You probably already know what dropshipping is, but just in case you are not familiar with this type of business, here’s a short explanation: Dropshipping is an online business model that enables you, as a seller, to sell products without the obligation to ship them or stock the products on your own. Basically, your role is to list a wholesaler’s product on Amazon, eBay, or your own dropship website and find the right audience for it.
When it comes to reverse dropshipping, it’s an even newer business model and as such, unfamiliar to many online sellers. So if you’re wondering “What is reverse dropshipping?” that’s the next topic we’ll cover in our SmallBizGenius guide.
Reverse Dropshipping Definition
Reverse dropshipping is a business model in which online sellers procure high-quality products for customers whose countries usually house mass-production sites, like China, Indonesia, etc. Products sold through reverse dropshipping are made in the US, UK, or other countries which usually outsource their mass production to Asian countries.
If you are wondering why an industry giant like China is a hotspot for reverse dropshipping sellers, there’s a logical explanation. Many Chinese consumers are seeking fine products, but finding them inside their own country is difficult. The result of China’s high-production level is lower quality for most domestically made products. Therefore, Chinese consumers, especially the rich ones, must find other ways to buy products that would satisfy their expensive taste.
If we want a more precise reverse dropshipping definition, we would say that a reverse dropship means buying high-quality products produced in the West, and selling them to wealthy, primarily Asian customers through your eCommerce website. Reverse dropshipping is a business model similar to regular dropshipping, with one significant difference. Instead of obtaining lots of poor-quality stuff that comes at a lower cost, reverse dropshipping companies procure top-notch, artisanal products. Hence, when it works, reverse dropshipping comes with much higher margins.
How Reverse Dropshipping Works
We introduced the basics of reverse dropshipping, meaning that the next thing we will explain is how it works. Generally, if you know how regular dropshipping works, you won’t have any problem understanding the concept of reverse dropshipping.
The only thing you need to have in mind is that reverse dropshipping involves expensive and high-quality products produced in Western countries that are sold to rich Asian customers.
As an owner of a dropshipping company, you will collaborate with domestic dropshipping suppliers. They will be responsible for manufacturing and storing products, packing them, and distributing orders to your customers.
On your website, you will create a gallery with the products, set the price for them, and manage the inventory. You will be responsible for advertising your offer and finding customers.
For example, you can choose a product available on eBay, Etsy, or some other eCommerce platform and sell it on your site. You’ll need to set a price that will cover both the dropshipping supplier’s price and marketing costs, and bring you profit.
For example, if a product you choose to sell costs $30 when bought wholesale, you can display it in your store for $75. The wealthy customer will order a product from your site and pay your price. Then, you forward the order to your manufacturer and pay the wholesale price, keeping the rest as profit. Your manufacturer will be in charge of distribution. You can decide if you’ll leave the shipping costs with the customers, or pay them yourself.
Dropshipping Pros and Cons
If you’re asking yourself: “Is dropshipping worth it?” the answer is yes. In 2020, China purchased $99.9 billion-worth of goods and services from the US.
There are lots of reasons why you should choose reverse dropshipping over regular dropshipping. One of the most important reasons is that reverse dropshipping comes with higher margins. A regular dropshipping business works with low-quality products which are cheap for you to buy, but also cheap when sold. Reverse dropshipping sellers work with high-quality products and rich customers willing to pay more than someone ordering pants in bulk from Wish.
Another good reason to choose reverse dropshipping over traditional dropshipping is a less competitive market. If you decide to open a dropshipping service, you will have only a few competitors, as this niche section of eCommerce has yet to fully develop.
However, you need to be more prepared than when entering a regular dropshipping business, meaning that you’ll need to know everything about the trading laws and regulations of the countries you’ll ship from and to. For example, many countries have strict policies on which products can be sold. In some countries, people can buy food and beverages only from domestic suppliers. There are also country-specific rules when it comes to selling medication. If you consider starting a business with food, drugs, or alcoholic drinks, reverse dropshipping is not the kind of business model that will be good for you.
Drop Surfing vs. Dropshipping: How to Choose the Right Business Model
All Rights Reserved: The Meaning of the Phrase and Its Applications
Cross-selling vs. Upselling: What is the Difference?
What Is the Best Time To Send a Press Release?
In our opinion, reverse dropshipping is a good option for business owners ready to find the right buyer for high-end products and find dropshipping sources that are allowed to operate in Asian countries. Especially now, while the market is still very far from saturated, getting into reverse dropshipping may just be the best move an aspiring eCommerce businessperson can make.
