This post is a contribution from Vincent Wong, part of the Empire Flippers content team. Today, he’s going explain why dropshipping is still a viable internet business in today’s day and age and share all about how to increase the value of your store. Let’s get into it!
“Dropshipping is dead.”
This phrase has become an increasingly popular sentiment recently, implying that dropshipping isn’t a worthwhile business to build.
We beg to differ.
Entrepreneurs continue to find success with dropshipping due to it’s low-risk and low barrier to entry thanks to minimal overhead costs. This business model also has more potential to scale compared to simple retail arbitrage. While you can make a quick buck buying retail items cheaply and selling them on other marketplaces, it’s not a sustainable model since it’s less of a real business to start with.
The caveat with dropshipping is that it does typically have relatively thin profit margins so success is dependent on the volume of sales. Generating more sales is always nice and we have some strategies for that, however it’s not the only way to increase the profit margin and resale value of your store.
If you can tweak a few operational aspects of your business, you’ll start to see more traffic flowing to your product pages, a higher conversion rate and less overall time spent maintaining the business. In turn, your dropshipping business will become a much more valuable and lucrative asset that investors will be highly interested in buying for a potential five or six-figure sum.
Here are some tips on how to improve your store to increase sales and the overall value of your business.
Build Around the Product
Differentiating your dropshipping store from your competition can be tough. Since you have little control over the manufacturing or processing of your products, it can be hard to stand out from everyone else.
One way to set your brand apart from the pack is by customizing the product’s packaging. When you’re searching for suppliers, ask whether they do custom packaging. If they do, they’ll likely charge a bit more as part of their cost but well-packaged products with an eye-catching design create a more specialized look for your brand and leave a better impression on your customers.
You’ll likely need to order the materials, like labels or stickers, from a packaging specialist and have them couriered to the supplier. However, this extra step can really be worth it as it’s powerful for branding, and gives the impression that you are selling a private label product.
As for pricing, one common mistake novice dropshippers make is to charge either too much or too little for their products. It can be overwhelming to see how low other dropshippers in the same niche price their products, and so it’s a normal reaction to follow suit and set your bar lower. On the other hand, some dropshippers think that if they sell at a higher premium, people will be more likely to buy their product under the assumption that it must be higher quality to warrant such a high price.
Keep your pricing competitive. Stay within the market range and avoid selling for too little, as you could be missing out on a lot of profit. Let your marketing and branding do the work of communicating that your brand is trustworthy.
Refine Your Marketing Strategy
There’s a LOT to be said about marketing to grow the value of your business.
Most dropshipping businesses use paid ads to promote their brand and products. The key to getting the most of your paid ad campaigns is to improve your conversion rate optimization (CRO) through effective copywriting and excellent visuals.
Great copywriting hinges on how well you can hone in on an emotion. Focus on emphasizing the benefits of the product. For example, if you were describing a Christmas tree for sale, a potential customer would be less interested in its dimensions when they could instead be learning of the joy of opening presents and hearing children’s laughter when celebrating the day around the tree instead.
Another great way to improve your CRO is to have time-limited offers. These create a sense of urgency and increase the likelihood of potential customers making a purchase out of the fear of missing out.
Many paid ads miss their mark because the images aren’t good enough. Images need to be relevant, thought-provoking, and high-quality. The aim of your images is to appeal to a customer’s emotion, just like the copy. They should create enough intrigue to stop someone from scrolling past them.
It may be best to hire a photographer or editor to take or create unique images of the products you are selling, even if it’s just by using a different background. If relevant, it can also work in your favor to include a model from the same demographic as your potential customers, showcasing the products. Having images with these types of models gives your audience an idea of what they would look like when using the product.
Getting CRO down to a T is one thing, but it’s also important to pay attention to your ad spend. Manage your ad budgets with A/B testing; scale the campaigns that are performing well and drop the ones that aren’t profitable.
Also, use analytics to identify the audiences you should be retargeting. Finding loyal customers helps you create recurring revenue since they’ll be more likely to buy from you again.
