Drop Surfing vs. Dropshipping: How to Choose the Right Business Model

Here’s the biggest nightmare of all online retailers: Seeing potential buyers dropping by their virtual store, filling the cart with items, clicking through the checkout pages, and when the payment is about to be initiated, giving up and abandoning the shopping process. A 2021 study by SaleCycle revealed that the percentage of cart abandonment across all sectors stands at 81.8%. The figures are the highest in the travel sector that traditionally has longer research phases and more complex checkouts. ECommerce business platforms and online retailers often seek for cart abandonment solutions to tackle this issue and better cater to their customers. How does one go about unclogging the bottlenecks of the shopping process and boosting sales? We’ve compiled a list of ideas, tips, and tricks to optimize the checkout flow. Keep reading and learn if you should stick with traditional methods or go for brand new technologies for an innovative approach to fixing the cart abandonment issue.  What Does an Abandoned Cart Mean for My Business? Let’s start by diving deeper into what shopping cart abandonment is and what the abandonment rates mean for your business. When the potential buyer orders items online and initiates the checkout process but gives up before completing the purchase, we talk about cart abandonment. Other forms of this practice include booking abandonment, form abandonment (which refers to abandoning forms for quotes, subscriptions, and financial products). There’s also browse abandonment, which refers to customers who give up while browsing and before placing an order. As an important metric for tracking customer satisfaction, the cart abandonment rate should be regularly monitored and analyzed to boost sales. The rate is calculated by dividing the number of completed transactions by the number of initiated transactions. The final figures indicate the percentage of prospective buyers who initiated a purchase but never finalized it. Analyzing this rate is important, but understanding the reason behind it - why potential customers give up on buying your products - is your primary goal.  Why Do Consumers Abandon Their Carts? Even though the reasons vary depending on the sector, there are some common issues that all consumers experience and cite as the cause of giving up on buying the desired item. Cart abandonment analysis can give you useful insights into the bottlenecks you need to address and clear in order to offer a swift and smooth shopping experience. Browsing for fun; Many consumers state they were simply browsing the website and checking the prices and shipping fees without the real intention of buying anything. Additionally, some of them might say they got discouraged by high shipping costs, even though they were satisfied with the product in general and genuinely wanted to buy it.  Comparison shopping; Aside from high shipping costs, shopping cart abandonment rates spike due to high prices of products and finding better deals with the competition. Buyers may add a product to their cart prior to comparing prices and then abandon it for a cheaper deal they’ve found elsewhere. Lack of trust; According to data, almost 61% of shoppers who abandon a purchase decide to opt out due to the lack of trust logos. Trust indicators include Site Seal, Corner of Trust, and TrustLogo. Not seeing any of these logos on a website can hold off potential customers.  Lack of payment methods; One of the common shopping cart abandonment reasons is the inability to swiftly complete the shopping process due to insufficient payment options. Opening a PayPal account for the sole purpose of buying a single product is a hassle and instead of doing that, consumers are likely to search for an online shop with the same or a similar product that offers more diverse payment options.  Complex checkout process; Don’t expect your customers to be patient and tenacious - that’s just not what online shopping is about. The main strategy for improving the sales process would be to make it as straightforward as possible. Think of Amazon and its 1-Click ordering. If you make your prospective buyer dig through dozens of pages and fill out tons of forms, you’ll probably lose them.  Technical difficulties; Finally, cart abandonment statistics indicate there’s a significant number of customers who give up due to technical glitches, bugs, or slow loading times.  How Can You Reduce the Number of Abandoned Baskets? Obviously, not all of these reasons behind cart abandonment can be addressed by the seller. If someone is just browsing your website and adding stuff without a serious intention to buy your products, you usually can’t influence that by simply optimizing your website.  On the other hand, most of the rough edges and obstacles that make customers give up can be smoothed out. Let’s take a look at some of the best cart abandonment solutions you can go for. Exit-intent popups Exit-intent technology employs sophisticated tools to identify customers’ exit behavior. If the potential customer signals reluctance, starts comparing the item with other websites’ similar offers or is about to exit the page, a prompt pop-up message will try to get them back on track.  These layouts can ask for an email, or carry a message that encourages customers to stay by offering discount codes, gifts, or free shipping for purchases over a certain amount. Not only can this motivate the shopper to complete their purchase but it can increase the overall value of the cart, so it’s a win-win approach. To reduce the average cart abandonment rate, you need to implement the right strategy when creating popups; first, analyze your target audience and your site heatmap, determine your sales goals, and figure out what the best offer might be. Then, hire a designer or expert to help you out with the subtle message display and optimize popup timing for better results. Email remarketing campaigns Good old emails remain one of the most effective solutions for attracting customers’ attention once again and having them rethink their decision to completely abandon their digital basket. Sending a cart abandonment email to remind the potential buyer of the product they were about to buy can increase purchases 19 times more than standard marketing emails.  So, let’s see how these emails should look and what information they should contain. Send the first email within 24 hours of the cart abandonment, and two more emails in the following days. Aim to create a sense of FOMO with a personalized tone and an offer such as a discount code, or simply with a reminder that the product is still waiting for them in the cart. Cart abandonment emails shouldn’t sound like one of those generic, cookie-cutter marketing messages; customize them toward potential customers instead and add a touch of intimacy.  