By Danica Jovic ·
If you have an online shop, you know that one of the most important things for clients is reliable shipping. Various helpful website-building tools can help you create an eye-catching site, but you also need to adopt some eCommerce shipping best practices to ensure a great shopping experience for your customers. Their shopping journey starts on your website, but it ends up once their order arrives. If you don’t provide your customers with the shopping experience that they expect, you might end up with lots of cart abandonments and a lower number of orders. Eventually, you might even lose your regular clients.
Establishing a good shipping strategy is crucial for your online business if you want to increase customer satisfaction and convert more leads into buyers. But putting a successful online shipping strategy in place is not always an easy thing to do. Many business owners think that free shipping is all you need, but it’s not simple. It’s an integral part of a consumer-friendly eCommerce shipping strategy, but far from being the only thing you should worry about.
Successful online stores employ more sophisticated business strategies. Good delivery practices include the engagement of the different teams inside the company, collaboration with reliable carriers, friendly customer support, and so on.
Establishing reliable shipping strategies can be complicated, especially if you are new in the business. Our article will help you understand this topic better, introducing basic shipping strategies for the successful delivery of your products. We’ll explain how you can benefit from different shipping methods, choose carriers, reduce shipping costs, and perform order tracking. Additionally, we’ll share some tricks and tips that can help you streamline your shipping process and boost customer satisfaction rates.
Shipping Methods and Rates
The first you need to know regarding eCommerce delivery strategy are the shipping methods and rates. Although free eCommerce shipping is praised as a solution for boosting clients’ satisfaction, there are also other methods that you can use to increase satisfaction rates.
Let’s start with free shipping and then discuss the other shipping options.
According to the latest statistics, 90% of customers say that free shipping is the main reason they choose to shop online. Furthermore, over 60% of prospective buyers abandon shipping carts if there are shipping costs. Therefore, free shipping is a must if you want to stay competitive.
We all know that free shipping is not really free, meaning that someone has to pay for it. Either your customers will pay more for the products, or you will have lower profit margins after covering the shipping costs yourself.
The best eCommerce shipping method is offering free shipping to your customers but only when they meet specific requirements. You can set up an order limit for free shipping. For example, Amazon enables free shipping for orders over $25. This way, you may be able to cover shipping losses by getting customers to buy slightly more than they otherwise would have.
Let’s say that you just started your online business, and you are not in a position to offer free shipping. It doesn’t need to impact your customer satisfaction rates if you do things right.
Firstly, you need to be honest with your customers. If your shipping is not free, you need to be clear about that. eCommerce shipping costs best practices are to set up shipping prices transparently, so your customers won’t have an unpleasant surprise when they complete their order.
Some people won't mind paying shipping costs if they are clearly informed about them at the beginning of their purchase. However, you can expect many clients to abandon the shopping cart if they can’t see the fees from the start.
We recommend adding the cost of shipment for each product to your shopping cart. Almost all eCommerce platforms (such as Shopify or Wix) have this option available. After your customers add the ZIP code, the shipping fees will instantly show up in the cart. There will be no surprises, so your customer will be far more likely to go through with their order.
Make the delivery date visible
The best eCommerce shipping solutions show clients the expected delivery date for their products. Just as you should be transparent with the delivery costs, you should also tell your customers when they can expect their order to arrive. The delivery time can differ depending on the chosen shipping method, order date, and more. You should be transparent and show this information during the checkout procedure because 80% of customers will abandon their shopping cart if they don’t know when their order will arrive.
Offer flat-rate shipping
Another strategy that you can adopt is flat-rate shipping. This is an option for an unchanging fee, often used for products that are similar in size or weight. You should still show the shipping costs, as per our suggestion above. However, it’s not a great choice for businesses that sell vastly different products in terms of shape, size, weight, and price.
If you want to keep your customers satisfied, the eCommerce best practices for 2021 show that you need to cover all segments of the customers’ purchasing journey. This means collaboration between different teams and departments, including marketing, designers, web developers, customer service, and the shipping fulfillment team.
The marketing team and developers will work closely together on communicating shipping and product promotions to the customers. Both team knowledge and tools can contribute to streamlining this process. While the marketing team researches which product you should promote, the web developers will help you implement the promotions on the pages that customers visit the most, and software can quickly tell you when and why customers gave up on their orders.
