I want to be a drop shipper. Can I make money? | Q & A

I want to be a drop shipper. Can I make money? | Q & A

Read our comprehensive guide on How to Start a Successful Drop Ship Business in Malaysia here.

I want to start my first online business. One of the ideas that I am keen about is to be a drop shipper. The reason I want to be a drop shipper is because drop shipping is the business with the least amount of investment. All I need to spend time and money on is basically marketing.

However, I have a few concerns:
1) What products should I start with? To be a drop shipper is a business with a low barrier to entry. So it is quite possible for many people to sell the same products. Can you suggest how I can choose the right products to sell so I have less competition?
2) How can I stand out from other dropshippers selling the same products?
3) How soon can I expect to make money from drop shipping?

* * *

First of all, I wish to congratulate you for having the courage to start a business.

Drop shipping is a good start to get a first hand feel on entrepreneurship. It is simple, you need only a small investment and you don’t have to keep stock.

Drop shipping can also help you to get a hang of how to do the online marketing that brings in sales. When your confidence grows, you would be able to try other business opportunities as they come along.

You are right: drop shipping is a highly low barrier to entry business

There are a lot of drop shippers in Malaysia which consequently results in lower profit margin than before. To succeed, you need to have a good strategy.

You can start by selling very basic products. But after that, you should look for products that could be the next in-thing in the market. You need to bring these in fast and sell them fast.

Other than that, look for good products that lack distribution channel. If you can find these products, you could become part of their distribution channel. This can give you an advantage over other drop shippers in this competitive environment.

Sell products in these five top categories

Based on the e-commerce statistics available, the top five product categories that people buy online are:

Electronics, Fashion and accessories, Food and beverages, Health and beauty, and Home products

Baby products or children clothing could be some of the other best selling items. You can consider selling products in these categories.

The good news is that we are now seeing a trend moving towards specialty shops selling niche products. The reason for this is because many online shoppers have already discovered the beauty of online shopping. All thanks to the likes of Lazada, Zalora and other big marketplaces.

However, marketplaces do not guarantee quality and at times, products that arrive at the consumer’s doorstep do not meet expectations. This weakness of market places gives drop shippers like yourself the opportunity to thrive.

But how do you differentiate yourself and be competitive?

You have to be very good in customer service and meeting customers expectations.

Know that price is no longer the major factor in customer decisions. As long as you deliver quality products and good customer service in the event a product is not up to expectations.

Many have discovered that though products from China are cheap, they are also of low quality. What you pay is really what you get; you pay peanuts, you get monkeys.

So consumers are now more discerning. They want to buy something which is value for the price they pay for.

By delivering high quality products with good customer service, you will be able to entice your customers to come back to you again and again.

Use social commerce and affiliate sites

Another way to drive sales online is to move into social commerce. This means using social media to market and sell your product.

You could promote your drop shipping site on Facebook and Instagram. These platforms are becoming popular among millennials and Gen Z. Get more people to share and you will get more eyeballs.

Another method is to use affiliate sites. Affiliate sites like Shopback are good platforms which you could use to increase your sales.

Shopback is an affiliate marketing site where customers buying from their site receives cash back. The model is very simple: a sale made from an affiliate site will receive a commission. That commission is split between the affiliate site and the customer, in the form of cash back. The percentage is dependent on how much % commission the vendor is willing to pay the affiliate site.

By integrating social commerce and affiliates into your marketing plan, you would be able to expose your business to more customers.

Take advantage of mobile commerce

A technology trend that is going on right now is mobile commerce. Try to find a platform that allows you to have both mobile and web commerce. More and more people are shopping via mobile these days. If you could reach them via mobile, you would be able to get more sales into the pipeline.

Since drop shippers usually makes money the moment a sale is made, going mobile would give you an advantage.

How fast a sale is made, however, is very much dependent on your marketing strategy, your products, your customer service and your price.

As drop shipping enjoys very low profit margin, usually around 5-10%, you need to sell at high volumes.

By leveraging on mobile commerce to sell your products fast, you can achieve these high volumes.

Remember: to be a drop shipper is only a start

Though it is easy to start a drop shipping business, it is the most basic online business model. It will never last.

You would not make a lot of money through drop shipping because it is too competitive.

So as an entrepreneur, you will constantly be on a lookout for products to sell that is not commonly sold by your competitors. This may mean working directly with manufacturers. By doing so, your business model will change and you will have to keep up with the competition.

To gain an advantage over your competition, you need to keep a pulse on your customers, understanding what they want and giving them what they want in terms of new products. Meeting your consumers’ changing needs will be the key towards a successful online business.

Remember: starting an online business is easy, but building a successful online business is the hard part.

Good luck and all the very best in your new venture.

Submit your own business questions to ask@entrepreneurcampfire.com.

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Andrew Wong is the co-founder of Entrepreneur Campfire and CEO of MAD Incubator, the largest business incubator in South East Asia. In his career, Andrew has started 8 incubators and 2 venture capital funds. Andrew is passionate about entrepreneurship and likes helping entrepreneurs.



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