SMS remarketing campaigns In the context of eCommerce businesses’ massive migration to mobile platforms, SMS communication makes more sense than ever. According to a study, text message marketing has grown 23% since 2016. People seem to like reading SMS offers sent by companies, and they spend twice the time on texting than emailing, so that’s your chance to get them back to purchase your product. Mobile cart abandonment can be easily addressed while the consumers are still holding the phone they were shopping on, using SMS marketing tools.  To refocus a customer’s attention back to their forgotten cart, you’ll first have to obtain their phone number. A good way to do it is to add a phone number capture in the checkout process. Make sure to include a message about the products they’ve added to their basket or a link to the shopping cart. You can also send an SMS to thank customers for the purchase or ask for feedback. Chatbot Service Indecisive and reluctant consumers can be stirred into action with a couple of messages via live chat or a chatbot service. This AI-based technology for cart abandonment recovery can be a decent replacement for those employees in brick-and-mortar stores who are good at talking customers into buying their goods, and we know that 37% of people use a customer service bot to quickly get answers. The live-chat function with a detailed and well-organized FAQ section can assist the buyers with the usual doubts and questions regarding sizes, returns, shipping, and delivery times. Of course, if you have customer agents available round the clock - even better.   Chatbots can follow the potential buyer along the whole shopping journey - from welcoming them, assisting them with the purchase, suggesting similar products in case the one they want isn’t available, to serving offers and discounts to reduce shopping cart abandonment rates. Consider using chatbot builder software to help you out with writing creative and personalized chat messages.  Retargeting advertising Retargeting is a common and powerful marketing strategy. When you’re retargeting someone, you have more chances of winning their attention, as you remind them of something they have already shown interest in acquiring. Focusing on people who are in-market can potentially curb the negative effects of shopping cart abandonment. When creating retargeting ads, make sure to include brand recognition and targeted content, as well as a special offer to convince customers to get back to your website. On a slightly different note: Invest some time and effort into optimizing your website for online sale and its design. Not having enough funds is no longer a valid excuse - you can go for one of the many excellent and affordable eCommerce website builders.  Trust and social proof Creating trust is of utmost importance, especially if you’re a new brand that’s not yet established in the eCommerce business. Cart abandonment solutions we’ve reviewed so far have focused mostly on getting customers back to purchase. The method of implementing trust and social proof relies on prevention instead, convincing customers into purchasing your products by building confidence. Most consumers will at least browse through customer reviews before proceeding with the order, so make sure to provide verified testimonials or star ratings. Also, include trust badges and certificates on strategic positions on the website, close to payment details. By doing so, you’ll reassure the customers that your page is legitimate and that they can expect a safe and secure shopping experience. Straightforward checkout A lengthy checkout process is a nightmare for consumers and one of the most common reasons for shopping cart abandonment. Too many steps and requirements, having to fill out too many forms, as well as not knowing when the process will end can all discourage potential buyers from completing their purchase. That’s why having only a few essential steps with a clearly visible progress bar can make all the difference. With so many online distractions, consumers nowadays have a short attention span and require simplicity. After all, shopping should be fun, not a chore. Some research shows that the best checkout process has four steps, a prominent progress bar on top, and a visible order summary along the way so that customers can be sure they haven’t made a mistake. Another useful tool for preventing digital shopping cart abandonment is a “Review” step, where buyers can make changes to their order or add more items to the basket without having to start all over again. Having to create an account is another drawback, so you’re well-advised to enable customers to check out as guests. Payment methods Eventually, it all boils down to payment; if the customer made it all the way through the checkout process and reached the final step, but there isn’t a single payment method that suits them, chances they’ll quit are very high. Most millennials require flexibility in the way they pay for goods and services, so having an option to pay in installments via third-party checkout partners is one of the most effective shopping cart abandonment solutions. Offering alternative payment methods along with the standard wire transfers and credit and debit card payments would make the whole process customer-friendly.  Conclusion Reengaging your visitors and persuading them not to give up on their purchase will reduce your abandonment rate and increase your revenue so don’t hesitate to invest time and effort into implementing at least some of the solutions we’ve proposed in this article because these are efficient tools known to work. When choosing shopping cart abandonment solutions, compare and test several and analyze which one works the best for your eCommerce business. Don’t set a bad example for your customers by giving up!

