Dropshipping is an increasingly attractive model for eCommerce. That’s because it’s easier (not to mention less expensive) to start a dropshipping business than to maintain inventory for a conventional digital storefront.
The pros and cons of dropshipping are well established, but the most important aspect of starting a dropshipping business — finding the right suppliers for your WooCommerce store — has been much less clear. Until now.
The Importance of Choosing the Right Suppliers
Dropshipping is a unique model for eCommerce. Conventional online retailers pay to maintain their own inventories. Dropshipping all but eliminates those expenses, so dropshipping doesn’t require significant startup capital.
On the other hand, dropshipping means you’re putting the fate of your eCommerce store in others’ hands.
With the dropshipping model, retailers are dependent on the wholesalers, suppliers, and distributors that handle fulfillment for the retailers’ orders.
There are many pieces to the dropshipping puzzle, and each piece is crucial for the bigger picture. Among those pieces, dropshipping suppliers are one of the most important. In fact, the best dropshippers come to realize that the quality — and overall reliability — of dropshipping suppliers will make or break a dropshipping eCommerce store.
So how do you find the right dropshipping suppliers for your digital storefront?
How to Find Your Dropshipping Suppliers
Starting a dropshipping business requires you to partner with suppliers, wholesalers, and distributors. You want to find suppliers that will strengthen rather than compromise your dropshipping business.
1. Research Your Products
Before you ever start finding and partnering with suppliers, you need to figure out what kinds of products you should offer.
In particular, you want to answer questions like:
- Where does the product come from?
- How is it made?
- How long does manufacturing take?
- Is there size or weight considerations that could make fulfillment harder or more expensive?
The goal isn’t expertise; instead, you want to get acquainted with the products so you can better decide which are right for dropshipping.
2. Know the Supply Chain and Understand Its Considerations
After nailing down your products, you need to get acquainted with the dropship supply chain. In other words, you need to know how dropshipping works.
With dropshipping, the products never actually pass through the retailer’s hands. Instead, the retailer receives an order and initiates fulfillment by a supplier that handles packaging and shipment. In this way, the retailer is like the conductor of a dropshipping orchestra.
If you don’t have reliable suppliers, you can’t offer products which means you have no dropshipping business.
3. Research Dropshipping Wholesalers on Google
With a Google search, you can find the major suppliers for your chosen products or product categories.
As you create a preliminary list, take note of the different attributes of the dropshipping suppliers by researching the next several questions.
- Where is each supplier located?
- Can the supplier integrate with your WooCommerce store so that new orders are sent for fulfillment automatically?
- What (if any) is the minimum order quantity (MOQ)?
- What support does the supplier offer (e.g. phone, email, chat, etc.)?
- What kind of product selection does the supplier offer?
4. Subscribe to Directories of Dropshipping Suppliers
Even if your Google searches turn up lots of options, directories can offer even more options. These directories consist of online databases of dropshipping suppliers and wholesalers for a wide variety of products.
You should know that some of the best — like Salehoo and Worldwide Brands — are premium directories, meaning they require paid subscriptions. There are free directories available, including Wholesale Central, that you can browse at no cost. However, free directories are sometimes outdated. Newer suppliers don’t appear and suppliers that are no longer in business are still listed.
Premium directories typically range in cost from $20 per month to a few hundred dollars for lifetime access. With free directories being hit-or-miss, you may find the cost of a premium directory to be worthwhile. There are even premium directories specifically tailored to dropshipping, including Doba.
5. Figure Out Which Suppliers Your Competitors Use
If you want to be competitive in the dropshipping space, it follows that you should see what your competitors are doing. In particular, do some reconnaissance to see which suppliers are fulfilling their orders.
There are a couple of ways to do this, but the easiest is to check marketplaces where your competitors sell.
If the supplier isn’t indicated on the listing, you can still uncover the supplier by placing your own order. Since it’s fulfilled by the supplier, the shipment will likely include an invoice or packing slip from them. Then you can contact that supplier directly to inquire about a partnership for your own dropshipping business.
6. Attend Trade Shows
Trade shows have long been known to be an effective way for retailers to establish and expand their businesses. So if you’ve not yet been to a trade show, add it to the top of your to-do list.
At trade shows, you network with other players in the dropship supply chain, including manufacturers and dropshipping wholesalers. You get an insider’s view of new and upcoming products that you could add to your online store. You also get to “talk shop” with dropshipping companies face-to-face, which is still the most effective way to conduct business.
