subject: Increase Profits from Selling Online with Dropshipping [print this page] Selling online can be a lucrative business if you know how to manage it properly. The formula for increasing your profit from selling online is simple: increase your revenues while cutting down on your cost. The difference between these two numbers is your profit.
First, let's tackle cutting down on your costs. If you already have an existing website which allows you to sell online, then list down everything that you spend for. Managing cost would be much easier for beginner merchants, those who don't have anything in place yet as you will be able to discipline yourself in the art of business spending.
Your cost drivers could be anything from internet access fees to rental of a warehouse to keep your inventory. There are a lot of other things in between that you pay for. This can include any employees you have that help you manage your online store, your hosting, your branding efforts (ie creation of a logo, web design), your hosting cost, the money you pay for a person to update your site or to maintain it. Shipping cost, currency exchange losses. It would be best if you write down every single thing that you pay for, whether big or small, that you need to be able to sell online.
If you want to learn more about the concepts of overhead cost calculation, you may want to do research on terms like capital expenditure and operating expenditure. Just a quick run-through of what these terms mean, capital expenditure or Capex is the cost of long-term improvement such as purchase of machinery, computers and other fixed assets. Usually these last more than the fiscal year where the asset was bought. Meanwhile, operational or operating expenditure (also known as OPEX) is the on-going or day-to-day cost of running the business. This can include manpower expenses, rent, cost of electricity and more.
In retail, you will often come across these two costs drivers. As you define your process of selling online better, you will see which among these costs can be retained or maximized. For instance, if you are more used to the traditional method of sourcing products via purchasing in bulk and storing in a warehouse, then it may be time to consider options like dropshipping.
Dropshipping allows a merchant to display inventory on their virtual storefront and to sell online even without having the actual item on-hand. Once an order is made from the store, the retailer contacts the dropship supplier to order the product and have it forwarded to the customer directly. Do you see where you're saving here? There will be no need to ship the product to you and to rent a warehouse and people to manage it. There is less of a business risk given that the products are already paid for before you order from the supplier, taking out the risk of spoilage or sitting anything too long on the shelves. Dropshipping also removes the need for you to take care of handling the product, packaging it and shipping it out to your customers.
Now, let's look at the flip side of the coin. You need to increase your revenues and profits. To do so, you will need to work on having a bigger profit margin. Again, dropshipping could be the solution. Dropship companies often price their items in wholesale. So that widens the gap between your purchase price and your selling price - meaning, more profits for you.
Additionally, dropship suppliers can offer you thousands of products to choose from. You will never have to deal with old stock or people looking for the latest item. Dropship suppliers can get you what you need with just a few mouse clicks.
Consider dropshipping to improve your online store's profitability and make selling online truly a worthwhile activity for you.
Happy selling!
Increase Profits from Selling Online with Dropshipping