The standard 9-5 work schedule definitely isn’t a good fit for everyone, so those who are brave enough to take the leap might be tempted to become their own boss and start something of their own. If you’re an entrepreneur at heart, you’ll probably enjoy the process immensely. Now, thanks to the internet and some specialist software designed to make our lives easier, running your own business definitely isn’t a far-fetched dream.  Depending on what kind of business you’d like to start, you might want to consider eCommerce as a vehicle for success. eCommerce is a rapidly growing market in which online stores sell goods and services globally. It’s estimated that by 2023, eCommerce revenue is expected to reach $740 billion in the US. If your business does manage to become the next Amazon or Etsy, you’ll be taking home a significant portion of that.  Of course, getting started is never easy, mainly because you have so much to think about. You need to plan and organize yourself before you dive in if you want your store to be a success. For all these reasons, we’ve prepared this detailed guide on how to start an eCommerce business. After reading it, you’ll likely have at least the first couple of steps of your action plan pinned down. So, without further ado, let’s get started.  Work Out What You’re Going to Sell People who are looking into starting an eCommerce business typically already know what they’d like to sell. Some are interested in turning their hobby into a living, while others already have a brick-and-mortar store and are looking to expand, or move entirely online. However, if you’re unsure what to sell, here is some food for thought. Typically, there are three categories of products you can sell online: physical goods, digital downloads, and services.  Physical goods are an excellent choice if you can manufacture or source things people are looking to buy. Of course, you can always resell physical goods - you just have to buy them from a wholesale provider first or set up a dropshipping store. These processes include their own set of challenges. For example, you need to find out which wholesale provider you want to go with, how you’re going to store the items, and which shipping method won’t cost you an arm and a leg. Selling digital downloads is an excellent way to open an eCommerce website if you don’t want the hassle of handling, storing, and shipping physical products. These could be anything that your customers can download on their devices: online courses, artistic designs, eBooks, printables, plugins, and templates, among other things. Depending on your skillset and the type of digital product you want to sell, your profit margins can vary greatly. While selling digital products doesn’t always entail the considerable initial investment you would need to provide for physical products, you might also not earn as much.   Selling services can also be an excellent choice for your eCommerce store. This solution allows you to get started with minimum investments and earn profits fast. Still, the main thing you’re selling is your time, and you only have so many hours in a day. Expanding beyond what you can accomplish (and earn) on your own typically requires that you hire someone else. They can take on some of the workload, but that in itself carries its own set of costs and responsibilities. Once you decide what type of product or service you’ll be selling, you should assess the viability of your idea. In other words, you want to be sure the result will be worth the effort. How can you determine that? By doing your market research first. Let’s take a quick look at how to perform that properly.   Research Your Products and Markets Just as you would when opening any other type of online business, you need to do your research before starting an eCommerce website. You need to find out what kind of products perform well, how much competition there is in the niche, and what type of business model can most effectively bring your eCommerce business ideas to life.  Since you’ll be selling online, doing a bit of Google research might help you pinpoint what type of product will work. By analyzing Google’s results for a particular keyword and its relative terms, you’ll be able to gauge how popular certain options are. Look for the type of product popping up on the first page and which companies are selling it. The autofill option might also give you a couple of online business ideas. “People also ask” is another excellent section that could be helpful.  You probably already have an idea in your mind of what you’re going to sell, so it’s time to work out whether or not that idea is plausible. You can do so by evaluating product viability. Here are a couple of things you should ask yourself about the product or service you’re thinking of selling: Is there a demand for it? Is it a fad, or will I still be able to sell this in five years? Are there reasonable profits to be made here? What do the numbers say? Is there already a successful eCommerce company selling the same products or services? The third question leads us to competitor research, which is a crucial component of starting a successful business. Finding out who the key players are is just the first step. The most important one is putting their business model under the magnifying glass.  Look for anything they’re doing well and make a note of how you could emulate it. More importantly, look for any ways you’d improve on their business model; you might be able to find a gap your business could fill. At the very least, you could identify that special factor that could help you set your business apart from the competition in your niche, which is crucial when starting an eCommerce site. Remember, just because someone else is already doing it doesn’t mean you can’t do it better.  Work Out Who Your Ideal Customer Is If you want to make sure your business will be successful, you also need to target the right audience. This means figuring out who your ideal buyers will be, which will significantly influence the steps you take. For starters, you need to be where your target audience is and speak their language. To ensure this, you should look into your customers’ demographics and psychographics. Start with their essential characteristics; you want to know their age, gender, and income. Once you have a good picture of that, you should then try to find out more about their opinions and beliefs.  Why is this important? Well, once you have these terms pinned down, you can clarify the approach of your eCommerce business. For example, if you want to appeal to environmentally conscious customers, you wouldn’t want to sell items packaged in lots of plastic. By the same token, Instagram isn’t the ideal platform for promoting bingo games to senior citizens. Getting this approach right will significantly improve your eCommerce website and your overall online presence. If you’re selling software for accountants and bankers, you might consider adjusting the tone of voice on your website to avoid the slang the kids use these days. To target a younger audience, having a flashy, highly responsive website might be the most effective thing you can do. Pinning these details down will help you figure out your marketing strategy later.  