Drop shipping and eComerce.
E-commerce is the process of buying and selling goods and services over the internet. At one time, this form of retail was the reserve of large corporations; however, with the simplification of technology and user-friendly software, anyone can grab a slice of online real estate.
Many businesses are ditching bricks and mortar for the cheaper online alternative of eCommerce, the dynamics of how consumers shop has changed rapidly over the last few years. It means that for us ordinary Joe’s, there has never been a better and easier way to make our fortunes online; if you’re not sure how, then read on as I’m about to explain.
I can remember back in 2012 when our family needed to buy furniture or clothes for our children; we would all jump in the car and travel to town to spend a day shopping, back then only 9.7% of all US and 10.6% of UK sales were online.
Fast forward nine years, and the number of online sales today has almost doubled to 16.5% in the US and 19.7 in the UK. It is predicted that this trend will continue well into the future. I work for a large Mobile network and broadband company and have witnessed the changes first hand, from the iPhone 5, one of the first 4g phones in 2012, to today’s offerings, some of the highest performing mini-computers we own. Data speeds have increased exponentially, and large businesses are ditching their on-premise services such as Active Directory and exchange in favour of online cloud services such as Azure AD and Office 365.
Yesterday was the time to go online with your business, but today is also an ideal time to ride the crest of the online retail wave, which is set to change the way we shop forever.
In this guide, I will discuss both eCommerce retail and drop shipping separately since I believe you will need to take a slightly different approach to both. I’ll be saving the best till last when I feature a readymade business model for complete beginners from AliDropship that had me blown away.
Types of Ecommerce business models
There are four main types of eCommerce business models, and it helps to understand these to formulate your own business plan.
B2C – Business to consumer
Business to consumer is the most popular form of the e-commerce business model. Most online retail shops follow this model, selling their products online to the public. Many times, these businesses will have a high street presence also or a well-recognized brand name.
With B2C products, the sales process is short with high turnover; since the products are less expensive, buying a golf club is not as important as implementing a whole new phone system costing $ 1000’s.
For this type of retail, competition can be high. For small entrepreneurs, it helps to corner a niche market and advertise through social media, targeting mobile phone users, so having your site optimized for mobile is essential.
B2B – Business to business
Business to Business sales is where businesses sell to other businesses. These types of transactions tend to be slower since the risk is higher. The company buying the product will expect you to be a subject matter expert, and they will generally require some form of consultation from you before deciding to buy. The advantage of B2B is that it is more bespoke, so competition is lower, and you are more likely to get repeat sales/signups; generally, the markup on the product is much higher.
C2B – Consumer to business
This type of eCommerce is where individuals or freelancers sell their services to businesses. Fiverr and Upwork are two massive platforms that allow individuals to pitch their services to businesses. Fiverr provides over 500 different services, with 3.4 million buyers every year and an annual turnover of $189 million.
I’m not going to cover this form of e-commerce in this guide since I have a detailed guide on selling your services on Fiverr here.
Online store builders
Around 2005/2006, the early pioneers of the online store building platforms first started to emerge, taking advantage of the change in people’s shopping trends. Since then, many of these e-commerce platforms have sprung up; however, I will concentrate on the big hitters here, Shopify and BigCommerce.
Shopify was founded in 2006 in Canada by fellow entrepreneurs Tobias Lütke and Scott Lake. Both were Snowboarding enthusiasts who wanted to create an online store for snowboard accessories. Tobias was at the time a software developer, and both were massively disappointed with what was on offer for creating and promoting their online store.
They decided to make their own offering, but it wasn’t until 2012 until the market finally caught up, that they finally made their breakthrough.
In 2015, Amazon announced the closing of its website service and listed Shopify as the preferred migration provider, this sent their sales through the roof, and their brand name multiplied.
So today, I believe that Shopify is one of the best brands out there for the online shopping shop builder market.
They offer the below benefits, and their products stand up to anything in the market today.
