dropship business
Dropshipping is a great way to make passive income while keeping your 9-5 job

Instead of lumpy expenses of things people traditionally purchase, today’s credit card statements include small monthly charges for subscription to sites that make up the new Subscription (Dropship) Economy. Previously, businesses were part of the Demand Economy, which is when businesses respond to consumer demand. While demand can be stimulated through advertising, you may not get a good ROI.

On the other hand, the Subscription Economy gives you more control as you proactively offer your services and have customers come to you. Other benefits of this business model include a positive cash flow, higher profit margins, better planning, and peace of mind.

By combining the subscription business model with the dropshipping one, you can double your profits. After all, you don’t need to pay for an inventory of products or worry about storage issues. To help you start this profitable business, here are the steps you should follow.

1Decide on the Products Your Dropship Business Will Sell

Most subscription providers have chosen their own niches. For instance, Diapers.com offers parents a generous supply of baby essentials on a monthly basis, saving them from midnight diaper runs and similar errands. According to Entrepreneur, the following seven niches are ready for subscription based dropship businesses:

  1. Grandparent Care – With 8000 Americans turning 65 daily, caring for aging individuals is a booming business. You can either provide supplies for the elderly or offer their relatives the chance to send a monthly box of goodies to let them know that they’re loved.
  2. Tea – Tea is the new coffee, especially if you consider the craze for herbal teas and supercharged high caffeine blends.
  3. Organic Food – Organic products or farm-to-table eating is becoming very popular, which is why you need to embrace this trend before the market becomes saturated.
  4. Pet Food and Treats – The humanization of pets offers dropshippers a great opportunity since pet owners would appreciate getting essentials at their doorsteps rather than having to run all over the city.
  5. Gluten Free Edibles – Gluten free edibles are becoming very popular, especially since health food junkies’ numbers are on the rise. You may need to provide weekly subscriptions though since edibles are bound to spoil quickly.
  6. Stationary – Handwritten notes have made a comeback, especially since everyone is overwhelmed with email. Therefore, you can earn a handsome profit by providing a box of stationary to corporates.
  7. Vitamins and Supplements – This may be tricky, but providing FDA approved supplements is a great business opportunity. You’ll need to work out the legalities of this business though, but you can expect repeat and loyal clients in the long run.

2Understand Your Customers’ Needs

Once you decide on the niche you’ll serve, research your customers and their needs. For instance, if you decide to offer pet food and treats, you need to decide whether your clients will opt for organic, gourmet or generic dog food. You can also add related products, such as flea collars and kitty litter, expanding your offerings and earning more profits through multiple subscriptions.

3Get Vendors and Determine the Right Price

You need a steady supply of products to satisfy your subscribers, so start shortlisting reliable, highly recommended vendors. One important aspect to ensure is that they’re never out of stock. As you gain more members, your vendor should be ready to deliver at the time you specify. Once you decide on a vendor, crunch their costs to determine the price you quote to your own clients. You need to ensure a good profit margin to keep your business running.

4Set Up a Site to Order Through

As a dropshipper (a dropship business owner), you need a good, reliable site to get orders through. Since the membership services niche is competitive, your site needs to have a user-friendly and aesthetically appealing design. Before that, though, you need to wisely choose your domain name and host. Your domain name is how your customers will find you whereas your host ensures your site’s availability all the time. You may need to spend a little extra on these elements, but rest assured that you’ll get your money’s worth and some more.

5Plan Shipping and Handling Accordingly

You need to factor shipping and handling in your business plan since it’s an important part of your supply chain. However, find out how you can reduce your shipping costs, especially during the initial stage when you have very tight margins. For instance, you can have a contract that allows you to ship in bulk or reduce the size of shipment boxes to fit standard mailboxes if possible. You shouldn’t rule out packing and sending the goods either if you can save a few hundreds of dollars in the process. Yet make sure that your decision is cost-effective since your time is the most important asset in such a business.

6Experiment and Test Membership Options

Since subscription services are relatively new, your customers may not have a clear idea of what they want. Therefore, provide different options after testing them out. For instance, provide a specific amount of a product to some clients and see how quickly they need to replenish their stock. Based on your findings, you can provide better options. In addition to quantity, test elements like delivery timings and product mixes. Just make sure to make these tests at discounted prices or offer them for free to the first five orders.

7Market, Market and Market Some More

Your business will fail without customers, so you should start acquiring them at the earliest of opportunities. Some of the best ways to generate a buzz about your service include viral videos, coupons and vouchers, and influencer outreach. Don’t be shy to step into offline advertising as it’s just as effective in getting your message across.

These seven steps will help you step confidently into the membership dropship niche. However, you also need to be prepared for the risks of this business, including sourcing products, shipping and logistics, and returns. You need to also plan upcoming steps and expansions to ensure your readiness for when the time’s right. Finally, remember to always keep your clients in mind. Only then can your business thrive and join the ranks of top subscription service providers.