Dropshipping was, for the last couple of years, the thing to do if you want to build a successful e-commerce business. I mean we’ve all seen those ads telling you how Teddy, who was broke and slept on his best friend's couch, made thousands of dollars within a week through dropshipping.
Running a dropshipping store is a valuable experience. It means that you know how to run online ads and digital marketing campaigns, how to set up a shopify store, how to manage customer relationships, and how to deal with huge peaks of stress.
Some of you have tested it and failed, while some others have succeeded (congratulations!!). In the latter case, it means that not only do you have the necessary skills to run an online business, but you also know your market while you have the customer base and the money to reach new heights and lead your brand to bigger stages.
In this blog post, we’ll present you a step by step guide on how to transition from dropshipping to traditional e-commerce. Before we move further, let me explain why it is necessary to move into e-commerce if you want to achieve growth and success for your brand.
Despite being a really cheap and lost-risk way to start an online business, dropshipping has many limits on the long term. Due to the fact that you have zero control over your inventory, it is hard to ensure that your products are processed straight away or aren’t on backorder.
Knowing that dropshipping margins are really low, it is hard to make huge profits on single items. This means that you’ll need a high sales volume to make profits, but volume means more orders, more orders mean more logistics-related problems, and more problems mean less time to focus on your brand’s growth.
One of the biggest cons of dropshipping is also the lack of control over the product’s quality. This leads to a difference between your customer's expectations and the product in reality, which results in an unpleasant customer experience.
This lack of control on many important factors of your business and the long shipping time affect negatively the whole experience and are clearly the biggest limitations of dropshipping, which leads to stagnation.
When it comes to proper e-commerce, it is slightly different. Starting an e-commerce requires some investment to support the expenses related to manufacturing and storage. It also represents a greater risk since the investment is bigger (be careful with aunty’s money). Saving some money from your dropshipping activity can be a great way to cover these expenses.
Since you have more control over every part of your business, you’ll be able to negotiate your manufacturing costs and set your own selling price and thus ensure to have the right margins (not too small, not too big, you know!!).
Another advantage is that you have full control over your brand. I mean you can manufacture your own product line, you can also manage your inventory however you want and so you have full control over all your supply chain processes, from manufacturing to shipping. This will help you offer different shipping options (No, 30 days shipping isn’t an option anymore) and ensure the best experience for your customers.
Going from dropshipping to traditional e-commerce will play a major role in upgrading your customers experience and driving growth.
Getting the most out of dropshipping and overcoming its limitations by expanding your business to e-commerce is a great solution if you want to develop a successful and widely known brand.
To help you during your transition from dropshipping to e-commerce, you can follow this step by step guide:
1. Create your brand foundations:
This is the most important part of your transition as it will affect every step you’ll take during your e-commerce journey. You’ll have to brainstorm, create your brand foundations, and define the vision and the values behind your brand.
Think about why you’re in this business and why your brand exists. You’ll have to ask yourself the right questions. What is my product for? For whom?
Defining the direction of your brand and creating a powerful message around it will help you position yourself in the market and differentiate your brand from your competition.
Don’t forget that the visual aspects of your website and the message behind your marketing campaigns should follow your brand positioning. So make sure to choose words, sentences, colors and images that resonate with your target audience.
2.Develop a product design and source potential manufacturers:
You’ll have to think about your product design and its specific components. Having a previous experience in your niche thanks to your dropshipping website, should help you to understand your customers expectations and determine which kind of product you want to develop and what are its differentiating features.
Once you have the design, you can start looking for a manufacturer. Think about where you want your products to be manufactured.
During your choice, you’ll need to take different factors into consideration. You’ll have to understand the costs associated with each manufacturer. If this one is overseas, you’ll also need to inform yourself about importation processes and the costs related to it. You can take a look at Ovrsea or Flexport, which are freight forwarders companies that can help you with your cargo’s importation.
To get you started, you can contact your old dropshipping provider who can introduce you to potential manufacturers in Asia or maybe even manufacture your products by himself.
Don’t forget to take into consideration your brand’s positioning during your manufacturer choice and product design. For example, if you’re selling sneakers and you position yourself around sustainability and you target vegan consumers. Make sure to use raw materials and choose a manufacturer that respect your brand’s values.
3. Create a business plan and make budget forecast:
Transitioning from dropshipping to e-commerce requires higher investment and better planning, for that you can use the business model canvas. This will help you determine all the big aspects of your business like your cost structure and your revenue streams.
To reduce all risks, make sure to forecast all your costs and revenues. This will also allow you to have better control over your finances and to better plan your business growth. It will help you to predict your cash flow and make better strategic decisions.
4. Choose your logistics provider:
The main difference between dropshipping and e-commerce is that you’ll be managing your own inventory.
While it can be easy to do it during the early stages, managing e-commerce logistics becomes a real pain as soon as orders start to flow, especially when you have no previous experience with logistics.
The best option for this matter is to work with a logistics provider who can handle your inventory storage, order fulfillment, and returns. This will ease the burden on your shoulders and you will be able to focus your effort on other areas of your business. It will also help you get the best rates for storage and transportation.
Make sure to choose a logistics provider that can scale with you and support your worldwide expansion. Choosing a provider who will help you optimize your logistics processes on the short and long run is crucial to ensure continual growth.
Working with logistics experts will help you offer the best options for your consumers. They won’t need to wait 30 days to get their products anymore. This will drive a better satisfaction and an upgraded customer experience.
Choosing the right logistics provider is a tricky task as there are many factors that you should take into consideration. To know more, check our article on how to choose the best logistics provider for your e-commerce.
5. Develop a marketing strategy to launch your e-commerce:
If you’ve successfully managed all the steps above, you’re almost done with your transition. While your products are being manufactured, don’t forget to set a marketing strategy to notify your current customers base about the changes you’re making. Keeping your customers updated will drive more engagement towards your brand.
Think about promoting your new products on social media and by email. Make sure to take advantage of the momentum you generated through your dropshipping activity by distributing coupons to your previous customers to push pre-orders.
Try to also focus your efforts on the launching day as if it was an event that no one wants to miss. This will help you to drive sales since the first minute of your e-commerce journey and introduce yourself to the market in the strongest way.
You can also engage with influencers in your niche to build trust, boost awareness around your brand and promote your product on social media. Working with influencers is also a great way to generate content about your brand without spending too much effort.
Try to encourage your customers to leave reviews, feedback or create user-generated content for your brand. You can, for example, create a hashtag that your customers can use on social media and promote on your channels. User-generated content is usually more trusted and doesn’t cost anything.
So depending on your niche, choose the most suitable channels and push marketing as much as possible to boost pre-orders and ensure a strong introduction into the market.
6. Enhance your customers experience and create brand advocates:
Now that you have full control over every aspect of your business and you got rid of all the dropshipping limitations, you can upgrade your customers’ experience and provide the best journey possible for them.
Once your customers notice your effort and your improvement, your relationship will get even stronger and you’ll be able to build a real engagement toward your brand.
Take advantage of this and try to build a network of brand advocates who will promote your brand and products for you.
Don’t forget to build a strong customer support team to answer and fix your customers inquiries and ensure the best experience for them at every stage of their journey.
Dropshipping is a great way to start your online business but its limitations make it difficult to achieve sustainable growth. However, it is a great way to gain the experience needed to run an e-commerce business and is a great first step to grow a successful brand (and to make the most out of aunty’s money)