Create a Business Plan Now that you know what you’ll be selling and to whom, you should create a business plan. It sounds daunting, but this is an excellent way to ensure you stay on track while you’re setting up an eCommerce business. Don’t overthink it - you don’t have to show that first version to anybody. It can serve as a to-do list for you as you plan each step in more detail. However, if you need a business loan, an advisor, or a partner to help run your new business, you really need to create a thorough and professional business plan. Here are some things it should include: What your business is and what you’re selling How you expect your business to earn money Your operational model Where you plan to get your financing from A list of any executives and employees (if applicable) Since this business plan will also serve as marketing material, you should keep your target audience in mind while writing it. If you’re going to show it to your potential employees, the business plan could help them see your vision and why it might or might not work for them. Before showing it to investors, you’ll need to have every aspect of your financials and operating model pinned down. After all, you want to maximize your chances of getting their approval and funds for your new online eCommerce business.  If you aren’t creating the plan for yourself, it’s advisable to look at some online templates first. These will help you keep your business plan consistent, thorough, and as detailed as possible, and will make sure you keep your goal and target audience in mind. If this is too troublesome for you, you can also consider hiring someone to write the business plan for you.  Lastly, it’s important to stick to the 20-page rule. You want to be informative enough, but you don’t want anyone to spend too much time trying to wrap their head around your concept.  Decide on Your Business Name and Structure You might now have a business plan, but you still don’t have a business. This next section of our guide is about formally establishing your company. You’re probably wondering how to start an eCommerce business step by step. First things first, you’ll need a name, a defined legal structure, all the necessary licenses, and an employer identification number (EIN). Let’s go through those steps one by one. Picking a Name Picking the right name can be difficult, and there are many things to keep in mind when doing so. You need a name that is distinctive, easy to remember, and clearly shows what your eCommerce business sells or does. On top of that, the name needs to be available, both with the US Patent and Trademarks Office and on websites that sell domain names. Even if you haven’t started working on your website, it’s worth registering a domain for your business as soon as you decide on a name. After all, the availability of a domain name can heavily influence the name you choose for your business. By acquiring a domain as soon as possible, you’re preventing someone else from taking it.   Defining Your Legal Structure Putting in place a defined legal structure is one of the most important steps to start a business, and it requires your time and attention. Consulting with a lawyer at this point is a good idea. After all, the type of entity you choose to establish will have important legal implications for your business. The most common types of business entities used for startups are sole proprietorship, LLC, general partnership, and corporation. Let’s give these categories a brief overview. Sole Proprietorship With a sole proprietorship, there isn’t a legal distinction between the business and its sole owner. That means you are personally liable and taxed for owning this type of business.   General Partnership If you’re not starting an online business on your own, you might consider a general partnership. These are typically conducted between two or more owners. Everyone in the partnership is equally liable, and this partnership is treated as a pass-through entity for tax purposes.  Limited Liability Company (LLC) LLC is one of the most common types of businesses out there. With an LLC, you and any other members have only limited liability and are typically taxed as a pass-through entity. Corporation  As an entity, a corporation is entirely separate from those who run it. That’s because a corporation is considered a legal person, meaning that the people controlling it have no liability. It’s owned by its shareholders and governed by its directors. Corporations aren’t the right choice for single entrepreneurs, but this legal structure works perfectly for large businesses.  If you’re still not sure which business structure is right for you, consulting with an experienced professional might be the best course of action. Once you decide on a suitable business model, they’ll help you file the necessary papers.  Applying for an EIN The next step is to apply for your EIN. Depending on what type of business entity you opt to establish, this nine-digit number may or may not be required. Regardless, it’s a great way to help you separate your business and personal finances. For this reason, getting an EIN is highly recommended for everyone looking to start an online business. You can apply for an EIN for free online or via mail, fax, or phone. If you choose the online route, you’ll likely receive your number immediately.  Getting a Business License Every business, whether online or offline, needs a business license. Depending on the state your business is located in, you might need to get yours sooner than later. Some regions allow you to sell up to a certain threshold before getting your license, while others require you to have it beforehand. All this information is neatly listed on the SBA website, together with which licenses are required in your state. You’ll likely be able to obtain your license online, although again that can vary by state. Find or Create the Products You’re Going to Sell Once you’ve done everything required to set up your online eCommerce business, it’s time to stock up on your product. If you’re selling digital products created by someone else, stocking up might be relatively simple. However, if you want to sell something you create yourself, you’ll need to do much more preparation for your launch, as the production process will probably involve a lot of work. When prepping for your grand opening, make sure you don’t compromise on the quality of what you’re offering.   