With internet moguls such as Amazon following the dropshipping business model for years now, it is no wonder there are so many people jumping at the shot to make a lucrative living off the same strategy.

In fact, it is estimated that 34% of Amazon’s products are actually sold through other merchants, with Amazon reaping the reward (to the tune of 15%) for playing middleman.

Amazon is one of the best dropshipping business models to date.

And, while most eCommerce business owners don’t stand a shot at becoming as successful as Amazon, there is still plenty of room to build a successful dropshipping business that rivals competitors trying to do the same thing – make a living off dropshipping.

However, it has been suggested that there are nearly 12-24 million online shops up and running at any given time. And, despite the rising trend amongst consumers looking to do all of their shopping online (51% to be exact), only 650,000 of these millions in eCommerce business owners generate more than $1,000 in revenue.

But how can that be you ask?

The truth is, with eCommerce content management platforms such as WooCommerce (WordPress), Magento Community Edition (Magento), VirtueMart (Joomla), and even Drupal Commerce (Drupal) making waves in the eCommerce world, it is easier than ever for the average website owner to build an online shop and start selling products and services.

Popular eCommerce platforms that are easily accessible to all website owners.

And all of this can happen without any prior experience, marketing knowledge, or established a presence as an online business.

While all of this does relate to online shops as a whole, and obviously not every eCommerce shop runs a dropshipping business, the truth remains – making a living off an online shop, regardless of what type, is challenging.

That’s why today we are going to take a closer look at how you can optimize your budding dropshipping business so that you can capitalize on what you have to offer, drive traffic to your business, and ultimately boost your annual revenue far past the $1,000 mark.

What is Dropshipping and What is the Appeal?

Before we jump right into optimizing your dropshipping business, let’s take a look at what exactly it means to dropship, for those that haven’t quite taken the steps to build their business yet.

Dropshipping is a product order fulfillment process by which a customer purchases a product from a business owner, and the product is delivered to that customer, not by that business owner, but by the supplier themselves.

In short, the website owner running a dropshipping business has no need to hold any inventory, has no need for a warehouse full of products, and has no need to deal with the overhead expenses of manufacturing and delivering products.

To make things super simple, let’s follow how the dropshipping process plays out when a customer comes to your website:

  • A customer comes to your website interested in a product you sell
  • The customer purchases the item available on your website and pays you
  • You then pass that order information to the dropshipper, or product supplier, who has the product the customer purchased from your store on hand in a warehouse
  • You pay the dropshipper for the product at a wholesale price
  • The dropshipper then packages and delivers the product purchased directly to the customer

In the end, you profit by paying wholesale prices for products that your customers pay retail prices for. And, the supplier profits because you continue to send business their way via your customers.

How to Optimize Your Dropshipping Business

Okay, by now you either have a dropshipping business underway or are in the process of building your business and are taking the proactive approach to optimizing your business before it even gets off the ground.

Either way, kudos to you. By doing this, you are likely to exceed the $1,000 cap so many eCommerce business owners run into despite their best efforts.

1. Optimize Your Shipping Prices

As a dropshipping business, how are you supposed to factor in shipping costs?

After all, any eCommerce business owner needs to provide a seamless user experience for every customer that comes to their shop. And despite not being the direct supplier, you are still responsible for convincing customers to buy from you – and that includes paying for shipping.

If you have ever purchased anything on Amazon that was not in the Amazon warehouse, surely you noticed that the shipping costs far surpassed what you would have normally paid if the product you were purchasing came from Amazon’s warehouse instead.

And if this has ever happened to you (which I am sure it has), I am sure it has frustrated you at least a little bit.

Fortunately, for big-name players like Amazon, they are able to charge whatever is necessary when it comes to their dropshipped products because they have such a large customer base.

However, for those just starting out, the last thing you want to do is gauge your customers when it comes to shipping and handling. But the truth is, you have to pay up when it comes to shipping because that is not something the supplier is going to cover for you.

Here are two different pricing methods to consider when it comes to your dropshipping business that will prevent you from discouraging customers from buying from you, while still generating positive cash flow from any purchases made in your shop.

Free Shipping

As hard as it may be to absorb the loss when it comes to offering free shipping to all of your customers, sometimes this is what needs to be done in order to optimize your dropshipping business.

Even high-end stores like Nordstrom offer free shipping all the time, with no minimum purchase requirements.