With both domestic and international shipping, for eCommerce best practices to really work, you’ll need a good team for order fulfillment. You can work with a third-party company or have an in-house team that uses order fulfillment software. Regardless of the option you choose, ensure that your team will do the work responsibly. It has to be prepared to pack, label, and ship items on time. This team is also responsible for the possible returns.
Lastly, every business requires good customer service, and the same goes for eCommerce stores. The customer service will communicate with your clients directly through phone, email, or live chat, so it’s extremely important to have reliable and knowledgeable people on this team.
Speaking of eCommerce shipping strategies, one of the most important ones is choosing the right carrier. Three large companies provide eCommerce delivery services: FedEx, UPS, and USPS.
The type of product you are selling can help you in decision-making because different carriers are good for different product types and particular types of shipping options. Some are better for international shipments, while others might excel at shipping clunky and oversized products.
You also need to decide whether you’ll have one or more carriers. Choosing one is simpler, but it doesn’t provide you the freedom and flexibility that having more than one would.
eCommerce shipping solutions with multiple carriers are usually in a better position when negotiating shipping rates and costs. Having multiple carriers is also a good idea because if one of the companies closes down or doesn’t work for some other reason, you’ll always have others to ship the products.
Additionally, if you offer different types of shipping products, it’s better to have several carriers at your disposal. Some of them may provide more efficient eCommerce international shipping solutions, while others will offer great delivery services across the US.
Every customer prefers to know in which phase of delivery their package is, so you’ll need to provide your customers with a reliable tracking system. This way, you will build trust between the company and its clients. The success of this functionality depends on which inventory management system you use, but it’s generally not too complicated to set up.
All good delivery solutions for eCommerce will have an order tracking service. It’s especially important for companies that do business overseas. International orders have longer delivery periods, so your clients might become nervous if they cannot check the status of their order. Over 80% of customers claim that they value online shops that provide information regarding fulfillment and delivery stage for their packages.
Although lost and damaged packages are not your fault, they are still your responsibility because your clients will not be satisfied with the service they paid you for. The order and shipping best practices for eCommerce recommend that sellers resolve lost or damaged packages. After all, a seller is the one who chose a carrier that did not manage to deliver the shipment successfully.
The first thing you should do is react as soon as possible once a shipping problem is reported. To be efficient, you can immediately check the shipment status online and see where the order is. Also, it’s smart to check if a customer’s address is written correctly. Problems like these are easy to solve, and your customers will be satisfied that you’re taking the initiative and helping resolve the issue in a timely manner.
Good shipping strategies for eCommerce include quick and honest communication between a retailer and carrier. Once the customer reports a problem with a delivery, you should contact the carrier and see whether the item is delivered or not. Your carrier should tell you all that you need to know about the delivery status. We recommend being persistent with a carrier to find out what happened with an order. If the order is definitely lost or damaged, then you should send a new package to your customers. Do that as soon as possible to keep your customers satisfied.
Tips and Tricks
Assembling a good shipping team, providing reasonable eCommerce shipping costs, and having good customer support are all part of a good shipment strategy. In addition to these, you can adopt many other methods that will keep your customers satisfied and help you manage your budget more efficiently. Here are some more things you can do:
Pack your products properly
Before shipping a product to your customer, you need to package it properly to keep it safe from transport damages. There are several shipping options at your disposal, depending on your product type and area of delivery. There are different types of envelopes and boxes, made from materials that protect your product during transportation. You could also consider a reverse dropshipping service if selling high-quality products to customers outside the US.
eCommerce shipping options for packages depend on the size and weight of your product. You should keep your packages light and small because the size or weight of the box will also determine the price. If you have several products in different sizes and shapes, consider having separate packages for each of them.
Use local delivery
We already explained the benefits of having multiple carriers. Additionally, you can add a local delivery company to your carrier list. It’s a proven delivery method, and many small businesses use it to ship items to their local clients.
Set the area for your local delivery by adding zip or postal codes. This way, your customers will be able to select it during the checkout. If you want to provide the best shipping for eCommerce, keep the local delivery free for at least some of your products.
In addition to tracking orders, many carriers offer shipping insurance. This is a good practice to secure your products during delivery.
In most cases, insurance is not too expensive. eCommerce shipping companies like UPS and USPS Priority Mail already include coverage for products up to $100. Also, when you pick shipping for eCommerce, check if product insurance is already included in the eCommerce shipping rates. We recommend using insurance for expensive packages that may get lost or damaged.
Shipping is an essential part of any online shop that sells physical items. As a retailer, you will face challenges when it comes to implementing eCommerce shipping strategies. Eventually, you will find what’s best for your online store. Before that happens, just take some time to check what works for your customers.
