By now we’re all convinced – dropshipping is one of the easiest ways to quickly build a profitable online business.
While many people consider dropshipping an all-or-nothing deal, we’re going to take a look at using dropshipping to test new product ideas, and how to follow up after those experiments.
For the sake of this article, we’ll put a focus on dropshipping print products (like t-shirts and posters). These lessons, however, can certainly be applied to dropshipping other products as well.
Let’s get started!
Use Dropshipping to Research New Markets and Product Ideas
The general idea of dropshipping is that someone else takes care of the sending for you. Since you’re not doing the shipping yourself, you don’t necessarily have to be located near your dropshipper. Thus, it opens a whole new world of possibilities. This feature can be taken advantage of if you’re looking to conquer a market that isn’t in your nearest vicinity.
For example, an Australian seller looking to expand to the American market would benefit from having a dropshipper located in the US because they’d be able to offer cheaper and faster shipping than if they were to ship from Australia. This is particularly meaningful since the US audience has become accustomed to quick shipping even for online purchases, like Amazon Prime 2-day delivery shipping.
Dropshipping is a method that even the majority of large retailers have adopted into their growth strategy. They use it to test new products and product types, new markets, cover order overflow and more.
Not sure if a new product is going to fly? Rather not risk buying up a whole lot of inventory only to have the new product flop? Easy, just set it up with on-demand dropshipping. You’ll validate the idea and will get an idea if this is a direction to continue developing.
Some great examples of drop shippers are Zappos, Gilt, Startup Vitamins and even IKEA. Some started out as exclusively dropshipped store and only later began fulfilling their own products.
Stores like Wayfair work exclusively with dropshipping, managing 7,000 different vendors! Note that Wayfair doesn’t have its own products. It’s simply a website that offers others’ products. The vendors (or sellers) are responsible for shipping the goods as well. It’s a drop-ship relationship. That’s why Wayfair heavily invests in advertising on TV and Internet to drive traffic to its site.
Essential Things to Look for in a Dropshipper
“Dropship your products” is easier said than done. The real question lies in finding the right dropshipper.
Here are some questions to ask yourself when considering a dropshipper:
1. Do they integrate with your ecommerce platform?
Your life will be infinitely easier if you can hook up your store with your dropshipper – orders would be automatically sent to your dropshipper, you’d pay the difference in cost, and pocket the rest of the money from the transaction.
There are several dropshippers for print products that integrate with Shopify stores. Here are some of the top ranked print-on-demand dropshipping integrations on Shopify:
2. How will customer service be managed?
Make sure to understand who takes care of customer service. What happens when there’s a return? Who takes care of it? Communication is very important. For example, if the printer has run out of stock for a certain product, who’s going to let you, or your customers know?
3. Is your dropshipper located close to the market you want to tap in to?
If your target audience is in the states but your potential dropshipper is located in Australia, chances are that it’s not the best option for you. Make sure to find someone close to your target audience so that you can reduce shipping time and costs.
4. What will the package look like when your customer receives it?
Consider if the orders are white-labeled — that means that each order is branded with your own store’s information, rather than the dropshipper’s, so that it looks like you’re sending the product yourself.
Be sure to take a look at how to create a memorable unboxing experience for your customers!
Pro tip: Make sure to order sample orders to test quality and shipping times, not to mention to double check the packaging.
Deciding on Your First Dropshipping Experiment
Choose something you can easily dropship
Once you’ve decided on a dropshipper, take a look at their offered products. What can you easily offer your customers that’s new and different? If you sell t-shirts, why not try selling prints? Or mugs?
Test the product for seasonality
Try something that’s seasonally relevant. For example, during the summer you can experiment with crop tops and swimwear, while during the winter you can try out sweaters and hats.
Listen to customer requests and desires
If you’ve been running your store for a while, chances are you’ve received a few customer requests in terms of products they’d like to see you sell. How about trying it out? If one person has asked for it, chances are there are a ton of others who haven’t gone to the effort of writing to you.
Ask your customers for insight and feedback
Communicate with your customers, start a conversation. Go ahead and ask them what they think of the product before launching it. Try to include some product related questions in a post-purchase survey, or ask the question on social networks too.
Once you’ve picked a product to experiment with, and you’re all set up with the dropshipper of your choice, it’s time to start running the sale! Simply publish the product on your store, and get back to your marketing and growth tactics to see if it’s a hit.
The Results of Your Dropshipping Experiment
Once you’ve tried out your dropshipping experiment it can inform your future business decisions and you’ll be able to take what you’ve learned and apply it to your store.
Here are three outcomes that we’ll take a look at, and what you can do next:
- Your experimental product results in equal or more sales than your best-selling product
- Your experimental product sells equally to one of your average products
- Your experimental product underperforms the rest of the products in your store
1. If your experimental product results in equal or more sales than your best-selling product
You’ve tested the market, and you’ve found that there’s demand. Perhaps the product sells just as well if not better than other products in your store.
Consider purchasing actual inventory
When you’ve had massive success with your dropshipping experiment, you might be itching to profit even more. The experiment was successful, and you can confidently bring the fulfillment in house.
Consider manufacturing your own product
How quickly can you cover the price of a printing machine? An decent entry-level direct to garment printer, setup and maintenance, for example, comes around to $28,000. How quickly will you make that money back, can you afford to miss out on that profit for a few months?
2. If your experimental product sells equally to one of your average products
So your experiment didn’t turn into the wonderful explosion of sales you had anticipated? The good news is, your experiment was a low-risk, low-cost endeavour. Now you have valuable insight to your market and audience that you can put to use.
You should stay with your dropshipper if you’re not able to spend the time fulfilling the products themselves, if you don’t want to keep inventory, or if the shipping prices kill your business.
Often your fulfillment company will have deals with shipping providers to get you cheaper shipping, since they have a high volume and can negotiate discounts.
Change the experiment and try a new product
Your audience didn’t like this product. By process of elimination, this is one of the directions you don’t have to continue to develop. That’s fine, now you know! How about moving on to the next product experiment?
Change the platform or audience you’re targeting
It wasn’t a good market fit. That’s not to say that it wasn’t a great product, it just wasn’t what your buyers are looking for. Are you still sure that it’s a winning idea? How about setting up another shop in a different niche, and marketing it to another audience?
3. If your experimental product underperforms the rest of the products in your store
Go ahead and leave it in your store, keep it dropshipped. This way, there’s no harm done, you make those few buyers happy, and you keep receiving a bit of income from it.
If your experiment was unsuccessful, ask yourself, did people know that you’re offering this new product? Did you send out an email? Don’t have an email list? How about trying some Facebook advertising? People can’t buy your product if they don’t know it exists.
Learn More About Dropshipping
Want to learn more about the benefits of dropshipping? Be sure to take a look at the infographic below, as well as our ultimate guide to dropshipping.
Dropshipping is a tool you can use not only to power your business, but to drive its development as well. Use it as a convincing way to validate a new product idea.
Do you have any other ideas as to how you can use dropshipping to experiment with products and business endeavours? Let us know in the comments below!