hough it has risen in visibility in the past decade, dropshipping is far from new. As early as the 60s and 70s, mail order companies advertised a variety of products through small booklets, though many were shipped by a fulfillment partner. In the 90s, dropshipping expanded as part of the .com boom with many mail order companies graduating into eCommerce as we know it today.
If you want to geek out on this history of dropshipping, check out this blog post by Wholesale Ted.
Enter 2020. Dropshipping has not only expanded its footprint in terms of products, wholesalers, and methodology, but has become incredibly complex as online retail leverages growing marketplaces like Amazon, eBay, Walmart, Facebook, Wish, and more.
Millions of entrepreneurs gravitate to dropshipping because, from a financial standpoint, startup resources are minimal. With just a computer and a phone, you can create a sustainable company for years to come.. despite the typical buzz that says otherwise.
Every year there is a new discussion about the death of dropshipping. We want to be clear, by no means does our team prescribe to the notion that dropshipping is dead, or even on its way out. Instead, sellers need to pause and understand what value they can bring to a market that feels more saturated than ever before.
One of the strongest predictors of success for any online retailer is a strong brand. Being that the dropshipping model has a low barrier for entry, naturally, many retailers are competing for the same customers in a market segment.
Given that the perceived value of a brand is at an all-time high (and growing), it is critical to convey to customers that your brand is worthy of their business over any other competitor. Such recognition can be accomplished through procuring powerful validation like customer reviews, comments, testimonies, and a great seller score across marketplaces. Not only do these items create high conversions and help you win the buy box, but they drastically increase repeat business.
As we enter into the new year, leveraging your brand will be a decisive aspect of your marketing strategy in the success of your business. If you are looking to further develop your eCommerce brand, consider implementing a marketing strategy that spreads your brand across social media and other outlets where traction can be gained. Developing custom content for these channels to boost SEO is a good place to start.
If you haven’t already, consider launching your own storefront. This allows sellers the ability to take control of their customer relationships and develop their brand through their own means as opposed to competing for listings and Buy Box spaces in other marketplaces.
As you scale your company to more marketplaces and channels, there will be greater sales potential and opportunities for customer acquisition. To be successful, however, many of the time-consuming aspects of your business need to be automated.
FeedStation customers often choose to sync data between their channels and marketplaces allowing updates on price, inventory, and fulfillment status to happen concurrently across every channel. Through custom-built solutions like this, sellers let the technology do the heavy lifting, allowing them to allocate their time and energy towards other more critical business operations.
Although overhead costs such as inventory storage or management do not exist for sellers in the dropshipping world, low profit margins are an outright requisite for retailers to compete in the market. Automating your business allows these retailers to reduce the risk of human capital tearing through their margins, which then allows resources to be allocated into more demanding business activities.
To stay competitive, many retailers have taken action and implemented these tools to relieve the headaches and time-consuming nature of these manual tasks, allowing them to dedicate more time to building their brand, which has proved to be an invaluable business solution throughout 2020.
In addition to dropshipping, outsourcing fulfillment for your own branded products has proven to be a valuable strategy in optimizing eCommerce businesses and building customer satisfaction. Many FeedStation customers sell their own branded products that are either shipped from their facility, or by a 3PL. Only selling these items often leads to a limited catalog, but dropshipping can support the sale of adjacent items. This approach allows for our customers to cover a greater segment of the market and increases their potential reach.
The standard for shipping expectations has been raised for e-commerce customers since the introduction of one- or two-day shipping (thanks to companies like Amazon and Walmart), making it harder for sellers to compete. However, opportunities for retailers to adapt do exist.
Firstly, sellers should establish a presence across as many marketplaces as manageable for greater visibility. Secondly, assuming they have their own inventory, utilizing third-party logistics companies will provide better service over their competitors. This strategy can help cut down shipping times which has, and will continue to be, an area of concern for the future of the dropshipping business model.
With ever-increasing technological solutions, we are excited to see how the model pivots in the coming years, as it has made drastic changes since its inception in the 60s. At FeedStation, we will be ready to respond and innovate. If you are interested in learning more about how FeedStation is saving customers 50+ hours a week, give us a call and schedule a demo today!