That dropshipping can be profitable is a fact. Dropshipping is a popular methodTo get started in online business without making large investments. Asyou start dropshipping, you become a reseller (reseller) of popular products.
How profitable that is depends on several factors. We are happy to explain how you canprofitable can dropshipping and what you should look out for when starting your webshop.
How profitable that is depends on several factors. We are happy to explain how you canprofitable can dropshipping and what you should look out for when starting your webshop.
1. Make sure you have enough margin between your buying and selling price.
It is tempting to think that the difference between the purchase price of a product and yourselling price, is your profit. The purchase prices of products fall under your variable costs.In addition to the purchase price, you need to consider costs for marketing, software,customer service and/or commissions charged by marketplaces such as bol.com.
2. Calculate your maximum CPA (cost per acquisition).
Marketing costs come in many different ways. You can run paid adsuse to market your products, you can spend a lot of time organically findablemake your webshop and you can use marketplaces to list popular products onselling.
Therefore, calculate for yourself how much marketing budget you can allocate to be profitablebe and remain. You can do this, for example, by determining how much an order maycost (CPA).
In this calculation, distinguish between the CPA of new customers and the CPAOf repeat customers. If you can get your customers to come back to you often, perhaps it canbe such that you don't have to earn anything on the first order: it's for your businessvaluable to have this customer in your database. You then earn on therepeat purchases.
3. Test charging shipping costs
Shipping costs: one of the biggest expenses of web shops. How do you deal with it?
There are several ways to cover shipping costs. Our advice: test differentways. For example, it may be convenient to use the cheapest selling price andcharge shipping costs separately.
On the other hand, "Free shipping" sounds very appealing. According to research bySendcloud 58% of consumers drop out in case of excessive shipping costs. Theoffer free shipping (and thus pay all or part of it yourself), you canyield more than it costs you.
4. Become an early adopter of new marketing opportunities
There are plenty of new trends where you do get relatively inexpensive marketing resultsgain. That you can advertise on Facebook, Instagram and Google is something everyonline entrepreneur. The available space on these platforms is shrinking, leaving yougoing to pay more for each impression or click.
Try new marketing opportunities. A good example is TikTok advertising: thecosts to be visible through paid advertising on TikTok are many times lower than onFacebook and Instagram.
How that's possible. An average TikTok user spends three times as long on TikTok each monththan they are on Facebook or Instagram on average. So there is much more room toadvertise. In addition, fewer companies are currently active on the relatively newadvertisement platform.
Try new marketing opportunities. A good example is TikTok advertising: thecosts to be visible through paid advertising on TikTok are many times lower than onFacebook and Instagram.
How that's possible. An average TikTok user spends three times as long on TikTok each monththan they are on Facebook or Instagram on average. So there is much more room toadvertise. In addition, fewer companies are currently active on the relatively newadvertisement platform.
5. Devise a subscription or loyalty system.
A new cologne every month, or a new sports kit? Or 20% off your fifthpurchase? Subscriptions or loyalty incentives can cause thelifetime value of your customers gets a big boost. Our tip: be creative, think of something thatappeals. Create added value.
In short, dropshipping offers a lot of opportunities to make a profit. However, be preparedwell and calculate your variable and fixed costs. That way you keep track and know forwhat price you can start selling products.
Do you have questions, comments or suggestions? We'd be happy to help. Email us at
[email protected] and you will get a response within 24 hours.