Introductory Guide to Dropshipping with WooCommerce
Packing in your traditional 9-5 job to start an online business is less far-fetched than it sounds—people just like you are taking the leap every day.
Most people have a burning passion inside them, and running an eCommerce business is one of the most viable opportunities for turning a passion into a profitable business—whether it’s your passion for a certain hobby, or the desire to build something from the ground up that drives you.
Unfortunately for many, that great idea, dream or passion will never become a reality, for two simple reasons: risk and cost.
Even if we have an amazing blueprint in front of us, there’s no guarantee of success. With mouths to feed and mortgages to pay, do we have the spare cash and the appetite for risk to bring that idea to market?
However, not all eCommerce business models come steeped in risk.
Dropshipping is a business model that actually circumnavigates these major issues, making it one of the most accessible forms of online business opportunities.
What is Dropshipping?
In a traditional eCommerce business model, you buy stock from a supplier (or produce your own), sell the stock your customers, then ship it to their specified address.
Using a dropshipping model, you are essentially selling a wholesaler’s products on their behalf. You actually never hold stock at any point in the process—instead, you list products on your website, and any sales you make are passed on to your supplier who ships directly to the customer.
In both business models, the amount you earn is the difference between the wholesale rate and the price you charge—nothing will ever change there. Of course, the major difference between the two models is the approach to buying and holding stock.
When you have to buy all your stock upfront, not only do you have to find the money to pay for it from somewhere, but you hold all the risk in the event of your products going unsold.
With dropshipping, this simply isn’t the case: you only “buy” your stock after a sale is made. This means there are no upfront costs, and the risk of unsold inventory is never transferred over to you.
With minimal risk and upfront costs, it’s no wonder dropshipping is such an attractive option to anyone looking to dip their toes into the world of eCommerce.
Getting Started with Dropshipping: Finding Your Products
The key to any successful dropshipping store is, of course, finding the right products to sell. You’re free to experiment with a number of different products to find out what sells and what doesn’t. As I’ve already covered, the risk involved in this process is taken completely out of your hands.
However, in general there are three tips to follow when searching for good dropshipping products to sell.
1. Mid-Price Range
For most beginner dropshippers, mid-priced products are the best place to start—around the $50-$200 mark.
Sell below this rate, and you’ll need to push serious volume through your store to make it worthwhile. Sell above this rate, and it will take a lot of extra effort to convince your customers to make a purchase. You’ll need exceptional images, product descriptions and an expert on the product to deal with any customer queries.
The mid-price range seems to be the sweet spot: not too difficult to make sales, and a decent return for you.
If you sell anything and everything, why would a customer come to your website over, say, Amazon?
When you operate in a tightly focused niche, you can quickly become a well-known specialist in that niche. This makes it far easier to build a recognisable brand. Define your market, then stick to highly related products.
3. Hard to Find
If a customer could easily find your entire product range down their local high street, why would they need to go online to buy? If a product is hard to find offline, a customer has no choice but to jump online to buy the product—and that means more opportunities for you.
Now, these three points aren’t overly complicated, but then dropshipping doesn’t need to be. As long as you follow these rules, you can sell pretty much anything.
Finding Your Supplier
Despite the flexibility on offer when it comes to your product choices, finding a quality supplier is a more difficult proposition.
Many wholesalers simply aren’t willing to offer a dropshipping service. This does make sense, from their perspective: if you are used to accepting large, bulk orders, the time and effort to ship single products for a dropshipper perhaps isn’t worth the returns on offer. This will be a common sticking point when contacting many suppliers.
If you spend some time digging around, you will find a supplier willing to dropship.
When you have found a supplier willing to dropship for you, there are a number of things you should consider before jumping into business with them.
Are the products being sold high quality? Unlike a traditional eCommerce model, you won’t have the opportunity to inspect the quality of each shipment, as the goods are shipped straight to your customers.
Obviously, this means you will have to do your due diligence, to ensure the products are of a satisfactory quality. Always visit a potential supplier, if you have the opportunity to do so. Not only can you inspect the products first-hand, but you can also get an idea of their processes, which will give you a feel for how they do business.
Of course, many dropshipping suppliers will operate overseas—in this scenario, visiting their premises just isn’t practical. However, most suppliers will be willing to send you a sample of their products, for you to assess their quality.
If a supplier isn’t willing to meet you, or at the very least send you a sample, then avoid them. It’s that simple.
For your dropshipping business model to work, you need to find a supplier that’s reliable. If they are consistently letting you down on shipment dates, they aren’t a viable business partner.
