It is no secret that in order for a business to succeed, an efficient marketing and advertising campaign must be deployed. In this piece we explore why you need a dropship business marketing and advertising campaign and what it means to actually market and advertise your new online venture. We also examine how much of your capital should be deployed to effectively capture your target audience.
Dropshipping business marketing vs. Advertising
Advertising and promotion are an integral part of our social and economic systems. Whether you are a large multinational retailer launching a global campaign to capture market share or a ma and pa home business owner, running their online store to generate extra income for the family, marketing and advertising are essential to your business success.
As in the above sentence, marketing and advertising are mentioned together. Many will simply group the two terms together under one meaning, however while they are related, they are also in fact quite different and equally important.
The difference between Marketing and Advertising is that marketing is an activity that involves researching and the identification of potential business opportunities while advertising is broadcasting your findings in the most cost effective way possible to your target audience.
Dropshipping Store Marketing
Here are some activities that can be defined as marketing your dropship store:
- Identifying your target market – Who exactly will you be marketing to?
- Product selection
- Product media development
- Pricing – cost/effort analysis
Dropshipping Store Advertising
So now that you have got your marketing up to scratch and you have developed a solid campaign, it is time to broadcast and communicate that to your target audience.
- Deploy an advertising campaign on your chosen medium
- Monitor campaign effectiveness where possible
- Asses the campaign performance
- Evaluate costs effectiveness of your campaign
Identifying your target market | Dropship business marketing and advertising
When undertaking marketing activities, your first step should be identifying your drop-shipping stores target market. This basically can be summed up in one question, “Who are my customers?”
Identifying your target market is important as it gives you insights into your customer base, the people who will essentially fund your source of income.
By understanding who your customers are, you are able to better tailor advertising activities that produce optimal returns for your investment (ROI).
Target marketing is the process of identifying the needs of specific needs of segments, selecting one of these segments as a target and developing marketing programs aimed at those specific segments.
You will not grab the attention of a “millennial” and a “baby-boomer” customer with the one marketing campaign. The identification of your targeted audience allows you to craft campaigns that will appeal each of the segments you target.
This can also have a cost-saving benefit, as it allows you to accurately target with pin-point precision the customers that you want to attract to your drop shipping store, and at the same time reducing wastage of your marketing dollar on those that are not your potential customer. Essentially, you will not be marketing a Pokémon themed backpack to a “boomer” and a mobility scooter to a millennial.
When you engage in marketing and adverting activities for your new drop ship supplier reliant online store, you are effectively identifying a new business opportunity, evaluating its potential, and then taking action in deploying it.
Product Selection | Getting It Right
It is not uncommon in modern retailing for the act of actual product selection to be considered a “marketing activity” Which products should you sell in your drop shipping store?
While it seems like this statement is wrong because after all, shouldn’t marketing be about promoting a product you already have for sale?
If you really think about it, you have more likely begun your “Marketing Plan” way before you even upload your first product onto your e-commerce website. The process of decision making about your product line is in itself a marketing activity.
To decide which products you might like to be in the business of selling, you have had to consider who are the consumers that will be buying your product? How do they think? What are their overall demographics?
These are all questions that are important when deciding on what to sell. And yes, while you might have a store with hundreds of products, you might not specifically put this much thought into each one of them, but rather group them into product categories. You might even take the route of specializing in one product or group only. This is called Single Product Drop Shipping and is a topic of its own.
Some other factors which you will be considering when selecting your products for your store are profit margins, product accessibility, warranties, serviceability, presentation, supply logistics, competition, and quality and safety certifications.
All of this is something that will require a degree of thought and it’s actually quite an enjoyable process once you have access to a large pool of wholesalers and drop shippers.
Product Media Development | A Dropshippers Key To Higher Profit Margins
When we get into merchandising our products, a lot of focus is placed on how to best represent your product on-line in the digital era.
While most of the reputable drop-ship suppliers will supply product advertising media such as images, charts, product descriptions and even in some cases video, if you want to put your own marketing spin on things, you will need to develop this media on your own.
Many would ask, why would you bother doing this? The answer is simply to stand out from the crowd, which will, in turn, create a sense exclusiveness and therefore demand a higher profit margin.
Think about this for a second; A wholesaler/drop-shipper decides to bring in and offer for resale a gadget that will be a sure winner in terms of volume turnover. It’s a hip new gadget that the manufacturer knows will be popular.
They provide six high-quality product images, a good 500-word description and even a handy quick guide on how the product is superior to anything else out there on the market in its league.