- Online store builder with simple drag and drop tools
- More than 100 themes, more than any store builder out there
- Full blogging capabilities
- A great list of SEO tools to allow you to monitor your business
- Mobile device optimization which is incredible
- A massive list of applications and plugins
- 70 different payment gateways
- Integration with Amazon, eBay, and AliExpress
All this makes Shopify one of the best store builders out there and makes them hard to beat.
Big-commerce was foundered in Australia in 2009 by Eddie Machaalani and Mitchell Harper, who met in an online chat room in 2003. The business snowballed, and in 2016 they partnered with amazon to sync inventory over both channels. They finally floated their company as a plc in 2020 and are one of the most respected online shop building industry players.
They offer the below benefits to their customers
- Online store builder with simple drag and drop tools
- Fewer themes than Shopify but still better than most
- Full blogging capabilities
- More simple SEO tools but easier to read. Google analytics can do the rest
- Mobile device optimization
- Plenty of applications
- Lots of payment options
- Integration into Amazon, eBay, Walmart, Ali dropship, and many others
- No transaction fees
- Robust platform
Although Big-commerce has fewer themes, where it wins is that the third-party integration is smoother, it has a robust platform also there are no additional charges or transaction fees.
Who Are Store builders for?
Store builders are for anyone who has a business idea or products to sell and wants to showcase their business on a countrywide or global scale. They are custom-made for the job and provide all the tools necessary to succeed in the online retail business. For many people who have set up their own site, their biggest worry is downtime. Both Shopify and Big Commerce have robust platforms designed with all the bells and whistles and can scale up to any business size.
So why do both businesses score so low on sites like trust pilot? One thing I have noticed when looking at these reviews was the enormous split between the excellent and the poor reviews. They seemed to be written by a different demographic.
Do I believe that Ben & Jerry’s or Heinz would place their online presence in the hands of Shopify if they didn’t trust their brand? Or that Skull Candy and Red Bull would entrust the future of their respective online businesses with Big Commerce if they didn’t believe they could deliver?
Both companies provide you with excellent tools; they don’t provide you with your business plan, that part is up to you, and there are a few things you need to understand before you go ahead and open your store.
Understand your market and target audience
You may have a product that you believe to be great, but is there a demand for it; also, you need to know where to find your customers; what might sell like hotcakes in China may completely flop in the US or UK.
Market research is the key here, and you shouldn’t even contemplate opening an online store without knowing the demand and the target audience you’re appealing to.
Sales Strategy and pricing
You can have the most beautiful store in the world, but you’re going to need customers; Shopify and Big Commerce will give you a stunning online store, but they won’t take care of your sales strategy. You need to know where to find your customers. Are they mobile users? What social media do they use, if any? Pricing is also important; you need to know your competition and price your products accordingly.
Conversion rates and sales funnels
If you’ve never heard of A/B testing, you will need to give yourself a crash course before opening your store. It’s no good having lots of visitors or a good-looking store; your store needs to be optimized for sales conversions; A/B testing can help you decide which things are working for you and which aren’t. Creating a sales funnel is also essential; this is your customer’s journey through your site from arrival to sale and is designed to draw your customer into a subconscious sale.
If you’re unsure how to optimize your sales site, click Funnel can help you create this with their site templates and drag and drop tools specially designed to convert visitors into sales.
Dropshipping is a fantastic way of making money entirely online from the comfort of your home. If you’re not already aware, dropshipping is when you sell a product from an online store; however, the supplier of the product stores, packages, and ships the product on your behalf. Most drop shippers use suppliers based in China, such as AliExpress, the retail brand of Alibaba.com; this is because the prices are so much lower, and therefore the potential for markup is higher.
The advantage of drop shipping over running a conventional shop is that you don’t have any overheads other than the small subscription fees to your online shop. Another advantage of drop shipping over other online stores is that you don’t even have to carry any stock, meaning that you can sell a product and get paid before you even buy it yourself!
As with any kind of business, there are some disadvantages; because your shop doesn’t have a high street presence, you will have to find ways to let people know you are there. Often this involves promoting your products on social media or paid for advertising.
Another disadvantage is because your products are being shipped from China, the returns process is much less straightforward. ( I will explain this later on.)
