The fact is that dropshipping can be profitable. Dropshipping is a popular method to start an online business without having to make large investments. When you start dropshipping, you become a reseller of popular products.
How profitable that is depends on several factors. We are happy to explain how you can dropship profitably and what you should pay attention to when starting your webshop.
How profitable that is depends on several factors. We are happy to explain how you can dropship profitably and what you should pay attention to when starting your webshop.
1. Make sure you have enough margin between your purchase and sales price.
It's tempting to think that the difference between the purchase price of a product and your selling price is your profit. The purchase prices of products fall under your variable costs. In addition to the purchase price, you have to take into account costs for marketing, software, customer service and/or commissions that marketplaces such as bol.com charge.
2. Calculate your maximum CPA (Cost per acquisition)
Marketing costs come in many different ways. You can use paid advertisements to market your products, you can spend a lot of time making your webshop organically findable and you can use marketplaces to sell popular products.
Therefore calculate for yourself how much marketing budget you can use to be and remain profitable. You can do this, for example, by determining how much an order may cost (CPA).
In this calculation, distinguish between the CPA of new customers and the CPA of returning customers. If you can keep your customers coming back often, you may not have to earn anything on the first order: it is valuable for your business to have this customer in your database. You then earn on the repeat purchases.
3. Test with calculating shipping costs
Shipping costs: one of the largest cost items for webshops. How do you deal with it?
There are several ways to cover shipping costs. Our advice: test different ways. For example, it can be useful to use the cheapest selling price and to calculate the shipping costs separately.
On the other hand, 'Free shipping' sounds very appealing. According to research by Sendcloud , 58% of consumers drop out at too high shipping costs. Offering free shipping (and therefore paying all or part of it yourself) can save you more than it costs you.
4. Become an early adopter of new marketing opportunities
There are plenty of new trends where you can achieve relatively cheap marketing results. Every online entrepreneur knows that you can advertise on Facebook, Instagram and Google . The available space on these platforms becomes smaller, so you will pay more for every impression or click.
Try new marketing opportunities. A good example is TikTok advertising: the costs to be visible through paid advertisements on TikTok are many times lower than on Facebook and Instagram.
How is that possible? An average TikTok user spends three times as long on TikTok every month than they spend on Facebook or Instagram on average. So there is much more room to advertise. In addition, even fewer companies are currently active on the relatively new advertising platform.
Try new marketing opportunities. A good example is TikTok advertising: the costs to be visible through paid advertisements on TikTok are many times lower than on Facebook and Instagram.
How is that possible? An average TikTok user spends three times as long on TikTok every month than they spend on Facebook or Instagram on average. So there is much more room to advertise. In addition, even fewer companies are currently active on the relatively new advertising platform.
5. Think of a subscription or loyalty system.
A new scent every month, or a new sports set? Or 20% off your fifth purchase? Subscriptions or loyalty bonuses can ensure that the lifetime value of your customers gets a big boost. Our tip: be creative, come up with something that appeals. Create added value.
In short, dropshipping offers a lot of opportunities to make a profit. However, prepare well and calculate variable and fixed costs. This way you keep an overview and you know for what price your products can be sold.
Do you have questions, comments or suggestions? We are happy to help you. Mail us at
support@gogetters.nl and you will receive a response within 24 hours.