Tip: Check out the Trade Show News Network to see when and where trade shows are happening.
7. Join Industry Networks and Groups
Trade shows help with finding suppliers for dropshipping businesses, but industry networks and groups are another effective resource.
Most retailers aren’t eager to divulge the secrets of their success, including the names of their dropshipping suppliers. However, the people who join industry communities want to share, learn, and grow. You can gain valuable insight from industry veterans by becoming part of the dropshipping community. For example, your peers could suggest better suppliers or warn you about suppliers to avoid.
8. Connect with Product Manufacturers
Not all manufacturers sell directly to retailers, but there are some that do. Before choosing suppliers for your dropshipping eCommerce store, consider reaching out to the manufacturers of the products you’ll be selling.
When a manufacturer agrees to be your supplier, you see much better margins than with a typical supplier or wholesaler. On the other hand, manufacturers often implement minimum order quantities which may require larger orders. In this case, you could find yourself with significant inventory to manage, which dropshipping is meant to circumvent.
If a manufacturer won’t partner with you, ask the manufacturer to recommend suppliers for you. After all, a recommendation implies that the working relationship between a manufacturer and supplier is positive. For that reason, recommended suppliers are surely worth including on your list of prospects.
9. Order Samples for Validation
No matter how many reviews or testimonials you find, there’s no substitute for firsthand experience. That’s why the next step in finding the right dropshipping suppliers for your business is to order samples.
Ordering samples tells you a couple of important things about a supplier. The first is you get to experience the quality of the product yourself.
The second is you get to see how the supplier handles fulfillment, including what shipment packaging is like, whether a separate distributor is involved, and how long shipping and delivery take. Suppliers will be fulfilling your orders, so ordering samples gives you an indication of what your customers will experience.
10. Confirm Contract Terms and Fees
You compiled some options, eliminated all but the most viable prospects, ordered samples to test those suppliers, and settled on the best supplier (or suppliers) for your dropshipping business. The only thing left to do is to negotiate contract terms and fees.
Compared to mature businesses with developed customer bases, new businesses with unproven customer bases have less negotiating power. This is particularly true when it comes to negotiating your margins.
Because dropshipping means you don’t have to maintain your own inventory, those margins will be low. Your supplier(s) bear the brunt of inventory costs as well as costs associated with fulfilling your orders. Since costs are lower with dropshipping, profit margins are likewise lower than if you stocked and shipped orders yourself.
With margins consistently low, the main difference between suppliers could be the fees involved. For example, some suppliers charge flat per-order fees, which are added to the wholesale cost of the products. Per-order fees usually range between $2 and $5 (although large or unwieldy products may warrant higher fees) to cover fulfillment and shipping costs.
Ultimately, you want to choose the supplier(s) that meet your needs and offer contracts with agreeable terms.
Never hinge the future of your eCommerce business on just any unknown supplier you find.
Choosing an inexperienced supplier will negatively affect the reputation of your store. Inversely, better suppliers that are experienced and trustworthy will result in longevity and growth.
Dropshipping is almost like a Rube Goldberg machine. It’s a system with many separate parts that work together so your customers can make purchases, and if one single part of the machine isn’t doing its job, the entire system is compromised.
With this in mind, these are some considerations you should remember while choosing dropshipping suppliers for your WooCommerce store.
Be Wary of Fake Suppliers
Yes, fake suppliers are out there, looking very much like real suppliers. Be careful not to invite them into your dropship supply chain.
There are ways to distinguish fake suppliers that will scam you if given the chance. First, suppliers almost never sell products at wholesale prices to the general public. Be wary, when a supplier is advertising products at wholesale prices to the general public.
Fake suppliers often offer memberships, subscriptions, or some other monthly fees in exchange for access to their products. Experienced, reputable suppliers don’t require potential partners to pay monthly fees just for access to their products. Instead, legitimate suppliers more commonly charge per-order fees and might invoke minimum order quantities.
Your Reputation is at Stake
Remember, when you partner with dropshipping suppliers, it’s the reputation of your digital storefront that’s in those suppliers’ hands. If a customer has a bad experience, the customer will blame you rather than the supplier that fulfilled the order.
From the customer’s perspective, it was the retailer — which is you — that took his or her money, not the supplier. So even though you’re not fulfilling the orders, customers will see their orders as your responsibility.
This is one of the biggest drawbacks to dropshipping, and one to always keep in mind.
Start Your Own Dropshipping Business with Liquid Web’s Managed WooCommerce Hosting
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About the AuthorMore Content by Chris Lema