The idea for this review of drop shipping and affiliate marketing as a business model to boost sales, post Covid-19, came to me the other day, when writing up a new about me page for a clients website.
Without wanting to understate it. 2020 has so far been a tumultuous year for business owners and employees. Many business owners are looking for a new path to get cash flow happening.
As well as researching a few sites, relevant to his tool making business.
At the moment, the clearest path appears to be selling online. LinkedIn is one of many business sites pushing digital selling.
Not to mention the ads on my FaceBook page for work at home agents.
Is this the End of Retail ?
Large and small retailers have been hammered by this shutdown.
My colleague, business analyst, Sirnivasan Mahanti, is of the opinion that, if 50% of the smaller business’s return it will be a miracle.
Over time, he says much will depend on the how the shopping centers restructure their business’s to keep and attract new tenants.
People are going to be less likely to become locked into expensive rents when they are only getting a 3%, or less return on their investment.
Many will ride into the sunset he say’s, others will transition to online only.
Brick and Mortar business’s (depending on their structure ), will try a combination of online, and walk ins.
Already we are seeing stock normally on a shop shelf, being sold off on E-Bay.
Baby gear, tradesmans tools, home wares, custom out door furniture.
So what you might ask, they have been on E-Bay for ages.
Not quite.. They used to be. Then E-Bay was swamped with Chinese wholesalers undercutting everyone and often delivering substandard products.
Now it is more country centric. With many small manufacturers products, showing they are willing to compete against cheaper Chinese products.
A Massive Mindset Shift !
While doing the new “About Us”, page for my brother’s business. I went and had a look at some of his retailers. To see the marketing methods they are employing to drive sales.
These are Nation wide brick and mortar automotive parts and tools suppliers.
One of the business’s is drop shipping… I went and had a look on E-Bay. ( drop shippers paradise for some niches).
I saw this product. I have done an evaluation for this Here.
A drop shipper accepted by the retailer is promoting some of the retailer’s products on E-Bay. (some good sales numbers too).
Then I had a look at another of his retailers.
One other business offers 4% commission with a 30 day cookie to people wanting to become Affiliate Marketers of their products
Not bad, compare that with Amazon and its 1.5% or less, and a one day cookie.
Plus they have a website that doesn’t want to let you go until you buy something, unlike Amazon.
Selling Your Product Online.
OF the 6 nationwide retailers my brother supplies, only 2 had upped the ante to become more aggressive and exploit the online alternatives.
This is not to say the others were not investigating the idea.
The two established ways if your serious about selling your products online are Affiliate Marketing and Drop shipping.
If your not doing it your missing out. Big Time!
There is a cost to set up, but it is not prohibitive.
A quick comparison between Affiliate Marketing and Drop Shipping can be found here.
Affiliate Marketing or Drop Shipping ?
Which ever one you go with, there are companies that want to help you. Lots of them.
The goals of the advertising company will align along the need (after some horse trading ), manufacturing companies have for an advertising and marketing partner.
The reach and scale of the agency… The fit with your production runs and how it fits with your cost structure.
Premium digital media companies test new audiences and drive performance with multichannel products, consumer insights, and advanced ad technology.
Reputable affiliate management companies have a set of conditions you must fulfill to be accepted into their fold.
- Does your Yearly turnover exceed $2,000,000.
- Can you pay a deposit ? On top of a management fee, to be used by the marketing company to pay affiliates.
- Do you have discounted offers.
- Does your website have pop ups.
- What creatives are you able to give affiliates. (Banners, Text Ads and the like).
- What Commission will you be offering Affiliates?
- What time will you give a cookie until it expires. (explanation below)
The management companies then assess everything, perhaps offer other assistance, or give you a phone call.
Have someone assess your site and its SEO optimization before accepting you into the fold.
After the initial set up and once you have been accepted, it is up to you as to whether you review affiliates who apply, or if they are to be automatically approved. (once their details have been supplied to the networks affiliate management).
Every now and then you may want to run sales ” Black Friday Specials” and the like. For these you will need to work with the management company.
Give them some ideas to create coding for whatever advertising you are intending to use. ie. Banners or Text.
What is an Internet Cookie?
You have probably seen those pop ups at the bottom of your screen when you go to a some random website.
They will have a little box or a drop down box that says, ” This website stores cookies on your computer. These cookies are used to collect information about how you interact with our website and allow us to remember you”.
What it means is your IP address (computer), is being recorded. In the case of an affiliate marketer who has had some one come to your site from his site, there will be a record of where the visitor has come from.
Techies say “fires a cookie”. Which means who ever was visiting the affiliates website has clicked a link that leads to your website.
Anyway the IP address of the affiliate is linked to the IP address of the visitor. The question for you is…
If the visitor comes back in a week or a month and buys something, does the affiliate still get a commission ?
This is of interest to Affiliates, as you can imagine.
