Answers
Jan 09, 2019 - 05:10 PM
If you are just starting out, drop shipping is the way to go to determine if the business is viable. In fact, you could even start by being an affiliate and sending your clicks to current merchants who sell similar products.
Once you have proved that the business has legs you will want to stock the product yourself and own the while shipping and delivery experience. Nowadays it is very hard to build a successful online business without 'touching' the customers yourself. By doing the delivery yourself, you could differentiate yourself and shine in the following ways:
- Use attractive packaging with your brand on it. Drop shippers don't care about this!
- Find ways to inject personality e.g. including personalized messages in the boxes
IMovr (they sell treadmill desks) is a very successful online retailer that followed the path I described.
1. First the started by writing reviews of standing desks and tread mill desks making money through affiliate sales.
2. Once they had decent volume, they negotiated better deals (higher revenue share) with the sites they were doing affiliate sales for
3. Finally they started manufacturing their own treadmill desks (they went even further than merely buying and stocking the product themselves).
Along the way, they also innovated and now have some patented designs that only they carry! This means they offer an exclusive product and command higher prices.
As you can see in the diagram below, their organic traffic has increased significantly over the last year and their revenue is in the mid 7 figures.
Jan 11, 2019 - 11:35 PM
Early in your brand’s journey, your focus should be on keeping startup costs low. This puts you at a lower financial risk, and frees up your funds for other startup necessities, like marketing. Since dropshipping keeps costs lower, I’d definitely recommend starting there.
You mention that this is a sideline business, which also suggests an incentive to keep costs low. Keep it simple until you see what your growth could look like. Dropshipping does mean your per-item profits will be smaller. But since this is a sideline project, that should be fine for the time being.
In addition to the cost, holding stock also requires space for your stock, and the time and effort for packing and shipping things yourself. This takes time and energy away from that crucial early marketing push. Unless you’re content to just sell to the handful of people who might stumble upon your business without marketing, you should invest there first.
Use your extra funds and time to do things like build a social media following, or invest in paid search so you can compete with bigger beauty brands. While the beauty industry is having a moment right now, you’ll also need to grab consumers’ attention away from the flood of products on the market.
After you have an established customer base, you can use your profits to transition into holding stock. This should be your ultimate goal, since you can control the customer experience every step of the way when you hold and ship your own inventory. But this early in the game, you have more important things to focus on.
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