Since a long time ago, droppshipping has become a new way of selling online. What freelance intermediaries have been doing for years offline, but adapted to the virtual world. But this adaptation is not a bed of roses.
What is dropshipping?
It is a form of sales adopted by the online world, in which the seller of a product does it without having stock of that product, and without even seeing it. It is a technique that coexists in the U.S. connected market, representing an online revolution for customers, suppliers and intermediaries.
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The Basics of Dropshipping. What do you have to do?
Being a sales method not well known, doubts arise at any step of the process, so it is important not to leave any loose end, because mistakes are often paid on the Internet, with indifference and fall, in the best cases or with criticism and negative comments in the worst. Therefore I will describe step by step how to start your business based on this form of sale.
Find the right product or products
To sell something the first thing we have to do is to know what we want to sell. To do this we must see the trends, possible competition, penetration of the same, real possibilities for the future in the sector, and an endless number of things to finally decide on one in particular. You always have the romantic option of a hunch, although success in this type of business is rare. We already have the type of product or products we are going to sell, we already know the sector we are going to be in, we have analyzed the competition and we have even seen brands that we want to sell on our website. Now it’s time to find someone to sell those brands and products. This is where the first problems begin. Especially when most of those suppliers that you have called to sell their products do not do dropshipping. Or rather they don’t even know what it is. When you explain it to them and you tell them that they don’t have to worry about shipping because you send the courier and they don’t have any problems, the concept of “Minimum Purchase Order” appears, the total enemy of dropshipping. “Ok, fine, I’ll do that for you, but I’ll only sell you one box at a time“. This is where you hesitate, and finally you end up saying: “well excuse me, I’m sorry, I think I made a mistake, my way of business is different, however I will call you if we decide to do it in a conventionalway” for the sake of never closing doors. The normal thing is that if you have not chosen well in point 1, go back and rethink what you want to sell. If you have done well, you will be satisfied because you will find the right suppliers.
Negotiating with suppliers
The basics of this way of selling is that the supplier will give you a starting price (PVP) and a percentage for you, which will depend on the type of product. I am one of those who think that if we want, not only to do dropshipping but also want to create our brand, we should sell it ourselves with invoices to our customers, plus that fiscally it will be better. That is, if you invoice your customer and your customer invoices you, the control over the product and your brand is total, however in the other way, your supplier invoices your customer and you invoice the supplier a commission.
But let’s remember that commission is a service invoice, which is taxed at 21% VAT, for selling some products that are only taxed at 10% or even 4%. Once you have chosen how you want to invoice, you will have to negotiate with the supplier the payment and when the invoice is issued. Remember that being online sales we are paid before sending the product, but the payment always takes a few days to arrive, so we discard the cash payment. If you can get the payment to 30 days or 60 well, but the goal will be a monthly summary: everything that is purchased in that month is billed at the end of the month and paid between days 1-5 of the next. In addition, we will provide the courier, so we should get good prices. Something important is that the packaging should, as far as possible, go without information from the supplier, this point can be done before talking to suppliers, to have a structure already assembled and to get better prices and conditions. But you always have to know before, the type of product you want to sell.
With your E-Commerce you can automate everything, orders, payments, shipments, discount vouchers, messaging, etc.. Therefore it is very important to know the format of your E-Commerce. I prefer Prestashop, although Magento is a good alternative, and the issue of messaging is especially relevant. The issue of messaging is especially important, as it will be the one that will determine the success of your sales and the loyalty of your customers in a very high percentage. When you survey the market, the first thing you do is to discard the big ones (I do not put names), most have very high prices and also put you a shipping surcharge to third parties. So if your order leaves the warehouse of your supplier to your customer you are taxed with 3 € or 4 € or whatever they want.
This is because these agencies work as a franchise, and each franchise with its own management has a zone, so if a third franchise has to intervene it is normal that they have to charge that service, but it is not enough for us, we do not want to have extra cost. We must decide for those who do not charge us with this extra fee, companies whose delegations depend on the same company, and only use freelancers as drivers, so they do not care to pay a freelancer from Salamanca and another from Barcelona than from Murcia and Barcelona.The form of payment must be very flexible in your Online Store. You must have the credit card formula, with your own virtual POS, as the commissions will be lower than with any other. Paypal you must have it, for lovers of this form of payment, although the commission that papal puts you is 3.4% plus a fixed 0.3 €. It is excessive and I would remove it for me, but I’d rather win a customer even if I lose that commission, than lose it, and also speak badly of you.
Payment by transfer you must also have it even if the shipment is delayed a couple of days, (which takes to arrive the transfer), unless you choose another type of transfer type Trustly, but we’ll talk about that another time. Then you will have to choose if you want to offer cash on delivery or not. The couriers charge you a percentage between 3 and 6% of the total amount they will charge on your behalf. So you decide. You also have the option to charge your customer a small commission for choosing these payment methods, but that could result in cart abandonment without a purchase, no different from a traditional sale. Dropshipping doesn’t mean you should have your store unattended, or your customers. You are responsible for everything that is sold, and also in charge of offering solutions to possible problems.in short, dropshipping is not a bed of roses, total stress at the beginning, difficult to negotiate with suppliers, but when you have everything taken care of and controlled is one of the most beautiful experiences you’ve ever had.do you know dropshipping? Tell us your experience.
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