So, You're Getting Sales But Aren't Profitable? A Guide To Making More Money, For Less.
Finding a winning product in dropshipping can be a great feeling, but it's really only the first step in building a successful business. Once you've identified a product that's selling well & is doing so consistently you may find yourself asking, what's next? Here are a few things you may want to consider for scaling your product or brand as efficiently & effectively as possible:
Make sure throughout the lifecycle of your product or brand, you’re always proactive when it comes to achieving & maintaining consistent profit margins. Try negotiating a better price with suppliers; by purchasing larger quantities of products, you may be able to secure bulk discounts or even better shipping rates. If you’re dropshipping you may also want to try an RFQ (request for quotation) on Alibaba which can bring the right manufacturers or suppliers for particular products or custom requirements directly to you, often also boasting competitive pricing or shipping.
Another common strategy to increase your profit margins is to experiment with different pricing strategies/offers to test & find the sweet spot for your audience that can both maximize profit margins without sacrificing sales. Consider implementing dynamic pricing, offering bundles, discounts & up-sells, or analyzing your data to determine optimal pricing to find your audiences best converting price range / offer.
An often overlooked metric in e-commerce but an absolutely vital one when talking in terms of increasing your profitability is the focus on customer retention. It's generally far more cost-effective to retain existing customers as opposed to acquiring new ones. This can be achieved through great customer service, loyalty programs to encourage repeat business, offering discounts for reviews & the list can go on.
Something to look at when trying to scale but seem to be constantly ‘treading water’ at or around the break even mark, is your Average Order Value (AOV). Idea being, if you can get someone to spend more money on your site per transaction, the easier it will be to remain profitable. If you sell a product that would generally be purchased in multiples, this is a great chance to implement quantity breaks, bundles, collections or other incentives for the customer to purchase more at one time, therefore increasing your AOV. Another great example, If you sell more than one product that is closely related, you can offer an additional up-sell product at the checkout, incentivizing the customer to add this to their order to reach a cart total minimum that makes them “eligible for free shipping”. The customer will often believe they will get more value by adding this product & actually paying more, as instead of having to pay for shipping they now get a whole additional product & do not have to pay shipping. These are both great ways to incentivize a likely shopper to spend more money at one time.
Now more so than ever it’s fundamentally crucial & perhaps a brands BIGGEST ADVANTAGE to have a strong organic marketing strategy implemented to increase profit margins. A strong organic strategy means you can get your brand in front of potential customers at no extra cost to you. Before the new reign of social media (tiktok in particular), this used to be considered virtually impossible. Whilst it’s no easy feat, ViralEcomAdz Studio has actually been able to consistently leverage & grow e-commerce brands via our proven organic TikTok strategies. If you’re currently struggling with a potential winning product, check out some of our case studies on how we have helped brands go viral in just days after working with them & we even break down how we did it! Gain some information & gather some inspiration! Alternatively, you can book a call with us today to see if we can help you take some of the guesswork out & start growing your brand in the most cost effective way possible.