If you plan to resell, you should contact wholesalers to work out how you can put together your inventory efficiently and cost-effectively. You need to select your inventory carefully and make sure you’re satisfied with what’s on offer in your store, taking industry trends into account. If you’re considering dropshipping, now’s the time to make the appropriate deals with suppliers and manufacturers.   Create Your Website Now that you have all the data, products, and paperwork figured out, it’s time to start working on your eCommerce website.  Your website is your online storefront, and you should dedicate the same amount of time and effort to building it as you would to setting up a brick-and-mortar store. After all, this is what your customers will see, browse through, and use to have your products delivered to their doorstep. It’s up to you to make that experience as pleasant and convenient as possible.  We’re assuming that by this stage, you’ve already selected and purchased your domain name. The next step would typically be finding a hosting provider, but that doesn’t really apply here; you’ll have to decide which eCommerce platform to use, and you’ll get hosting as part of that package. Here’s a quick overview of some of the popular eCommerce software options out there: Shopify Probably the world’s most popular eCommerce platform, Shopify is an excellent choice for anyone looking to open their own online store. Shopify accounts start at $29 per month and allow you to create and customize your store to an impressive extent.  WooCommerce If you decide to create your website on WordPress, you should definitely opt for WooCommerce as your eCommerce provider. With its most basic package, this plugin allows you to create an online store for free; all you have to do is download it and enjoy its multitude of features. Just be aware that if you’re not familiar with WordPress, WooCommerce might present a bit of a learning curve. Magento Magento allows you to customize your new eCommerce site to the fullest. It’s free to download and offers many more options than any other solution on the market. The potential problem is that you need to be quite tech-savvy to get the most out of it.  As such, it’s not the best option for new eCommerce entrepreneurs with a DIY approach. However, if you can find the money to hire a developer, you can use Magento to open up a world-class shop that will put your competitors to shame.  Squarespace Squarespace is another excellent solution for making an eCommerce website, especially for beginners. It’s famous for its easy-to-use shop templates that will get you started in no time. As is the case with Shopify, Squarespace allows you to set up shop without having to know how to write a single line of code. It’s also relatively cheap - the basic plan that includes eCommerce capabilities starts at $18 per month. Still, Squarespace is more of a website builder than a full-blown eCommerce platform. As such, it’s somewhat limited in terms of the tools, features, and add-ons it offers.  Some eCommerce website builders will offer hosting packages that cater to your needs adequately, but there’s also a chance you’ll have to figure out hosting by yourself. If this is the case, you should consider cloud hosting, which is widely considered one of the best solutions for an eCommerce site.  You’ll also see many other options, such as shared hosting or even dedicated server hosting. Both of these are good options when you’re just starting your own eCommerce business, so it’s not something to stress too much about. Still, you should be aware that these options can be much more difficult to scale than cloud hosting.  Whether or not you’re ready to scale depends on how well your eCommerce site is performing. You need to think about the features, usability, and customization options you need as your business grows. More importantly, you need to be conscious of the system you’ll be using to manage your day-to-day business online. For example, if integrating payment systems into your eCommerce site is as complex as brain surgery, you might not be able to scale that quickly.  If your customers can’t navigate your site or find what they’re looking for effortlessly, it could be a dealbreaker for them. Consider hiring a UX design agency to help you create an online store and set up the basics.  Define Your Brand Another reason why you might not be able to scale as extensively as you'd like to is failing to attract and keep customers. For this reason, you need to pin down your brand building strategy. This starts with your eCommerce website and goes on to include your marketing efforts later. But the most important place for your brand to thrive is in your customers’ heads, so that it’s your company that comes to mind when they think about a specific product. With all this in mind, you can see why branding is crucial when you’re building a business. After all, there’s a fair chance that when someone mentions coffee, a green Starbucks sign pops into your head. Your ultimate aim is to create that kind of instant association for the products or services you’re selling. One of the most important aspects of branding is thinking about the design of your website, your logo, and your visuals in general. Unfortunately, selecting colors, typography, and other elements for your website is more difficult than you might expect. Don’t overthink it too much right now; you can always rebrand down the road. Finding a logo maker is one of the best ways to consolidate your brand identity when starting your own business.  Testing everything before you go live is non-negotiable. You want to be sure that every inch of your website functions as intended. One way of doing this is to ask your friends to help you test the site, or if budget allows, hire a QA specialist to test it professionally. You want to make sure the website looks good on all devices, every button works, and you don’t have a single broken link.  Add Your Products to the Site Once you’ve done everything to set up your eCommerce store, the last step is to add your inventory. When doing so, pay close attention to categories and the overall organization of your site; you want your customers to find what they need quickly.  Once they find the product they want, the customer will likely dwell on its description and image. For this reason, you need to provide them with high-quality visuals and accurate and detailed product descriptions. Think about what they’d like to know about each product. Excellent visuals and precise descriptions are key to unlocking more sales.  