Remember, you can’t order your stock in advance to avoid any potential shortfalls you might experience. You only place your order with the supplier after a customer has ordered from you.
That customer will be expecting their shipment in a timely manner—make sure you have a dropship supplier who can deliver.
3. Customer Returns
Perhaps the biggest risk involved in dropshipping is customer returns. While quality products will keep returns to a minimum, there is no way to keep this figure at zero. It’s just one of the costs of running a business.
With this in mind, it’s important to understand your supplier’s returns policy.
Are they responsible for faulty products, or do they shirk responsibility over to you? Hint: a faulty product isn’t your fault, so should not be your responsibility.
What if the customer changes their mind, and wants to return a non-faulty product? Will the supplier be willing to accept this?
How long does a customer have to return a faulty product?
These are all questions you need to ask, as these are terms you’ll have to quote your customers.
4. Payment Terms
You’ll also have to work out the payment terms with the supplier. If you plan on processing a lot of orders, having to pay for each order individually can be a very time-consuming process.
You will save yourself a lot of time if your suppliers are prepared to accept payment at the end of the month – this is often called “net terms”, where you have a set number of days to settle the bill, for example, net30 means you have 30 days.
The supplier is taking a lot of risk entering into this sort of arrangements, as there is always the risk of a non-payment. In many cases, you’ll have to build your working relationship, or at least provide a credit references, before a supplier is willing to accept this arrangement.
Where to Find Suppliers
If you find a supplier that ticks all these boxes, you’re onto a winner. Of course, finding one of these suppliers is easier said than done.
Although you can potentially find a dropship supplier anywhere online, there are a few good places to start your search:
Dropshipping and WooCommerce
Without a doubt, one of the easiest ways for WordPress users to build a dropshipping store is through WooCommerce. This free plugin adds many eCommerce functions to your website, including product pages, pricing options, a shopping cart and checkout—basically everything you need to get started with an online store.
Despite the significant differences in standard eCommerce and dropshipping business models, there is actually very little difference in the approach to setting up your website: you still need to add your products, images, descriptions and prices for your store.
The real difference occurs only after a sale is made, as this is when you contact your supplier with details of your customer’s order, for them to fulfil. In fact, WooCommerce allows you to direct any “New Order” emails, which means you can get them sent automatically to your suppliers for fulfilment.
With this in mind, there are very few dropship-specific plugins or extensions for WooCommerce. However, general eCommerce plugins/extensions will still be of benefit to dropshippers.
I did find one premium plugin for WooCommerce dropshippers that I would highly recommend.
The WooCommerce Dropshippers plugin is available for $20 from CodeCanyon. It simplifies, and to some extent, automates the backend process of dropshipping.
The plugin allows you to assign a new type of role when creating a new user from the WordPress dashboard: Dropshipper.
You can then assign all relevant products to each dropshipper, as well as their contact details. Every time an order containing one of their products is successfully processed, the dropshipper will receive an order confirmation. This means you will no longer have to manually contact each supplier after every order is placed.
As well as this, you can assign a dropshipping price—essentially the wholesale price—to every product you stock. Your dropship suppliers are able to access a restricted view of the WordPress admin panel, which will inform them of the total sales of their products, and the amount you owe them for these products.
You’ll still have to arrange a procedure for paying your suppliers, but the other aspects of your business will be completely automated with this plugin. This will save you significant amounts of time each day, especially if you work with several suppliers, or process a lot of orders.
Because of the minimal risk and costs involved, dropshipping is an ideal entry point for people looking to get started with eCommerce.
Of course, the real skill lies in finding the a great set of products with sufficient demand, finding and dealing with your dropshipping suppliers, and marketing your website to generate sales.
But the technical aspects of building and marketing your website are essentially the same—so you won’t need to learn a new skill set further down the line—meaning you have all the tools required to expand your fledgling eCommerce empire!
[…] visit Prospress […]
[…] published another great WooCommerce article this week: an introduction to dropshipping with WooCommerce that provides some helpful plugins to […]
Great article! Doba is a pretty cool site for drop shipping as well. They currently have a really basic setup with WooCommerce, hoping we can roll out a better integration soon.
Good to know, thanks Joel!
usefull article. I am developing a website like doba in my country but I still use blogspot, but if I get investor I will use this plugin..
[…] friends over at Prospress have an excellent introduction guide to dropshipping with more information (especially related to WooCommerce integrations), and Shopify has a detailed […]
Look at this one http://geekngadget.com/ it,s my best dropshipper.