Customers often expect free shipping these days; especially with huge online retailers so freely offering it with every purchase made. However, the term “free shipping” is a misnomer. In fact, online business owners offering free shipping often have to build the actual cost of shipping and handling into the price of the product so they don’t end up in the red.

If you want to include free shipping to customers making purchases from you, carefully research what your competitors are doing, offer competitive pricing when it comes to your products, and make sure to build the cost of shipping into those prices without the customer feeling like they are overpaying.

Flat Rate Shipping

Flat rate shipping is a great way to avoid making customers feel like they are paying way too much for shipping and handling, while still maintaining a positive cash flow.

Take your cue from retailers like J.Crew and offer flat rate shipping (with a mix of free shipping on some orders!)

The best way to calculate your flat rate shipping price is to average the cost you are being charged by the supplier for shipping and handling and make that the flat rate. Sure, sometimes you will make more, and sometimes you will make less. However, the idea here is that you will break even at the end of the day by charging the same shipping rate for all of your products, no matter what.

2. Focus on Social Proof

When it comes to operating an online business of any kind, it is crucial you work to establish trust with your customers so they feel comfortable buying from you. More importantly, you must forge solid relationships with existing customers so that they continue to purchase from you time and again.

After all, it is estimated that it costs 5 times as much to gain a brand new customer than it does to retain an existing one. As far as optimizing your dropshipping business goes, this fact alone should tell you where your priorities should lie.

Social proof, especially by way of product reviews, is one of the best ways to optimize your dropshipping business. In fact, 70% of global consumers trust online reviews when it comes to their purchasing decisions.

Make the Most of the Product Reviews

Adagio Teas has reviews for every product they sell, as well as a star rating and upvote system.

Take a look at what else allowing product reviews on your website can do for you:

  • Instill confidence in customers that are unsure about a purchase decision
  • Increase your business’ presence since feedback and reviews can pop up on major search engine results
  • Social media exposure of reviews left by customers have the potential to be shared, thus exposing your products and brand
  • Insight can be gained from reviews, both the good and the bad, so you can improve your business by providing more of what customers like, and less of what they don’t

If you decide to allow product reviews on your website (and you should) it is essential you make the experience of leaving one on your site is easy to do. Do not require customers to provide too much personal information and consider offering an incentive as a bonus for leaving a review to build up your review sections.

In addition, Adagio Teas offers an incentive for leaving product reviews.

In addition, when reviews are left on your website, moderate them regularly to keep things moving. After all, customers want their review to show immediately if possible. More so, reach out to customers that leave poor reviews and capitalize on the chance to make things right and hopefully retain a customer in the end.

Lastly, try not to let too many poor reviews bring your whole business down. People naturally like to complain. That’s part of the process when you allow reviews on your website. Make use of what is important and let the rest go.

3. Organize Your Dropshipping Products

If you are running a dropshipping business, chances are you offer a wide assortment of products, just like Amazon. However, poor management of those products can wreak havoc on your user experience and will affect your bottom line.

If customers cannot navigate your website, or fail to find what they are looking for, they will bounce and buy from your competitor.

In addition to having an extensive search function and plenty of filter options, Toys“R”Us gives customers a unique way to narrow down purchase decisions, as seen with this Lego gift set process.

In order to optimize the navigation of your dropshipping website, consider the following:

  • Know what your customers are buying regularly and make them readily accessible
  • Offer “Related Items” at the bottom of the page so customers are enticed to explore your online shop further
  • Show what other customers ultimately purchased so if a customer finds something they like better, they can easily click on said product and finalize their transaction
  • Enable an advanced sort and filter feature so customers can pinpoint products based on things like price, brand, color, ratings, etc.
  • Invest some time into the complex, yet effective method, of merchandising

Target offers customers a more traditional way of filtering through their available products.

In the end, beyond that of basic web design best practices, it is important you take a closer look at how you are maximizing the navigation process your customers follow while exploring your website.

4. Take Advantage of Social Media

Just like any eCommerce shop trying to generate lots of revenue, you too should take advantage of the power social media can have on your dropshipping business.

Take Facebook for example. With over 2 billion active users as of this year, think about how many people you have the potential to reach by advertising just on Facebook alone. Remember, your target audience likely frequents other highly populated social media networks such as Twitter, Pinterest, and even Instagram.

Utilize the power of Facebook Ads like Pura Vida Bracelets does.

