In 2018, the dropshipping market earned over $102.2 billion.

This astounding figure will continue to experience rapid growth as more entrepreneurs decide to branch out into a dropshipping model to test out a new product. Everyone hopes to obtain the kind of success Amazon holds. Amazon itself now controls over 49% of the e-commerce market.

The growth of dropshipping matches how popular e-commerce is. The U.S. Census Bureau of the Department of Commerce released a report recently that detailed how much e-commerce earned for the entire year of 2019. E-Commerce exceeded $601 billion in revenue. That's a whopping 14.9% increase over the year prior.

It's all too clear that dropshipping and e-commerce are thriving. In a world plagued by coronavirus fears and countries shuttering brick-and-mortar stores, there's a good chance that earnings through dropshipping will skyrocket for 2020. More people than ever want to avoid leaving their homes and be able to shop from the comfort and safety of their bedrooms.

If you’re curious about dropshipping and thinking of giving it a try, keep reading. In this article, we’ll cover the basics of dropshipping and how to get started to test out a new product.

Dropshipping 101 for a new product

Before we can dive into how to get started with dropshipping, we must first answer what it is.

Dropshipping is a method of shipping a product. It involves a customer ordering a product. The retailer doesn't keep the product itself in stock, though.

Once a product is ordered, the retailer purchases the product from a third party like a wholesaler or manufacturer. The third party then ships the product directly to the customer. This is what’s known as “dropshipping products”.

Image Credits: Shopify.com

Now, here are some tips for how to get started with dropshipping to test a new product:

1. Find a supplier that's right for your business

The first step you must take if you want to become one of the dropshipping success stories is to find an excellent supplier. The success of your product will rely on the quality of the product offered by the supplier.

Many dropshipping businesses have failed because they did not choose wisely. If the supplier you go with provides products that are poor quality, or if they deliver weeks past the due date, *your* reputation is the one ruined. The credibility of your business will tank hard and fast.

Research suppliers and ask these questions:

  • How does the supplier handle returns?
  • What are the supplier's shipping times?
  • How much does it cost to ship with the supplier?
  • How often does the supplier update their inventory?

As long as you keep these questions in mind while you research, you should find a supplier that is both reliable and offers high-quality products.

2. Choose a new product with care

You want to test new product ideas to see how successful they'll be before you invest heavily and keep it in stock in your warehouse. That's where dropshipping comes in. There are several things you should keep in mind when it comes to selecting a new product.

One important factor to keep in mind is that you should try to stay within your current business niche. If you're a business that sells smartphones, then smartphone cases would be vertical to that niche and you could test them out as a new product to offer.

You need to also find out if the supplier does white-labeling. When you introduce a new product line, you want to sell those products as if they were your own. It won't help your brand if you're selling a product with someone else's label on the product.

3. Test the product idea

Once you have a product chosen and placed on your website, it's time to test it out.

The first method you can use to test the product idea is email marketing. This is one of the most effective and least expensive methods out there.

Set up a newsletter and send it off to your subscribers. Then see what the CTR is and how many sales it generates.

The other alternative to testing the idea is social media platforms like Facebook or Instagram. Both platforms require different approaches. Marketing campaigns are a whole other beast to talk about, so we'll just cover the basics in this article.

Often with Instagram advertising, you'll do an influencer post. An influencer is someone on Instagram with thousands of followers who sometimes do sponsored posts in exchange for payment.

After your influencer post has gone live, you'll want to keep track of certain data points. Factors to keep track of include:

  • how many comments the post garners
  • how many visits product page gets
  • how many visits convert into sales
  • how many people abandon the shopping cart

All of this information will help you in your decision-making process with the product. Something to be aware of is that sometimes an ad may not do well not because of the product, but because of the ad itself.

It's worth it to do at least three different ads on Instagram so you can better learn whether its the ad or the product that wasn't doing well.

With your second Instagram influencer post, change up the image and caption and other details. Do the same with your third ad. Influencer marketing can be costly, but also the results can make it well worth the investment.

Facebook is another option to try testing your product on.

The Page Post Engagement (PPE) ad is Facebook's most popular campaign because its entire design focuses on delivering new leads and purchases. PPE is also one of the cheaper options for running ads on Facebook.

To run this type of ad structure, you create an Engagement campaign. Then you'll want to create multiple ads so that you have a large enough pool to gather key performance indicators from.

4. Gather customer feedback

This is one of the most important steps and it shouldn't be overlooked.

Send a follow-up email to the customers who purchased the test product and ask for feedback. This will help inform you of any issues, like if the shipping took too long or if the quality of the product was lacking.

The feedback should help you decide whether your current dropship supplier is worth keeping or if you should find another. Or whether the product you were testing isn’t one worth pursuing.

5. Stock the product

If all went well and the product testing came out exemplary and the supplier is solid, then you can move to the next step of stocking the product for your business. You'll simply ask the supplier for a quote on a set amount of the product, pay, and then the items will be delivered to you.

Is dropshipping worth it?

There will always be someone on the internet saying dropshipping is dead, but the truth is you can still make a massive amount of money from dropshipping in 2020.

However, because you have no real control over the supply chain, it's important to find a good supplier. As a dropshipper, you're at the mercy of the supplier in terms of fulfillment speed, product quality, and return policies. If the supplier fails in any one of these categories, it’s your brand that suffers.

This is one of the biggest drawbacks of dropshipping. Customers won't care that your business isn't responsible for the shipping or the state of the product. The only fact the customer will be aware of is that they went to your website, saw your brand name, and gave you money for a product.

That's why it is so important to order a sample from the supplier before you make any decisions or set up an ad campaign. By ordering the product first yourself, you'll be able to see first-hand how long shipping takes, whether the quality of the product is good, and more.

If the supplier turns out to not be so dependable, then you know you need to find a new one. Also, if you want to learn more about dropshipping and how to do it well, there are services like a dropshipping course you can look into to further educate yourself.

The best thing you can do for your business is to not jump into dropshipping until you are certain you understand the business model from start to finish. There are many different strategies to employ with dropshipping and it's easy to lose money if you don't execute a smooth operation.

Try dropshipping today

Now is a great time to seize control of your business and test a new product via dropshipping. It’ll allow you to save on the overhead of stocking inventory and will let you explore different product options fast. Many businesses find their “winning product” by taking advantage of dropshipping.

If your business sells anything through Amazon, there are also other important factors to keep track of. There are a variety of problems that can occur that can damage your business, such as hijackers of listing issues.

Let Birdwise monitor your Amazon profile and alert you to any changes. Sign up today!