It’s Time for Marketing You don’t want your store to open to the sound of crickets; you need customers lined up in front of your virtual door and stampeding towards your “buy now” button. That doesn’t happen on its own; you need to put effort into marketing your new business on the internet. Of course, marketing something properly is no small feat, and there’s a lot to think about. Newsletter? Social media marketing? Paid promotions?  In an ideal world you’ll employ all of those strategies. But which will be your top priority - the one that will bring you the most customers with the least effort? To answer this, you should backtrack a couple of steps in this eCommerce startup guide to the section where we talk about analyzing your target audience. Do they use social media? If so, which social platform might they be on, and what type of groups would they be active in? Think of any correspondence you might have with your audience and the tone that would best speak to those potential customers.  Promo codes, giveaways, and free goodies are also an excellent way to create interest and buzz about your store opening. If you’re offering services, free consultations may be the best way to get customers through the door. A free download each month could work for digital products. Listen to your audience’s feedback and you’ll quickly realize what works. Grow Your Business  Once you launch and sell all of your initial inventory, it’s time to grow further. Most aspects of running your business will remain the same, but on a larger scale. It could be beneficial to invest in some tools, hire someone to help, and draw from the experience you’ve gained while building an eCommerce business to find room for potential improvement in the future. You’ll want to consider upping your current eCommerce marketing efforts. This could mean creating a lengthy email marketing list, collaborating with influencers in your niche, and focusing on SEO.  As you gain new customers, you might consider investing in good customer relationship management (CRM) software. This kind of program is bound to upgrade your customers’ experience at your eCommerce store. CRMs do a solid job of replacing the face-to-face experience people have at brick-and-mortar stores.  As your customer base grows, you’ll also likely have more inventory to handle and warehousing problems to solve. Thankfully, there are plenty of software options that can help you with inventory management. On top of that, you should keep an eye out for other things you can do to help you further optimize your processes. As always, the best way to improve your business is to listen to your customers. You should also look out for ways to improve your back-office processes when you notice that something is unnecessarily complicated. Any improvements you make will surely help your profits down the line! How Much Does it Cost to Start an eCommerce Business? This is a difficult question to answer, as there are many unknowns at play. Creating an eCommerce website can be expensive, but you might have friends who are willing to lend their expertise for a percentage of your profits. On the other hand, you might have to pay for someone to help with marketing, or you might need to splash out more to get special inventory in.  With all that in mind, we’ll try to answer this question: how much money does it take to start an eCommerce business? If you need just the basics - domain, platform, and hosting - it could cost you as little as $40 per month. On top of that, creating your business and acquiring all the permits you need can cost anywhere from $30 to a few hundred dollars, depending on your location. And while it doesn’t seem like much, this minimum investment will mean you have to do a lot of heavy lifting yourself.  From there, hiring a website designer could cost anything from $300 to several thousand. On top of that, hiring a graphic designer to come up with a beautiful logo will likely cost you anywhere from $15 to $300. A warehouse typically costs $4 to $7 per square foot per month, and if we’re not even going to get started on the costs of marketing - there’s really no limit to how much you could spend getting your company’s name out there. Social media marketing starts off being quite affordable, but if you’re trying to reach a broader audience, you’ll also need to consider expanding your budget.  Any additional software or service will create extra dents in your budget. Keep in mind that $5 might not sound like much, but if you have to pay that amount every month for multiple apps, it will soon add up. Still, many of those services are well worth their price, so it’s up to you to figure out what you can handle yourself and what you need help with when starting an eCommerce website. Overall, excluding your inventory purchases, you could be looking at an initial investment of around $700 to $3,000. So, Is eCommerce the Right Business for You to Start? Especially in this day and age, eCommerce is the best option if you’re looking to start your own shop. After all, few business owners these days want to deal with all the extra expenses and challenges that come with operating a brick-and-mortar store. If you start an eCommerce business, you can enjoy high levels of flexibility while forking out much less cash than you would to open a brick-and-mortar shop, and you might even be able to work from the comfort of your home. Before you get too excited, you should be aware that the niche is very competitive. Unless you’re offering a product that enough people need but can’t buy anywhere else, you’ll likely have to grind a lot to turn your store into a success. Still, the opportunity to be your own boss might just be too good to miss out on.

Dropshipping seems to have been the buzzword among people looking to start a business for quite some time now. This is more than understandable, as it is an excellent source of income that doesn’t require a significant up-front investment, too much know-how, or management skills typically associated with retail. This business model is great for beginners: You can quickly test everything and figure out what works without any major drawbacks. For that, though, you’ll need to figure out the basics, such as what it is and how dropshipping works. Then, it’ll be up to you to decide whether this business option will be the one to make you a successful entrepreneur. Let’s get down to explaining the basics. What Is Dropshipping? Dropshipping is a business model that allows you to sell products on your website without worrying about inventory or shipping. This form of eCommerce order-fulfillment method enables you to purchase products wholesale from a third-party supplier. Your supplier will keep the products in their warehouse and ship them for you. All you have to do is sell