Dropshipping is the finest supply chain management technique of the modern world. It is a business model where retailers don’t have to keep the products and items in their inventory. Retailers only need to take the orders from the customers and the manufacturer or wholesaler will ship the items directly to the buyers. As in all retail businesses, the retailers make their profit on the difference between the wholesale and retail price. Moreover, you don’t have to pay for dropshipping services, before you sell anything.
One of the toughest aspects of dropshipping is establishing a reliable network of dropshipping suppliers that represent the brand at the same high standards as the brand itself. Finding a trustworthy supplier is the key for successfully running your dropshipping business. From manufacturing to shipping the goods to the customers, almost everything is the sole responsibility of the supplier. So, if you have a reliable supplier by your side, it will be much easier for you to grow your business and acquire more customer.
Chinese suppliers and wholesaler are ruling the dropshipping world. But, along with the popularity of dropshipping business, the number of fake and unreliable suppliers has increased a lot. Retailers need to have a sound and solid supplier acquisition strategy that will bring real value to their business.
There are many aspects you need to consider at the time of searching for a supplier such as:
- Order Minimums
- Expert Industry Knowledge
- Support Staff
- Responsiveness to Email Orders
- Availability of Data Feeds
Dropshipping pricing strategy
A dropshipping pricing strategy is the single most important thing. Before you even think about which dropshipping pricing strategy you want, you need to have a clear understanding of what industry you’re in and what you plan to sell. Different industries are sold in different ways. For example, electronics are sold at a higher volume but the margins are much lower, whereas for household decor products you can sell at a much lower volume, but the margins are higher.
Here are some of the most popular dropshipping pricing strategies:
- Fixed Markup
- Tiered Markup
- MSRP (manufacturer suggested retail price)
- Cost-based pricing
- Competition-Based Pricing
- Free Plus Shipping
- Bundle Pricing
One thing retailers should keep in mind while deciding on the pricing strategy is that it shouldn’t be static, it has to be dynamic. Figure out multiple pricing points, scrutinizing how different markets react to different pricing, discover new product lines. Always keep a close eye on your competitors and regularly re-evaluate your prices in line with competitors.
Choose a strategy and roll with it. If it’s not working out, try a different one. Test different pricing strategies in your store to find the one that works best for you.