Dropshipping can be a very profitable means of selling. There are people out there making millions at it; watch Rich House Poor House channel 5 (season 7 episode 6) to see how eCommerce millionaire Kamil has changed his life. You would only need to make a fraction of this to make this a worthwhile work-from-home business!
Don’t expect to make an overnight success; you will need to work out which items sell and build and promote your brand name, all of which takes time. I have listed below the steps you will need to take to start your dropshipping empire.
Step 1. Find your niche.
Decide what types of products you will be promoting; use google trends to do some research. If you already know and understand a particular niche product and its value, then go with that.
Step 2. Set up an account.
So, what makes a winning product?
- It has to have the wow factor and jump out of the page.
- There is a good profit margin for marking up.
- It’s not easy to find in other stores.
- Does it solve a problem that you or others have?
- Does it make life easier?
- Is it a good size for dropshipping? Think about postage prices.
While looking for your winning products, here are some things you need to avoid.
- Large products.
- Products you can’t advertise easily. (adult products)
- Counterfeited and copyright products.
- This is an oversaturated market.
- Potentially dangerous products.
- Fragile products.
- Clothing, shoes, or anything that may have sizing issues.
- Electrical products – too much to go wrong!
- Safety products – they might not meet your country’s standards.
Step 3. Set up your store.
When setting up an online store Shopify and BigCommerce are the obvious choices. Both provide a purpose-built online store with a simple setup process. They have a range of custom-made themes, and you will have complete control over the look and feel of your shop. You can set up a Shopify or BigCommerce store for as little as $29 (£21) per month.
Although they seem the obvious choice, both have to integrate into AliExpress for Dropshipping, so in the case of drop shipping, my personal choice would be Ali Dropship. Obviously, the integration is seamless since it integrates with their own site, so with the hosting, domain, and integration, their start-up cost is a one-time payment of $147/£107 with no monthly subscription
Step 4. Make sure you have a returns procedure in place.
When I first looked into drop shipping, the one thing that concerned me was how do you handle returns?
You can use this as your returns policy!
Instead of returning your item, you can contact us for a full refund. Why? Returns run counter to our emphasis on sustainability. Every return has a carbon footprint. Just tell us what went wrong, send a picture, and we will give you your money back in full. If possible, you can then donate your product to a local charity or recycle.
When a customer asks for a refund, be sure to be apologetic and ask for the reason why; it may be that you can get a refund from your supplier.
If the customer tells you that they just don’t like the product, I’m afraid there is nothing you can do, and you will need to chalk this one up as a loss, but be sure that this is not something that will happen very often.
If a product didn’t arrive, was not as described, or is faulty, you should be able to get a refund from your supplier for the amount you paid for the item keeping the amount that you lose to a minimum.
Refunds are just a fact of selling. There will always be someone unhappy with the product that they have received, and this is just something that you will need to accept. However, if a particular product is getting many returns, I would suggest you stop selling that product as it will eat into your profits.
Alidropship’s premium readymade store.
In this guide, we’ve talked about E-commerce, dropshipping, and a business plan for your store to succeed. But what if I told you that Alidropship has a successful readymade store you can purchase, all for the incredible cost of a $300/ £210 one-off fee?
Incredible as it sounds, Alidropship will provide you with a readymade business model which has already proven to make money; you get an exact replica of one of their highly successful stores, which are already optimized to convert sales and includes all of the sales products which are proven to sell, already listed.
On top of that, you will get a full breakdown of your target audience, including country, sex, age, and the phones they use, and the tv programs they watch.
They provide you with exact ad copies of the ads which have proven to be successful, not just that; they also show you where to place your ads based on their previous experience and past successes for that store.
The only thing you will need is to set up your domain and domain host; your host will need to support ioncube loader, which both of the web hosts I recommend Bluehost and HostGator support.
Not surprisingly, the Trustpilot score for Alidropship is a staggering 4.8 out of 5 excellent, proving that anyone can make a success out of their dropshipping premium store business model.
Why are you waiting? Sign up today and secure your working from home futureClick here.