them. While this sounds similar to the standard retail setup, there is a significant difference. The merchant doesn’t handle keeping products in stock or maintain inventory. Instead, they typically purchase merchandise on an as-needed basis from a supplier. Now, we’ve used many new terms here. Let’s identify the key players in the scheme, to make the dropshipping definition clearer. Supplier Having a supplier that works with you rather than against you is the only way to run a successful dropshipping business. After all, you will be relying on your supplier to store and fulfill your orders. Sometimes, your supplier might be the manufacturer of the goods you’re selling, too. Some of the most popular supplier solutions are AliExpress, SaleHoo, and Wholesale central. However, depending on your niche, you can find many independent dropshipping suppliers to make your store stand out. Selling Merchant (You) But can’t everyone simply go to AliExpress and order whatever they want? The answer is yes, so you might be wondering why anyone would need a dropshipper as a middleman. However, AliExpress and other wholesale websites are typically, well, a mess. From product descriptions and images that are as daunting as possible, to poor search results, unknown sizes, and plenty of unknown providers who may or may not be the real thing - it may all seem like too much work for the average shopper. This is where you - the dropshipper - come in. If your main question is: “What is a dropshipping business’ purpose?” here is a quick run-through: You are the one doing the research, curating the wholesaler sites, and guaranteeing the right product will end up on their doorstep. It is up to you to provide a shopping experience your customers can rely on. Depending on how committed you are (and you need to be committed for this to work), creating a top-notch website is a great idea. It should have images and videos that accurately represent the product. You should also focus on providing a realistic delivery timeframe and excellent customer support. After all, that’s what’s your customers are paying you a little bit extra for. Customer The customer is, of course, the third part of the dropshipping model. They place an order on your website, and once they pay you, you can direct the order to your supplier. Your supplier will accept the order, charge you their cut of the price, and ship the product to the customer. Keep in mind; your customers are working with you and not with the supplier - your reputation is the one that will be damaged if something’s wrong with the product. And while you can always rely on reputation management companies down the line, it is always better to be safe than sorry. After all, a happy customer is returning customer, and you want as many of those as possible. So, What Does a Dropshipper Do? As the dropshipper, you are the intermediary between the customer and the supplier. It’s your job to create an excellent customer experience and carefully select exceptional products to sell. If you pair that with innovative advertising to reach and expand your audience, you’ll be all set. What Are the Benefits of Dropshipping? Now that we’ve covered what dropshipping is - let’s go over some of its benefits by comparing it to more traditional online stores. Fewer Significant Expenses Unlike a more traditional setup, which requires plenty of spending upfront for inventory, dropshipping allows you to launch a store without a single item in stock. Retailers typically have a lot of money tied up in their supplies, but dropshippers don’t have to pay a single cent until the customer pays for the order first. This also means that you don’t need to worry about investing in a product that ends up performing poorly on your site. As there’s no commitment from your side, you can test out and replace products to no end, until you're completely satisfied with the selection. Get Started Quickly There are business solutions that require a lot of planning and learning before you start. However, with this type of eCommerce business, you can learn as you go. As mentioned, with a dropshipping business, you don’t have to worry about the products, managing a warehouse, shipping your orders, finding the right order-fulfillment software, handling returns, and other tasks people with retail stores typically have to figure out. As Inexpensive As a New Business Can Be Most dropshipping companies are home-based businesses, so you won’t need to rent office space. You also don’t have to invest much to get started - all you need is a laptop and a website. What’s better, even as your business grows, you are unlikely to experience a lot of recurring expenses and costs. The ones that do appear won’t break your bank. Sell Anything You Want If there is a supplier for it, you can list it on your dropshipping store and sell it. Since you don’t have to purchase anything and store it before selling it, your wares can be anything. Look for trending products, and list them without worrying. Easier To Test Until You Succeed If you are unsure which products would sell well, dropshipping is the best way to test things out and find what works. You can order samples of the goods for yourself for a negligible price. On the same note, finding what works quickly will allow you to scale and grow faster. With the other models, twice the orders means twice the work, but dropshipping excels in this case: The extra work is handled by the supplier. For example, you only have to maintain the same standard of service your customers like. The Disadvantages of Dropshipping While the benefits make dropshipping a very enticing business option, there are also downsides to it that you should consider. Let’s discuss what you need to be aware of before you start building a dropshipping platform. Harsh Competition Means Low Margins While there might not be many physical stores in your niche, you’ll be dealing with a lot of competition online in this day and age. Since it is pretty cheap to open one of these dropshipping websites, you can expect your competition to offer products with rock-bottom prices attached. It can be challenging to compete with that. While you can take advantage of the competition’s weaknesses, which are usually poor customer support or low-quality websites, the price will always be a big deciding factor. This is why you need to research your competition first - finding a good niche to set up a dropshipping shop in can make all the difference. Tricky Inventory Tracking While there is plenty of software for keeping track of inventory and warehousing for eCommerce, you don't need that for dropshipping. Still, you