Implementing eCommerce shipping solutions that fit your business will help you keep your customers, achieve low cart abandonment rates, and increase profits.
By Danica Jovic ·
Many will say that shopping from the comfort of your home is the best way to shop. Luckily, many merchants jumped on board and seized this opportunity - which is why we can now shop without having to get out of our pajamas. Catalogs moved to the internet, and eCommerce (short for electronic commerce) allows you to have everything delivered to your doorstep with just a couple of clicks.
ECommerce is one of the biggest industries these days, weighing trillions of dollars. If you are interested in selling your product or service online, you might be wondering, “How does eCommerce work?” Let’s dive in and explain this skyrocketing market in detail.
What Is eCommerce?
The simple definition of eCommerce is that it is a business model that allows people to buy and sell products and services on the internet. Nowadays, you can buy almost anything through your computer, tablet, or mobile device. It's this convenience that's making it one of the fastest-growing markets.
Almost every retail business now has an eCommerce shop as an addition to their brick-and-mortar ones. Online-only retail business numbers are growing each day, too, and many shops have closed their physical doors in favor of an online storefront. After all, sellers want to be where their customers are.
So, if you want to become a part of an eCommerce world, let’s discuss what makes an eCommerce store. We'll cover its types, how eCommerce businesses work, and how to start an eCommerce store yourself.
What Are the Aspects of the eCommerce Industry?
An eCommerce system doesn’t differ much from a regular physical store. It all starts with a product you want to sell. From there, you would need a place to sell the product. In eCommerce, your website is your store - the site takes on the role of the shelves and display, and your customers use it to browse and purchase your goods.
The internet is a crowded place, so it will be hard for your shoppers to just stumble upon your store. You have to attract them, so catchy and carefully planned eCommerce marketing will be crucial to your success.
Once customers start shopping on your site, they’ll have to be able to order and pay you for the products. You’ll also need to put some security measures in place, as you’ll be dealing with a lot of sensitive information.
Figuring out how to get the product to your customers’ doorstep is the next link in the chain. You’ll typically need to sort out a fulfillment method and shipping, unless you are selling digital goods.
ECommerce sites also have to handle returns and, if applicable, warranty claims. To do this, you need to find a way to provide support to your customers. In a regular brick-and-mortar business, you have shop assistants to accommodate your buyer’s requests. You can rely on email, phone calls, online forms, or live chat.
Depending on your business model, you might want to add additional features for a better user experience and more satisfied customers.
How eCommerce Works
Typically, your customers will land on your site with some help from the search engine where they looked for a product you sell. They could have also clicked on a paid ad, social media image, or received a recommendation from a friend.
Your eCommerce site then presents them with your listed products, with images, descriptions, and prices. The customer browses, selects the product they like, and places them in their virtual shopping cart. If they decide to make a purchase, they will head on to the check-out page.
There, the shopper completes the check-out process. They add their payment information and finalize the transaction. The order is then processed by a payment gateway, for example, your bank or PayPal. This step provides secure payment processing.
In the meantime, your website provides the customer with information about their order. It could be estimated shipping times, postal tracking numbers, or other information they need to track their purchase.
As mentioned, the next step for eCommerce services is order fulfillment - or the actual process of getting the goods delivered. Depending on who stores and ships the product, it could be an in-house team or outsourced to an order-fulfillment company.
Of course, the last step is the product arriving to your customer’s address. You want to ensure that the customer is satisfied with the product and service provided, so you might forward them a survey inquiring about their impressions once the order is delivered.
Types of eCommerce
Your business model when setting up an eCommerce company will typically fall under one of the four main categories:
B2C (Business to Consumer)
The first type of eCommerce we’re going to cover here is the B2C model. It’s the one people are most familiar with: A business sells directly to consumers; Amazon is a great example.
B2B (Business to Business)
The business-to-business model is one where a company sells to another company. Outside the internet, we associate this business model with wholesalers. However, it’s also used by companies that sell ready-to-use software to other businesses, for example.
C2C (Consumer to Consumer)
The C2C model was popularized by digital commerce platforms that allow regular Jos to sell products or services to other regular Jos. Some good examples of the C2C model are eBay and Etsy.
C2B (Consumer to Business)
This model is used when a business extracts extra value from its consumer base, like when influencers get paid to promote a product, or customers agree to share their data for market research purposes in exchange for discounted goods.