One of the biggest things dropshipping business owners overlook is creating an organic traffic source. Building a blog is a great way to increase free Search Engine traffic and establish your authority in your chosen niche. By consistently churning out great and evergreen content, your readers will be more likely to trust your store, and ultimately buy your product.
You can also build a strong following on social media to promote your products. Consider hanging out in niche groups on Facebook or LinkedIn so you can be a brand ambassador while researching what your target audience’s pain points are. Facebook is a great place for paid ads thanks to its ability to target specific audiences, so it’s worth investing some time in growing a following there.
A lot of entrepreneurs want to create a passive income stream while working as few hours as possible. Automating your business increases its value by turning your asset into a turnkey solution, since it means buyers will need to spend less time maintaining it.
When it comes to forwarding orders to your suppliers, this in many times can be automated via software solutions but, at the very least, you can hire a remote virtual assistant to get this job out of your hands.
Another example of automation is to schedule blog posts and social media posting so that your posts go out frequently. If you started a blog, make a content calendar and outsource the content creation to freelance writers. You can schedule posts to be published well into the future.
By automating as many processes as possible, you will make your site more valuable and you will free up time to focus on other areas to improve the brand.
Have More than One Supplier
Managing your suppliers is a really important aspect of building a profitable dropshipping business. It can make or break your brand’s reputation if there are problems with stock inventory or the products themselves.
To avoid having unhappy customers because your awesome product isn’t in stock, have a variety of suppliers who can fulfill your orders at any one time. This isn’t always possible but if you can have multiple suppliers who can fulfill each product, you’ll always have a backup.
When you’re searching for a new supplier, order a sample to check the quality and that the product matches the description. If it isn’t good enough for you, it won’t be good enough for your customers. Once you’ve reached out to a few different suppliers and you’re satisfied with their products, nurture and maintain a good relationship with each of them so that you can order from them whenever you need to.
Branding: First Impressions Matter
Even when a customer has landed on your site, there’s no guarantee they’ll buy anything. If your storefront isn’t polished, they might even leave as soon as they’ve arrived!
Whether you’ve built your store on Shopify or Bigcommerce, there are a few key things to remember when optimizing your site. Regardless of which platform you’ve built the site on, the focus is on providing an excellent customer experience.
No one likes waiting, especially when browsing a site or store online. You can decrease loading times between pages by using pictures with smaller resolutions so that the site isn’t bloated. But just because the images are small in size doesn’t mean they can be blurry; include high-quality shots of the products, as customers will pay attention to images, even if only for a brief moment.
Not being able to reach anyone for support or pre-sale questions when you have a question can also be frustrating. Installing chatbots is a great way to provide customer service even when you’re not available. Chatbots can answer common questions with pre-programmed answers based on common issues. It’s a small but powerful way to build trust with customers when they can get help at any hour.
You can also build trust by including testimonials and showing the average customer ratings across dozens or hundreds of reviews. According to the Spiegel Research Center, nearly 95% of customers take reviews into consideration before making a purchase.
Once you’ve cleaned up your site and taken steps to win the hard-earned trust of customers, you can increase your sales by cross-selling and up-selling.
On product pages, suggest products that are frequently bought together if you have products in a similar range. You could also entice customers with irresistible deals by offering a discount on a product if they buy more items at once.
Optimize Your Business to Increase its Value
By this point, we’ve shown you that dropshipping is far from dead and has a lot of potential for growth. While you have less control over the product with this model, you can still create a good foundation to increase sales and reduce the maintenance required in many ways.
These all contribute to not only increasing your net profit, but also the resale value that a well optimized dropshiping store can command.
One of the best things about dropshipping is that your startup costs and barrier to entry are relatively low. Of course, this makes it more important to build your brand beyond the average store. The good thing is that a lot of dropshippers – your competition – don’t bother to do this.
Take some of these steps to enhance your store’s value and your dropshipping business can conceivably grow to a six-figure value. If you’re interested in finding out how much your online business is worth, try this free valuation tool – you might be surprised by how much a dropshipping store could sell for.