Using social media, you can pinpoint your target audience and advertise directly to them. You can offer products to potential customers right in their feeds and encourage them to check your website out and possibly make a purchase.

If you are going to use social media to branch out and expose your dropshipping business to a wider audience, make sure you implement the following strategies:

  • Video Marketing. Invest in video marketing because people love to consume video content. In fact, explainer videos, product demos, how-tos, and testimonials are the best types of video content for any online business. Make sure your videos are less than 2 minutes long so you don’t lose your customer’s interest, add video content to any email marketing campaigns you run, and remember that 46% of social media viewers make a purchase as a direct result of watching a branded video.
  • Utilize Your Email List. Many social media networks, such as Facebook, will let you upload your email list (that you have been diligently building) and create ads targeted at those same people via their social media. Make use of the hard work you put into your lead generation efforts on your website and apply them to your social media networks as for an additional marketing boost.

Altogether, not utilizing the power of social media is one of the biggest mistakes you can make as an up and coming dropshipping business.

5. Focus on SEO

As a dropshipping storeowner, it is critical that you become well versed in the ways of SEO best practices. In fact, SEO for dropshippers is unlike regular eCommerce shops, making it more difficult to rank high in search engine results.

DSW nabs the top two spots in Google search results related to kids shoes. Notice the images that rank well too – Foot Locker, Robert Wayne, and Zappos.

The reason dropshipping SEO is so different is that you are not selling unique products that your company has developed and marketed. In fact, it is highly unlikely that any of the products you sell are exclusive to your own business (however, it is not unheard of).

Instead, you are offering products from a variety of suppliers who are likely working with other dropshipping businesses as well. This means everyone is vying for the exact same ranking spots in search results, with the exact same products.

The key to this issue is to find a way to stand out.

Here are some of the things you should focus on when it comes to your dropshipping business’ SEO efforts:

  • Never copy and paste product descriptions from other eCommerce businesses or manufacturers
  • Aim for a 2% keyword density and write for humans, not bots
  • Always use unique image alt tags and meta tags to boost being found and indexed well
  • Create a sitemap of your entire website and submit it to the popular search engines
  • Track your SEO efforts using Google Analytics or some other similar metrics tool
  • Again, add product reviews as a way to differentiate your content from other sites selling similar products
  • Use unique images that show your products in a different light if possible
  • Interlink your product pages to your homepage when appropriate to boost proper indexing
  • Add a number of landing pages to help with your site’s visibility amongst web crawlers, search engines, and site visitors
  • Create a separate coupon page if applicable to help with interlinking, search indexing, and user navigation

Aside from all of the normal SEO efforts you should be putting into your dropshipping business, there are definitely some dropshipping-specific SEO tactics that you should take advantage of in order to optimize your site’s ability to be found by prospective customers.

6. Start a Blog

One of the most cost effective ways to optimize your dropshipping business is to start a blog to complement the products you sell on your website. In fact, blogs are the 5th most trustworthy source of information amongst people looking online for information about anything, including the products you sell.

  • Millions of people read billions of web pages every month
  • Marketing experts believe that blogs are a great way to garner new customers
  • Quality content, consistent publishing, good web design, and a strong presence on social media all influence a person’s choice to read a blog regularly
  • Blogs significantly impact your SEO efforts and search engine rankings

Take for instance Marcus Sheridan of River Pools and Spas. His online business’ first blog post was so successful that it now ranks as the number on an article in Google search results when the term fiberglass pool cost is searched.

Proof that even the smallest of businesses can make waves with stiff competition by creating killer content that resonates with customers.

In the end, blogs are a great way to boost search engine rankings, drive organic traffic to your website, build an email list, and provide added value to those visiting your website. Plus, they offer yet another opportunity for you to encourage site visitors to make a purchase.

Final Thoughts

Optimizing your dropshipping business can be an overwhelming ordeal if you are not sure where to start. And, with it being so easy to start a dropshipping business these days, the competition is often watered down with a lot of inefficient online stores that your target audience must wade through to get to yours.

By taking a proactive approach to optimizing your business, you will effectively rise above those that simply cannot keep up the likes of you. In fact, if you put into practice the above-mentioned tips, you will find yourself with a successful dropshipping business in no time; one that exceeds the $1,000 roadblock so many global eCommerce stores find themselves facing year in and year out.