To make understanding eCommerce easier, let’s discuss the different shapes these models can take:
Of course, the most common kind of eCommerce is retail - businesses selling directly to their customers. But, there are also wholesale eCommerce sites that sell products in bulk, as well as stores selling digital products to companies and consumers alike. On a whole different level, dropshipping businesses work together with wholesalers, so they don’t have to handle inventory and shipping.
Subscription-based eCommerce websites recurrently sell the same product on an agreed schedule. Of course, people can also offer their services on eCommerce sites.
Overall, eCommerce can take many forms. As long as someone is selling or buying something via the internet - it is eCommerce.
eCommerce vs. Traditional Stores
There are many benefits to starting an eCommerce business over opening a brick-and-mortar shop. For example, your reach will be much broader. Expanding your business globally is also much easier to do online, as you won’t be limited to the customers in the vicinity of your physical store.
What’s more, one of the many benefits of eCommerce is that your overhead costs are typically much lower. Not only do you get to avoid rent, but your transaction costs will also likely be cheaper. Also, with this type of business, you can rely on different inventory management software for help, and outsource your customer support, instead of having to hire employees.
If you decide to join the eCommerce system, it's good to know that the right software can automate many aspects of your day-to-day business operations. For example, with the dropshipping model, entrepreneurs don’t even have to handle inventory or shipping. All the dropshippers need to do is forward the order to their supplier.
With eCommerce, there is also no limit or rule on what you can sell. Just like you could order an entire house to be shipped to you by mail via a catalog back in the day, the same goes for eCommerce. Golf clubs, children’s Halloween costumes, plants, or candy - if you can think of it, there’s someone on the internet who’ll want to buy it.
Speaking of customers, starting an eCommerce business means earning regulars quickly, thanks to the wide selection of software that can help you establish a connection with your customers. There are also tools to provide excellent support to your buyers and have them rely on you for your product or services for as long as you are in business.
However, there are also cons to this type of selling. It takes a bit of a tech-savvy customer to shop online, which narrows the customer base slightly. Also, people might feel reserved about shopping online because they can’t touch or see the product before purchasing. Lastly, there is also the lack of personal shopping experience that some people appreciate.
Lastly, the biggest issue is security: eCommerce stores are often targets for hackers, and your customers’ personal and payment data can be in danger unless you introduce strong safety measures.
How to Start an eCommerce Business
Starting this type of business is no mean feat. You’ve got many things to check off your to-do list before the launch:
The first step is, of course, figuring out what you would like to sell. Are you going to offer physical or digital goods, or your services? How will you obtain the products - are you manufacturing them yourself or relying on a wholesaler for your inventory?
Once you have these basic questions answered, it is time to research the competition and their prices, and crunch the numbers. This will also allow you to see how saturated a particular niche is and find out what you can do better to rise above other eCommerce companies.
It will also give you a great insight into the prices you can expect to charge and pay for running your store. You should use this information and the information on how much it will cost you to fill your inventory to gauge your margins. If the idea is viable, and there is a market, then it is time to start working on your store.
How to Build Your eCommerce Store
Typically the first step is to define your eCommerce store’s name. You should have a domain name pinned down before you get down to building the site. Your domain name should match your store's name, and should be descriptive of what you’re selling, so take your time with it. You also want it to be memorable and, most importantly, unique.
Building your store is the next step. You can approach this by using an eCommerce website builder or relying on an eCommerce platform to help you get set up. Your store should be easy to navigate, have detailed descriptions of the products, excellent visuals, and a simple payment process. Making your eCommerce web design as memorable as possible and adding as many payment options as possible is a good idea.
You should also consider adding features that will help you maintain and promote your store as effortlessly as possible. For example, tools for promo codes or options to start eCommerce sales without changing the price for each product manually.
Once your store is complete, it’s time to find your customers. Start by working on your SEO first, then start advertising. There are many marketing approaches you could take, from social media and email marketing, to paid ads. Which one will work best depends entirely on what kind of product or service you’re selling and who your target customer is. Understanding who your perfect customer is will help you narrow down your eCommerce marketing to-do list, and significantly increase your revenue.
Even after the launch, your job is not done. You need to keep an eye out on your store’s KPI, conversion rates, and overall performance at all times, and look for room for improvement. You might need to find cart-abandonment solutions, or improve your support system. You’ll also have to manage inventory, negotiate with wholesalers and suppliers, and provide support to your customers. And if you want to have many new customers at all times, marketing never stops, either.
By Vladana Donevski ·