How to Leverage Dropshipping to Build A Sustainable Ecommerce Business

How to Leverage Dropshipping to Build A Sustainable Ecommerce Business

When you are thinking about starting a side hustle, the internet has lowered the barrier of entry into certain industries. The internet has given us the freedom to set up a website for a blog, share music, open an online store, and build technology platforms that can scale. E-commerce has given anyone the opportunity to enter the game to sell a product or service & build a business. 

Ecommerce dropshipping is a method to get started with an online business. You have probably seen people on YouTube tell you how they make $10K a day dropshipping and how you should take their course. You'll also see the plethora of individuals showing you how to find “winning products” online that are going to make you $100K. The list goes on and on. 

If you don’t know what dropshipping is, dropshipping is a form of retail arbitrage. You have a supplier who is overseas and they give you access to their product. AliExpress is a website that provides you with access to thousands of suppliers who sell products for many different categories. They have products that they sell on the AliExpress for a profit margin for themselves but also leaves you room as a reseller to have a markup to make a profit.

To get started with dropshipping, you sign up for an ecommerce store. You can use Shopify, Wordpress, or Squarespace for your store. Next you download an app like Oberlo to your store. Oberlo will enable you to easily import products to your store from a website like AliExpress. You simply find the products you would like to sell and you import them into your store. Once you import the product, you are responsible for building a business around this product. You handle the marketing, finance, and advertising for the product. Once someone purchases the product, you order the product from the suppliers website and they ship it to your customer. 

Dropshipping provides you with side income but if you want to establish a long term business, dropshipping isn’t a sustainable business model to stick to. Let us tell you how:

Shortcomings of Dropshipping 

You Have No Feel of The Product

The idea of dropshipping sounds cool. You have a product you can sell, there is no costs of making the product, no inventory costs, the supplier takes care of the shipping for you and you just sell it on your storefront. It’s easy.

The issue with this is If you are building a business, and never touch the product, you don’t know what the customer is getting. It’s risky having someone ship the product for you. You don’t know if the product is defective, if it does what it does, and what the packaging is like when it arrives at your customer's door. The last thing you want is an angry customer who wants a refund. 

Long Shipping Times

In today’s current market, customers expect their products to arrive in 3-5 business days when ordered. Amazon has revolutionized the ecommerce model. They have expedited shipping times where you can get the product you ordered the next day. When you are dropshipping items from countries such as China, products take 3-4 weeks to arrive at your customer’s doorstep. You can find a supplier who can cut the shipping time to two weeks but the waiting period is going to have your customers impatient. 

Your Customer Lifetime Value is important. Having long shipping times can stop a customer from making another order from you. You are in business to retain current customers, not in the hunt of always finding new ones. It’s an expensive process advertising to do this and it’s not a sustainable way to build a business.

Customer Experience

Customers are simply smarter now. They can sense where a product is coming from before they insert their credit card details into your store. They can tell from the ads when a product is coming from China. Customers are now buying from companies and brands that they trust. They do complete research into your website, product, and look online before they make a purchase. They will look for reviews, and social proof before making a purchase. This customer experience process is out of your control with dropshipping.  

Imagine you have spent thousands of dollars advertising a store, got hundreds of orders for your product and only for all your customers to be angry with you. They are disappointed because it took months to arrive, it was the wrong product, or the product never showed up. 

Your customers are the lifeblood of your business. You have to take care of them, communicate to them daily, and reward them for doing business with you. Dropshipping completely takes this critical part of building a business out of the window. 

How to Approach Ecommerce The Right Way

Look at dropshipping as a way to experiment. Use it as a tool to validate a product in the marketplace but not as a way to build a long term business. Below are some steps to follow when moving into building an ecommerce business.

Find A Product You Believe In

Find or build a product that you believe in that solves a problem. Make sure this product is something you can stick to for the long haul. It’s extremely important to find a product you believe in. You don’t want to be on the hunt for finding “winning products” all the time. You’re playing a losing game and it’s exhausting. Find a product that you can get behind, validate it, and slowly start bringing the inventory as you are establishing your customer base. 

Building A Brand

Once you have the product, build a brand for this product. A brand is not your website or your logo. It’s branding your product with your name on it. It’s crafting your messaging, your brand voice, style, core values, packaging, and lastly what you believe in as a company. 

Customers care about these things and it’s very important to communicate your brand and messaging. This is what makes customers talk about your company to their friends. It's what compels leave great reviews, talk on social media, and stay on as a customer. Focus on building a brand and not selling the next trend. 

Mindset Over Everything

It’s very easy to get discouraged in the beginning when you start building your online business. You can spend money on inventory, advertising, and not see anything out of it. 

Building a business is a long-term game. You can’t throw in the towel on one product and move on to the next product that you think will make you a quick buck. You’ve got to stick to the process and see it all the way through. It generally takes 5 years to establish a brand. 

MVMT watches began by dropshipping their watches but they moved on from that model. They saw that their watches were selling and got inventory in-house to build a brand.

After couple of years building the MVMT brand, they got acquired by Movado Group for $100 million. They began the brand in 2013 and got acquired in 2018. This is an example of what can happen when you stick to the process, build a business, and establish a brand.

Dropshipping is great but only when it’s a tool to build a long term brand and business.

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