quality photos and a decent price there should be no reason why your product won’t sell. The search system is also great for getting in touch with your target market as many repeat buyers search consistently for similar items.
Brand Recognition - The best part about using eBay when you are just starting out is the fact you can attach your business to a genuine brand that has the reputation. Even though your buyers have never heard of your store or brand, they put their trust in you given eBay’s success and ease of service.
Seller and Buyer Protections - Not only do your buyers have the added protection if anything goes wrong, you are also well protected if a buyer decides to cause trouble. With eBay’s mediation any issues can be solved through the third party causing less stress and disruption on your side.
Ease of Use - A lot of effort has gone into making listing an item incredibly easy through ebay. With a long list of features to allow for making a listing a simple process, eBay is one of those platforms that virtually any beginner can pick up straight away. In addition to this the management system for your items allows you easily track what is working and what might need improvement.
Disadvantages
High Fees - Over the years since eBay's inception, fees have increased incrementally almost to the point where it can be difficult for beginners to turn a profit if they are still getting the hang of managing their business.
Large Competition - Competition, particularly between rival drop shipping businesses has also increased over the years with many sellers offering very similar items. This is why it becomes important to differentiate your products from competitors to give your business an edge.
Difficulty Selling Unique Items - Since most items listed on eBay are heavily keyword driven and with a very particular algorithm for deciding what reaches the list first, newcomers who are traded overly unique items might find it difficult to reach the audience they desire.
Shopify
This one is for the more intermediate drop shippers. The reason for this is the previous channels have a much greater exposure and virtually effortless marketing methods, seeing as the sites take care of driving traffic to your products for you. Shopify on the other hand is an all in one ecommerce solution which can be great when going down the path of opening an online store.
Shopify allows you to build a turn-key ecommerce store with many features taking the hard work out of the process.
Advantages
Marketing - While it might not give you the exposure of eBay or Amazon, Shopify allows you to take care of the simple yet effective basics of online marketing. These being marketing campaigns such as email marketing, adwords and evening landing pages allowing your products to sell themselves.
Customer Support - This one would be more for you than your customers which doesn’t make it any less valuable. In the times when you just need that bit of extra help and don’t have the funds to turn to developers or consultants, Shopify allows you to take advantage of their huge database of FAQ’s email/chat support as well as phone support with an actual support rep.
Add-Ons - This would have to be Shopify's greatest advantage, the huge number of built in features, add-ons, apps and plugins. This allows you to fully customise and integrate any features which are suited to your drop shipping business.
Speed and Security for Hosting - Running an online store requires a great deal of both speed and security and fortunately Shopify accommodates both. Understanding the need to keep customer payment details safe yet offering a streamlined experience, the Shopify team takes care of all issues with hosting and online protection.
Disadvantages
Pricing Plan - Unlike both eBay and Amazon, Shopify requires up front payments in order to use the service. This means that even if you are unable to make any revenue you will still be required to pay for the platform.
Poor Content Marketing - While most ecommerce stores depend on effective content marketing for driving organic traffic and building the brand, Shopify’s solution is something which needs a little bit of work particularly compared to other options which might be available such as WordPress.
Mobility - Due to the all inclusiveness of Shopify’s platform, shifting from one platform to another can be extremely difficult. This is where the shift from intermediate to advanced dropshipper can be challenging particularly when breaking into your own platform.
When deciding which platform to establish your dropshipping business it is important to match one with not only your target market but also the products which you decided to sell. While eBay and Amazon can take some time to master and see results, they are great for beginners. As time progresses and the business becomes more established, it can be time to move into another platform. Shopify is great with so many built in features, however these can be overwhelming for beginners, so it would be recommended as a step up from either Amazon or eBay.
As time progresses further, you can start looking into other platforms which are more in tune with the goals of your business, though these should be looked into once your dropshipping business reaches a level you are comfortable with to start learning new skills.