Logistics: how to do dropshipping in 2021?
ropshipping is a practice that have become more and more common during the past years. What is it exactly and how to do it well?
Definition and interest of dropshipping logistics
1. What is dropshipping?
Dropshipping is a tripartite e-commerce logistics organization between the end customer, the reseller (dropshipper) and his supplier. The dropshipper acts as an intermediary between the buyer and the wholesaler. It is the latter who will take care of all the logistics and shipping of the orders to the final recipients, once the order has been placed on the retailer's website.
2. What are its main advantages?
For the dropshipper, it is a very advantageous operation from a financial point of view, in that he does not have to bear the costs associated with logistics: he does not invest in a stock since, by definition, he "sells what he does not own" and unlike a classic merchant, he sometimes never touches the product that he markets and promotes.
This strategy offers many advantages for the e-merchant:
- A great facility to launch an e-commerce activity by taking little risk
- An important flexibility in the daily management
- The possibility to relieve oneself of the logistics constraints in order to concentrate all its efforts on the sale and the promotion of its products only
How to begin dropshipping?
1. Creating your company: which status to choose?
The very first step before starting dropshipping is of course to choose a legal structure for the creation of your company, in order to declare your activity and your income legally. The choice of the legal status will vary according to different criteria.
A simple auto-entrepreneur status can be sufficient if you are only getting started on the e-commerce market. If your dropshipping activity is only meant to be a supplement to your income, it is the best option for you, as it is the status that offers the most flexibility in terms of administration.
EURL or SASU
If your goal is for dropshipping to be your only activity and if your ambition is to make it your main source of income, the EURL or SASU are good alternatives, and even if they imply heavier constraints than the auto-entrepreneur status (as well as the payment of a starting capital), these two statuses will allow you an easier professionalization.
2. The choice of the products and the supply
Find a 'dropshipping niche'
The stage of the choice of the products and the suppliers is crucial for the good success of your e-commerce, and it is a point not to neglect. First of all, you need to find the dropshipping niche in which you will specialize: what kind of products will you sell?
- Cosmetics and beauty products
- Children's games
- Wellness products...
There are many fields, but it is essential to find a sector that will allow you to be profitable, and to develop your e-commerce in this niche only, thus avoiding multiplying the universes - which does not exclude of course to enlarge your catalog and your range in the future.
Chose your products well
Choosing your products well also means checking their potential, according to several important criteria:
- Product quality
- Competition on the dropshipping market
- Ease of finding influencers ready to communicate on this product
- Sales seasonality, etc.
Many criteria must be taken into account and this step requires special attention, because it represents the basis of your e-commerce activity.
Source your products efficiently
Once you have identified your niche and your product or products, you need to find the right supplier for these goods among the many wholesalers existing on the market.
AliExpress being the most popular dropshipping platform, sourcing your products there can be a double-edged sword, as you may find your products all over the net.
Anyway, to make it easier for you and save some time in your research among these very rich catalogs, you can use the Dropizi platform which gives you access to the references of these two main wholesalers.
3. Selling via an online store
What is a good dropshipping website?
Acquiring the right products is one thing - certainly essential - but making people want to buy them is another - just as central. That's why the creation of your e-commerce site as well as its design and domain name will have a considerable impact on the success of your online store.
You must take special care of your website, especially the content of your product sheets, because it is the "showcase" of your online business.
Indeed, the impression of professionalism that your website will give to your potential customers is a determining factor in the buying process, especially since dropshipping is becoming more and more popular - dropshipping websites are indeed more and more easily common and thus more and more spotted by Internet users, who consequently become more and more demanding.
What CMS to chose at the beginning?
With a generally limited budget at the beginning, and no certainty of the success of your activity, it is better to turn to flexible solutions at the beginning.
More and more solutions exist today to help you create an e-commerce site easily and in a few clicks, especially thanks to subscription solutions, even without any technical skills.
When to switch CMS?
As soon as your budget allows it, it may be beneficial to review this initial strategy.
You can easily migrate to more advanced and customizable platforms such as Prestashop or WooCommerce for example, or why not even consider creating a custom website from scratch with the help of a developer.
These options have the advantage of not having to pay a monthly subscription or commission on your sales, although they are of course more expensive at the time of implementation.
How to scale as a dropshipper?
1. Focus on marketing for success
Give yourself the means to succeed from the start
The key to a successful dropshipping site is undoubtedly the marketing resources you will commit to the various web acquisition channels in order to promote your product.
It is absolutely essential to use the best traffic acquisition techniques, especially in 2021 when the competition is fierce in the e-commerce and dropshipping market.
The most common and used techniques are the following:
- Natural search engine optimization (SEO)
- Paid search engine optimization (SEA)
- Social ads (Facebook, Instagram etc.).