7 day, 30 day and 90 day cookies are common. Companies like E-Bay and Amazon have a 24 hour cookie.
Reputable Affiliate Marketing Companies.
- Rakuten . More details here
- Awin. https://www.awin.com/gb
- CJ Junction https://www.cj.com/advertiser#global-opportunities
- Share a Sale. (which is part of Awin). https://www.shareasale.com/
- Pepperjam. https://www.pepperjam.com/
- Aragon Advertising. If you are a financial business. https://aragon-advertising.com/
- More Niche. This is Strictly Health, Nutrition and Fitness. https://moreniche.com/
- MY Lead. This one mostly covers Europe, but also has some programs in Oceania and the Americas. Check it out here.
The above list is by no means exhaustive, there are many more business affiliate programs online.
The choice you need to make, is whether to align your business with your niche.
This can be hard as not every niche out there is covered…
Or join a network with a broad merchant base and let content marketers, and affiliates choose you from the category (Niche), that aligns with them.
If you go with this model then I would suggest to review the publishers website to make sure it aligns with your products.
Market Research. The Future Potential of Dropshipping.
Drop Shipping research covers two areas.
- Dropshipping Software
- Physical products
For dropshipping software your research should have an overview regarding the competitive landscape, raw materials and downstream buyers.
Plus any research should now broadly analyze the impact of COVID-19 pandemic on the overall market growth.
The potential (from what I have seen), is great, but don’t take my word for it check out the reports above yourself.
The Best Sources for Drop Shipping Your Product.
I have at the link below, a list of Drop Shipping Platforms to give you an alternative to setting up your own drop shipping section within your company.
List of Drop Shipping Platforms You will want to bookmark this page once it opens.
Essentially this list is to give you a lead in to getting your products listed throughout the world.
The top 4 are SaleHoo, Worldwide Brands, Sproket and Go Ten.
For Researching on how your Physical Product is likely to Perform.
Companies like 3W Market Research ( listed above), provide in depth reports on anything business.
Do you want to know the outlook for Forged Railway Wheels? They can tell you.
The outlook for Snowmaking machines, Auto Accessories, Orthopedic Care Products, Jewelry… ? The list is near endless.
The outlook. Year on Year growth prospects, regional market scope, product-market various applications, market size according to a specific product.
Dropshipping sales and revenue by region, manufacturing cost analysis, industrial chain, market affecting factors.
They could be the most valuable reports you will ever subscribe to.
If you are able to reach an agreement with a company such as Sprocket or GoTen this will be the most efficient way to get your product out to the world.
Companies like GoTen, World Wide Brands and SaleHoo rely on market research to keep abreast of trending products and future developments.
Generally speaking, companies like Oblero and Sprocket lean more to the higher volume consumer products, and hand made crafts. Themed Throw Pillow covers for example.
You will be vetted.
It is the reason Salehoo came into being. Once done however…
It leaves you to concentrate on making your products.
Every business is different. but the changes should not be massive to your marketing and distribution section.
If you want to set up your own little drop shipping section, it is not hard, you need a little space. A good work bench and a computer station.
The challenge will be finding drop shippers. If you do trade shows, you should have no problem, adding a link to your website helps. Goggle searches could help too.
Some basic Rules for Setting up Your own Dropship Operation.
Undercutting the Sellers.
Don’t do it.
This is a disgraceful practice that will only backfire.
I have seen it on E-Bay, A wholesaler advertising a product at less than the wholesale price others would have to pay.
That guy would not have made enough money to cover the postage.
If you are going to include drop shipping in your business mix, have a definite retail price setting for your products.
The people who sign up to sell your products deserve a fair go. I remember when the rip offs were rife coming out of China years ago. There is a review here.
Time to leave that in the past…
Back to a definite price point…
Here are a couple of ideas on how to achieve this.
- Have the price point for the drop shipper as a percentage of of your retail price.
- Depending on your costs. An example could be. 65% for you 35% for the drop shipper. This is the simplest. Everyone knows the boundaries.
- Have a recommended retail price, and leave it to the drop shippers to set their own retail price. This works well.
- If you are going to be selling, then stick to your retail price, the drop shippers may sell at less than you, but you still get your 65 – 70% or what ever.
- This site will give you a great overview of how a good drop ship company works.
If this is a change from your normal day to day business operations, there will need to be some additional area set aside for your Drop Ship operation.
- Computer Station,
- Packaging bench
- Visible phone numbers for couriers
- Postal declarations ( depending on your country.
- Set up an account(s) with your postal service.
- Ability to receive payments efficently… PayPal, Stripe, Mastercard, Visa, American Express, etc. Bank Deposit should be a last resort.
For accounting, have the drop shippers set up with a reference. So his sales are recorded.
Payment… The Best Part.
The great thing about Drop shipping it works 24/7. While your asleep somewhere on the other side of the world your products will be having eyeballs on them.
Nothing like starting the day with positive cash flow !