It is no surprise that non-traditional business models have grown in popularity over the past year, as many businesses have found themselves restricted due to the COVID-19 pandemic. One e-commerce model has drawn considerable attention because it allows entrepreneurs to set up online retail businesses with little more than a laptop: drop-shipping. We explore whether this new alternative will become a staple for the future of e-commerce.
Drop-shipping
Drop-shipping is a method of e-commerce that allows creators to focus on the marketing and selling of products, without the hassle of handling stock or deliveries. By partnering directly with suppliers -who handle all stock logistics, -, businesses can reduce start-up costs and streamline their service. Drop-shipping is nothing new. However, with more people working from home and looking for convenient ways to start their entrepreneurial dreams, it has become the business model of choice for many.
Social commerce
One of the most popular e-commerce platforms for drop-shippers is Shopify. With its easy-to-use interface, Shopify allows almost anyone to market products, predominantly across social media channels. By allowing drop-shippers to convert their discovery content into shoppable posts easily, Shopify is part of the accelerated increase in social commerce.
The advantage of operating on social media platforms for drop-shippers is that it allows a shorter path-to-purchase, which can positively decrease metrics such as bounce rate and basket abandonment. Furthermore, the changing nature of social media platforms and their online traffic fluctuation can be easily dealt with when using an adaptable drop-shipping service.
Drop-shippers can easily take advantage of the most effective social commerce platforms, while popular and yield results. They can then re-establish themselves on other sites when this popularity fluctuates. The common factor between drop-shipping, social platforms, and Shopify is that they are all flexible services and can capture consumer needs as they arise.
Lockdown entrepreneurs
Due to successive national restrictions, business people and entrepreneurs have found themselves stuck at home with limited access to resources and collaborators. The convenient nature of drop-shipping and the ability to grow an e-commerce business directly from home has increased its popularity amongst startups, especially over the last year.
Over the past year, many news outlets have reported on young people over the globe have successfully launched their business careers by using the drop-shipping method. This success is often attributed to the knowledge that Gen-Z has when it comes to social media platforms and how to get the most out of them. As “the social media generation”, Gen-Z are perfectly placed to know what their peers are most likely to engage with, allowing them to capture a large audience that has a strong social media presence.
However, on further analysis, the key to successful drop-shipping businesses is more to do with adaptability. Entrepreneurs who can sustain their success adapt quickly and are not afraid to abandon old platforms that no longer offer good performance. But if drop-shipping is so simple, then why isn’t everyone doing it?
Tips for creating the best drop-shipping services
Despite the ease with which entrepreneurs can set up drop-shipping businesses, maintaining success can be a challenge. This is especially significant for ensuring that they are delivering a good customer experience while also making sure their products and practices are ethical.
Here are some top tips to boost your drop-shipping performance:
- Businesses should make sure that they handle a sample of the product they plan to sell, before offering it to customers. This way, they can check the quality and consider what type of packaging customers will be greeted with when their parcel arrives. Suppliers may be open to negotiation if any changes need to be made.
- Searching for reviews on chosen suppliers is important. Some product suppliers will be more reliable than others, and finding trusted reviews can help businesses to make an informed decision that will positively influence sales going forward. Ensuring that suppliers are easily contactable can also save a lot of headaches if problems arise.
- For those who are not sure where to start, online tutorials and courses can be beneficial. However, it is important to check that they are being provided by reputable companies who offer legitimate training. Online reviews can help to sort the good from the bad in many cases.
- Consider how the business is set up to interact with customers who experience problems or want to get in contact for support. Popular low-cost methods are setting up dedicated social accounts where customers can message with questions. The entrepreneur themselves can answer these if the business is on a small scale, or a dedicated customer service representative may be employed. The key is to ensure that customers know they have a reliable point of contact for the business.
A business model for the future?
The growth in social commerce and the increasing lean towards digital marketing strategies that incorporate these popular platforms, certainly ensure a solid base from which drop-shippers can operate. When it comes to drop-shipping and Shopify, the convenience of such a streamlined business model, combined with the continued uncertainty caused by the COVID-19 pandemic and the rise in working-from-home, means that it will be likely that we will see more new businesses and entrepreneurs drawn to it in the future.
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Written and researched by Paige Elford, Digital Marketing Graduate
