Dropshipping Branding is very helpful when it comes to dropshipping

The dropshipping hype: is this the revolution in branding?

Dropshipping is still a hot topic for online retailers who want to make a lot of sales with the least possible effort. Because at its core, this e-commerce business is about selling products that the retailer has never touched or has in stock. They are sent direct from Asian platforms such as Aliexpress. We take a look at the dropshipping scene and show how branding works without your own products.

You may also come across brands and products on Facebook and Instagram that you have never heard of before. When the fidget spinner hype reached its peak in mid-2017, many users' Facebook news feeds were full of ads for the toy. Usually one click led to a typical online shop like this one, where hundreds of fidget spinners are available at low prices.

A typical dropshipping shop

However, there are no retailers behind such shops who manufacture the toys and send them from their warehouse, but rather resourceful marketers who set up a shop with the e-commerce platform Shopify and pass the orders directly to China shops such as Aliexpress. These then send the goods to the customer. The dealer who originally accepted the order never sees the goods.

React to trends without risk

“With dropshipping, the risk is minimized because you can start with a comparatively low budget and - unlike in classic e-commerce - you don't have to have a minimum number of orders. At the same time, the retailer can react more quickly to new trends, ”says a dropshipper, who wants to remain anonymous, to OMR. For a long time he himself operated over 100 dropshipping shops and has now outsourced them to "virtual assistants", i.e. freelancers all over the world. In classic dropshipping, there are hardly any costs due to the infrastructure and of course none due to logistics. In the end, costs arise primarily for marketing.

“The typical procedure for dropshipping: recognize the trend, set up a shop, attract the target group to the site with a cheap offer on platforms like Facebook and then ideally sell other products,” says the dropshipper. This is how the number of 100 shops came about. Anyone who wants to react to every product trend (keyword: fidget spinner) also has to constantly open new shops - but not a big problem with a dropshipping strategy. "When it comes to dropshipping, cheap products from Asia are so popular because high-priced goods can get stuck in customs and cancellations mean more effort." In addition to toys, cell phone cases and T-shirts are typical dropshipping items.

“Dropshipping Gurus” on Youtube and Facebook

Because it is relatively easy to create professional-looking shops with Shopify, a certain soldier of fortune economy has emerged around the topic, which is also being pushed by the "passive income online" trend. Dropshipping gurus try to build reach with their recommendations on Youtube or Facebook. A typical example is the young Irishman Rory Ganon, who reported on the construction of his shop for a week in August 2017 and at least collected around 100,000 views for his videos. Kris Stelljes from Germany is currently trying his hand at dropshipping on YouTube.

The promises are great. Ganon bets he can set up a shop within a week and earn $ 1,000. Stelljes states in his video that he earns over 2,000 euros a day with dropshipping. And the guys are very open about their strategy for success. In his videos, Ganon shows in detail how he creates a shop with Shopify, selects the products based on suitable target groups, connects his shop with Aliexpress, places Facebook ads and then generates sales. As the Atlantic writes in an article on Ganon: “He is reversing the whole idea of ​​trade. What he sells is secondary to how he sells. "

The self-titled dropshipping millionaires are of course also trying to make money with their tips. Kris Stelljes links to Shopify under his video and collects an affiliate commission. Under the interview with a dropshipper, a click on the link leads to a free “drop shipping spicker” from the channel operator Eric Promm, for which users have to leave their email address - in order to receive payment offers from Promm later via this channel .

Shopify apps make it easy

“Most dropshippers use Shopify for their online shops. The tool is cheap, easy to use and there are countless apps that are extremely helpful with dropshipping, ”says the dropshipper. The decisive tool - and that's why it is mentioned in all dropshipping videos - is Oberlo. The creators advertise on the website that Oberlo users have sold 85 million products with the tool since the company was founded. The app is integrated into the online shop created with Shopify and allows retailers to automatically copy product information including a picture from China sites such as Aliexpress to their own site. Then the dropshipper only needs to set price rules (always add 80 percent to the changing Aliexpress price) and the "inventory" is ready.

The app even forwards orders and customer information directly to Aliexpress, where delivery is then triggered. The app is free to start with, only those who have more than 50 orders per month have to pay 30 US dollars per month. Anyone with over 500 orders pays just under $ 80. Oberlo was created exclusively for dropshipping, and it is not without reason that the number of dropshipping shops has exploded since the tool was introduced in 2015.