will likely be dealing with multiple suppliers and several warehouses, which can make keeping track of what is in stock and which dropshipping products you’re out of difficult. Luckily, there are many apps out there to remedy this problem, so choose one to stay in sync with your providers. Shipping Cost Calculation Multiple warehouses and suppliers also mean various locations - and this will influence your shipping costs. Passing the charges to the customer is not always the best idea, and automating these can be difficult. Common Supplier Mistakes Everybody makes mistakes, especially while fulfilling orders. When opening a dropshipping store, you need to be prepared to own your mistakes - but also the suppliers’. After all, it’s your job to maintain a business reputation. To minimize the amount of apologizing, corrections, and stress you’ll take on with this type of business, make sure you only choose the best dropshipping suppliers. If you want to do it right, you should always purchase several test products beforehand. Check the order for everything: Package quality, missing products, and poorly executed shipments. If you are unhappy with the end result, chances are, your customer will be disappointed as well. No Control Over Products With dropshipping, you’ll have to give up any dreams of unique branding or customization - all designs are entirely up to the supplier. If you’re lucky, you might find a supplier comfortable with customizing their products. Still, you can expect that they will also require a pre-purchase of minimum order quantity for those. Now that you’ve had dropshipping explained, it is time for the biggest question of them all: Is Dropshipping The Suitable Business Model For You? Essentially, dropshipping is an excellent business model for anyone looking to start a shop without investing too much upfront. However, it does take a keen eye for detail, superb research skills, and excellent people skills. You’ll need to know how to manage a site, too, and you should most certainly practice your customer support voice before you dive in. Now, if you’re confident this will be a good gig for you, here are some quick how-tos. How To Start a Dropshipping Business To start with dropshipping, you need to get the basics set up first. Here is what you should know. Select Your Niche And Target Audience This is where your research skills can shine. You need to scour the market for existing stores in the niche you’re interested in. Pay close attention to their pricing structure, current offer, and how they rank for particular products. If the market is already saturated with competition and you can’t find the room to top them, consider another one. Choose Suppliers Carefully As mentioned before, your suppliers can be your best friends or your biggest enemies - so choose your wholesaler wisely.    There are many websites dedicated to eCommerce that provide complete directories of potential dropshipping wholesalers. From there, you select the providers you would like to feature on your dropshipping site. Once you create a shortlist, email them, or give them a call about your business plan. This also serves as the first test, so make a note of how long it took the suppliers’ team to reply. Here are some things you should check: Charges And Expenses If you’ve done the market research, you already know what the competition charges. Compare that to the offer you got from your provider. If there isn’t enough room in between for you to make a profit, look at other options. Also, make sure you ask about any additional fees the supplier might charge, as these can quickly eat up your profit. Shipping And Return Policies Familiarize yourself with the suppliers’ shipping and return policies. You need a supplier who uses tracking numbers, which are essential for keeping your customers updated on the whereabouts of their orders. You also need to know how complicated it would be to fix things if something goes south. Get informed about the eCommerce dropshipping suppliers’ return policies, and if a supplier doesn’t accept returns or provide any other guarantees, look elsewhere. Billing Not all suppliers charge the same way: Some will bill you on a per-order basis, while others do it monthly. You’ll want to find a supplier that will work with your cash flow rather than against it. Creating Your Dropshipping Store The last step on your journey toward dropshipping success is creating a website. When crafting a dropshipping website, you have two options. You can build your website from scratch, or choose one of the many available eCommerce platforms out there. Which one you’ll choose depends entirely on you. However, with an eCommerce platform, a large chunk of the job is already done for you. All you’ve got to handle is adding the products and customizing the platform to fit your brand. On the other hand, eCommerce builders allow you complete control over the look and functionality of your site, and remove all competition from the same platform. It is something you should certainly consider if you’re going for a highly competitive niche. Extra Tips For Successful Dropshipping If you want to find out how to make money through dropshipping, and have your business become a success quickly, here are some pro-tips to consider and implement. Choose Your Products Wisely Just because you can list anything doesn’t mean you should. Do market research, focus on your niche, and display only high-quality products. Think about your customers, marketing plans, and how difficult something will be to ship. Focus On Customer Experience Dropshipping is not a new thing: That means your niche probably has one-too-many dropshippers in it already. You probably won’t match the low prices, but you can offer the best customer experience on the market. It is something your customers will appreciate paying a bit extra for. An easy-to-use website with excellent visuals and accurate descriptions, realistic shipping times, and exceptional customer support could make a customer choose you over other dropshipping companies. If you’re not sure how to accomplish it on your own, consider hiring a UX agency - it will certainly pay off in the long run. Invest In Your Brand You need to build a good relationship with your clients, which you can’t do without proper marketing and support processes. Create a solid social media presence, catchy marketing, and email campaigns. Make sure you provide top-notch customer support. Reputation is the key to success with this business model, and you shouldn’t neglect any opportunity to position yourself as a reliable spot for products in your niche.