Keep in mind that a good start in dropshipping necessarily implies to give yourself the means of your ambitions regarding the sales part: being reluctant to invest at the launch is not a good calculation.
Learn marketing techniques
There are many ways to easily learn SEO and online advertising techniques, even for beginners:
- Many e-commerce training courses have been created in the last few years: MOOC, YouTube channels, specialized blogs... Which are full of tips and best practices
- You can also choose to hire an expert in the field - and if this second option is more expensive, it will allow you to quickly acquire the keys to success.
It's up to you to choose the solution that suits you best in order to get the most out of your sales platform, but remember that investing in marketing is an eminently necessary strategy that, if properly implemented, will undoubtedly give you a more than advantageous return on investment.
2. Scaling with Fulfillment
The very principle of dropshipping is to avoid having to deal with logistics, and most dropshippers have their products shipped directly by their suppliers - usually located in China.
This is certainly a practical and inexpensive solution, but it is not without its drawbacks.
Reduce your delivery times...
Delivery times in dropshipping are, in most cases, very long (ten to fifteen days on average), which may result in a bad customer experience and have the consequence of discrediting the brand.
Internet users are more and more demanding when they order online and the advent of marketplaces such as Amazon or Cdiscount have made delivery in one working day commonplace. Receiving your product in two or even three weeks is not in line with these standards and can make your e-commerce suffer.
In order to avoid these inconveniences and to avoid having to manage a delicate situation with your customers, it may be wise to turn to a specialized logistics provider and to set up a proper e-logistics strategy.
... and sell even more!
Especially if your product is proven and your sales start to explode, a top-notch logistics organization will be even more beneficial to you, in that shorter delivery times will encourage your customers to order on your online store and will help build loyalty. The outcome will be even more sales and success!
Outsourcing your logistics to an expert will certainly be more expensive, but this investment will be largely compensated by the increase in sales generated by the improved quality of your service.
Have more control over your products
Working with a Fulfillment provider will also give you more control over your products. Even if, as in the case of dropshipping, you do not own the products, as they are stored in a third-party warehouse, you will benefit from more control and visibility over your inventory.
This is possible thanks to the inventory tracking and parcel tracking tools developed by many logisticians.
Improve your overall quality of service
In short, using a Fulfillment service will allow you to benefit from a much higher quality of service (in addition to shorter delivery times) and to enjoy new services compared to dropshipping such as:
- Returns management
- A wider choice of carriers and delivery methods (Standard delivery, Express delivery, delivery in a Relay Point etc.)
- Benefit from a dedicated customer service to manage customer disputes
- Personalization of packages via branded packaging for example
Thanks to this new logistic organization, you will be able to scale efficiently and more easily and will be able, in the long run, to reach the goal of many dropshippers: to move away from the initial dropshipping model in order to become a full-fledged brand, which will allow you to distinguish yourself from your competitors and to be even more credible with your customers.
3. Avoid the pitfalls!
If dropshipping has the reputation of being an extremely simple solution to launch an e-commerce activity and succeed in being profitable quickly, it is necessary to remain realistic on this logistics method and to be cautious if you want to succeed without burning your wings.
Be aware of the highly competitive nature of the market
Dropshipping methods are more and more known, more and more mediatized and therefore more and more widespread in the world of e-commerce.
This means that the competition is increasing over the years, which is not necessarily good news for you. Every day, hundreds of dropshipping websites are created, only to fail a few weeks later, mainly because of the widespread idea that dropshipping is "a way to get rich without any effort".
Give yourself the financial means to succeed
To avoid the problem of not investing enough at the launch, it is essential to allocate a specific budget at the time of the creation of your e-commerce site (even if it means asking for a loan from your bank) in order to have the means to make your e-commerce live afterwards.
In the same way, to allocate a monthly budget - more or less consequent - to its marketing and its communication is not in any case an option. Just like with traditional commerce, it is necessary for a dropshipping site to make itself known, by taking care of its image, and by doing targeted advertising to reach its niche and especially by monitoring its campaigns: letting its campaigns run without analyzing the KPIs (click-through rate, transformation rate, bounce rate, etc.) is like throwing money out the window.
If these concepts seem abstract to you, do not hesitate to get help or to follow a training on the internet or with specialists.
Staying within the law
Another common misconception is to try to get around the law, especially with regard to customs fees and import VAT, in order to save money.
If these optimization or even fraud techniques seem attractive at first glance, we advise you to avoid them at all costs - the consequences can be dramatic in case of control (goods blocked in customs, severe fines etc.)
Especially since the legislation is becoming stricter in the face of the massive fraud observed by the authorities in recent years.
If you want to know more about this part, and how to be in order with regard to customs duties and VAT from July 2021 and the European reform, you can read the article we wrote on this subject.
💡 You have a dropshipping business and you want to improve your delivery times in order to scale? Don't hesitate to contact our teams!