Oberlo is the most important but not the only tool that dropshippers use. The dropshipper integrated the Shopify app “Product Reviews” to manage and boost reviews. There is also an “order printer” for invoice management and a tool to create artificial shortages - with overlays like: “Only 3 of this product are available”.

Platform marketing is crucial

Once the shop has been set up and automated, marketing decides on success - and becomes the only task. Dropshipping could never have developed like this without platform marketing. “The number 1 marketing channel is by far Facebook. But influencers can also be helpful, ”says the dropshipper. With its target group settings in Ads Manager, Facebook is perfect for the dropshipping business. Placing ads in the newsfeed can work without your own reach - but it will be more precise and cheaper for dropshippers with so-called lookalike audiences. These are Facebook users who behave in a similar way to users who have already been reached.

The dropshipper won such lookalikes through specially created fan pages. He built his Facebook pages by grabbing viral videos, pushing them into the news feeds of potential fans with a budget and then collecting likes. For a few hundred euros, 100,000 followers were in there. He was then able to address this follower organically with products and at the same time form lookalike audiences and thus reach other, similarly behaving Facebook users cheaply with ads in the news feed.

How do these ads get the customer's attention? In some cases, the cheapest prices are promised or products are offered free of charge. The dropshipper sold MP3 players for zero euros - and often only made money with the high shipping costs of ten euros. In some cases, however, users would have "bought" four players directly and then paid shipping costs for each - even though they only paid shipping once themselves. The main purpose of offering free products is to upsell. When customers land in his shops via the unbeatable offer, they would usually buy more products.

Influencer for dropshipping products

According to the dropshipper, influencer marketing on Instagram can also work - better than Instagram ads from his experience. However, this is only worthwhile with higher-priced products such as during the "hoverboard" hype. It could be worthwhile for shop operators to reward niche influencers with affiliate commissions, but a fixed payment like that of prominent influencers is unrealistic. The Irish dropshipper Rory Ganon, by the way, opts for a shop that sells lion products during his one-week experiment. There are influencers in this area that he can use.

In the meantime, however, Instagram ads for dropshipping shops are also appearing more and more frequently. Of course, the product must match the target group on the platform. Therefore, during our research, we stumbled upon fashion shops that sell T-shirts, shirts, coats or socks - mostly in the style of higher-priced brands but fully synthetic.

Revolution in brand building

Instagram ad from Louie Supply

A good example of how dropshippers try to build brands with the cheapest Chinese goods is “Louie Supply”. The "company" advertises its shirts via Instagram and free shipping worldwide from 100 US dollars. If you click on the ad, you land on the Shopify shop, which looks like stores of so many hip brands - including models on train tracks. In the About Us section, the makers claim to be from Vancouver and are looking for little-known but extremely cool brands for their customers all over the world. Like so many dropshippers, they tell a story about their brand - in the end, they send orders to China and let Aliexpress take care of everything.

From the outside, consumers can hardly tell whether such brands are local labels or cheap China intermediaries. Dropshipping brands are called Louie Supply, West Louis, Romwe or Hype Clothing. Many of these fashion dropshippers use private labels, so they also have their brand sewn into the interchangeable shirts or coats in China. This creates a small brand building revolution in the business. Instead of investing a lot of money in branding in order to establish themselves as a young brand, dropshippers rely on inexpensive products in combination with online shops that appear professional to the outside world.

The Louie Supply website

Is the hype over?

The dropshipper no longer cares very much about his shops: “The dropshipping highlight was certainly the time before the US presidential election. Trump products have exploded and we have made real sales in the US - with flags, t-shirts and mugs. ”As already mentioned, he lets freelancers all over the world manage his shops. There are hundreds of digital workers on platforms like UpWork who are ready to take on the job for five dollars an hour. “Dropshipping was hot a year ago. In the meantime, the battle between countless shops is simply too great and it is becoming more and more difficult to find products that are not already being sold elsewhere, ”he says.

Although he describes himself as a dropshipping millionaire, he doesn't believe that there is really a lot of money to be made in the business - especially not without great commitment: “Many underestimate the costs that dropshipping incurs. Anyone who really gets involved as a one-man company can make a profit of perhaps 5,000 to 10,000 euros per month, but more likely 2,000 euros net per month. "