If you ask the average person why they haven’t tried to start their own business, you will likely hear the following response: “It’s too risky.”
This sentiment is understandable. Entrepreneurs often need to float their business initially by investing their money. With future profits being far from guaranteed, it’s easy to see why many opt for 9-5 jobs. Fortunately, if you’re an aspiring e-commerce entrepreneur who’s hesitant to leap, drop shipping is a low-risk way to get started.
When done well, drop shipping can be an e-commerce growth hack. You can introduce new products to the market to understand consumer demand without a significant investment.
Here’s how it works.
Connecting Demand with Supply,
Most businesses are formed after a founder discovers an insight about the market few others have gleaned. Using this knowledge, they create a product and market and sell it. However, the inherent risk in this model is that the idea won’t catch on with consumers.
Drop shipping eliminates the need for founders to develop a new product on their own—and that’s partly why it’s an underappreciated e-commerce growth hack. Instead, owners of drop shipping e-commerce stores use tools such as Google Trends and other keyword research tools to identify niche products for which users are searching online. They then find a product supplier, negotiate an agreement, and sell items through their e-commerce store.
After a customer purchases an item through the online store, the supplier ships it directly to them. Customers pay the retail price for the item, while the store owner pays a cheaper wholesale price. The owner profits from the difference between the two prices.
But what truly sets drop shipping apart as a growth hack for e-commerce businesses is the ability to experiment. Let’s dive a bit deeper.
New Product Testing Without the Risk
Most new products fail. It’s a harsh reality for many business owners.
Unfortunately, developing a product and taking it to market can be costly for businesses. Some estimates place costs between $20,000 and $100,000 for every new product. While those costs are a drop in the bucket for a company like Amazon, smaller companies typically need help to afford to have their products fail.
Drop shipping companies are not forced to pay these upfront costs. The low overhead costs of drop shipping for e-commerce companies make it a growth hack. Owners simply tap into existing consumer demand and fulfill their needs through their online storefront.
This makes drop shipping an ideal fit for e-commerce businesses that want to expand their product line—including those that don’t strictly work in dropshipping. For example, imagine you had an e-commerce storefront that primarily sold a niche product like men’s jewelry.
Based on your research into consumer online search data, you’ve found a spike in searches for silver bracelets. You have two options available. You can work with a vendor to design and produce a new silver men’s bracelet type. Or, you can use 3PL drop shipping as an e-commerce growth hack and work with a supplier to ship silver bracelets directly to your customers.
It’s a much faster and less expensive way to connect customer demand with supply through your online store.
Expanding the Scope of Your Business
Expanding product lines is only one use case for drop shipping. You can use drop shipping to reinvent your e-commerce business completely.
Successful business owners are constantly monitoring customer trends. They’re researching what their current and prospective customers say on social media and monitoring how healthy customers respond to paid advertisements and organic content they publish. This data can detect customer needs that are currently unmet by the existing market. Drop shipping is a growth hack for e-commerce businesses because it allows them to respond to these needs quickly.
For example, imagine you ran a successful drop shipping business focused exclusively on selling dog toys. Your company’s Facebook page is a hub for conversation among pet owners, and you begin to notice many commenters asking questions about pet skincare products other owners use. Under normal circumstances, you would be stuck; reorienting your business to sell pet skincare products would take significant time and money.
In moments like this, drop shipping reveals itself as a growth hack for e-commerce businesses. Store owners must search for pet skincare product suppliers and reach an agreement. You can then begin testing new products by introducing pet skincare products to see which ones gain the most traction with your customer base.
Building Your Product Roadmap
Some e-commerce business owners want to sell their products through their stores. 3PL drop shipping can serve as a guide to what features customers prioritize.
Using drop shipping in this way is a mighty growth hack for e-commerce businesses that sell food and beverage products, given how quickly tastes can change and how hard it can be to find products that click with a customer base.
Imagine you operated an e-commerce company that sells gourmet chocolate. You have a hunch that your customers might like chocolate with toffee but don’t want to risk launching a new product without knowing whether it will sell. Drop shipping allows you temporarily to test the new product without needing first to produce it. If the new item sells well, you have the validation to create your product version.
Trust Conri As Your 3PL Shipping Provider
If you’re interested in tapping into drop shipping as a growth hack for your e-commerce business, CONRI can help. Our warehouse management system can seamlessly integrate with your e-commerce store, connecting you to our global network of shipping providers. Get started by submitting a contact form today.