This is great, if you have found a drop-shipper or a wholesaler that is able to provide these marketing/advertising materials, it becomes very easy to construct a professional-looking product listing, but there is a catch.
Chances are, that by the time you post that product to your Shopify store, eBay or anywhere else, there are already 100+ copies of the same product, images, guides etc floating around. Competition is fierce in on-line sales, unfortunately, this also means that the profit margins are quite slim.
If it’s easy to “grab” it’s easy to throw it out there for resale. While this is very convenient, it’s not the best way to get along with the very scrutinising search algorithms used by Google. This however, is a topic for another article.
Now let’s think about the other side of constructing a product listing using your own marketing and advertising media.
Let’s say you have just test bought one of these gadgets in question and decided that it is intact something you are interested in marketing for resale. You have checked out the item quality and found it o be acceptable enough to rest your seller’s reputation on it. You were impressed with the way the product was packaged by your drop shipper and how quickly the product has arrived to you.
You completely disregard all of the marketing materials that are available for your new item from the wholesaler/drop shipper and create some of your own.
You write up a whole new unique description, take high-quality images and maybe even apply some filters to make the images also look unique. Outfit your new product listing with an original heading and tag line and take it to market. Oh yes, and don’t forget to price it accordingly. You are no longer one of the hundreds selling the particular item, you are the only one selling the item you are marketing. This sort of exclusivity demands higher profit margins.
Pricing & Cost to Effort Analysis
The concept of cost to effort analysis is quite simple. It revolves around the basic idea of retailing and that whatever you are promoting for resale should at the end of the day (figuratively speaking) bring you in a profit for your efforts.
This is usually done by gauging what sort of capital is required to successfully market and promote a product. Some of the expenses that contribute to the total “marketing exercise” may be cost of advertising, costs of producing your marketing materials and of course your time spent on the whole ordeal.
Once you have a rough idea of the costs, you can begin to price your product and then evaluate if it can still be a competitive offer once presented to the market.
I’m sure that you have heard the saying “how to sell sand to an Egyptian or snow to an Eskimo”, this is basically the best of marketing at play, and yes even today it is quite possible to increase a products perceived value through the use of clever marketing and advertising.
One of the perfect examples that have come across lately was a particular product that is sold at bulk wholesale price of $2.60, Drop-shipped at a cost of $3.90, resold by the masses for anywhere between $7.95 and $9.95. However one particular seller is absolutely crushing it by cleverly promoting the item with their own marketing materials for the price of $24.95.
This is a perfect example that the products you resell do not necessarily need to be of a premium and expensive nature to bring in a great profit margin. $3.90 cost, $24.95 resale price brings in a very healthy Gross Profit Margin of 82.8%.
There are many Product Pricing Strategies for a Drop Shipping Business that can be explored. The key takeaway here is that whatever effort you put into effectively selling your items, it must be rewarded with an appropriate dollar value profit.
Choosing the Best Advertising Medium for a Drop-Ship Store
When it comes to advertising, choosing the best fitting advertising medium/platform for your purpose is an important element. This is after all the determining factor of how effectively you are able to communicate with your prospective buyers, and at what cost.
Being a drop shipping reliant store, the margins can be a little slim if you have not deployed a marketing campaign to distinguish your product from the rest of the competitive pool of resellers.
It is therefore important to either first embark on a marketing campaign then promote/advertise your marketing efforts, or find an advertising medium that is cost effective and efficiently targets your buyers with the products that can yield you the highest profit margin.
There are several common advertising mediums that can be explored. These are
- Broadcast Media – Television or Radio
- Print Media –Newspapers, Magazines, Catalogues
- Direct Marketing – Communicating directly with target customers to generate a response or a transaction. – Infomercials, Live Demonstrations.
- Internet & Interactive Media – Google Adwords, Social Media Advertising
- Corporate Advertising – Communicating directly with a corporate body in charge of making purchasing decisions.
- Personal Selling – Person-to-person communications process. This type of advertising is very specific to the type of product you are promoting.
Now, while it is very easy to guess that in most cases the best fitting advertising medium for an online-store would in fact be “Internet & Interactive Media”, this can also depend on the type of product your store is actually selling.
Recently we have advised a client to explore the possibility of allocating a portion of their advertising budget towards “Corporate Advertising” resulting in an increase of ~ 60% of their profit over a space of 3 months. This increase in profit has since opened up another income stream for the store owner, allowing them to quickly scale up their operations. In short, what started as a small “extra income” project has very quickly turned into a full time, very profitable family business.
Your dropship business marketing and advertising campaigns if successful will ensure that you are effectively communicating your product offerings to the right targeted audience. This in turn leads to greater success.