This is the first of a six-part series on the elements of a successful drop shipping operation. The intent of the series is to provide a framework, key considerations, and best practices for merchants who are looking to expand their offerings to include drop shipped items.
The series is broken up into the following chapters:
Part 1: Products
Suppose you were the proprietor of a corner store looking to add new products to your shelves. Which products would you choose? Since the store has physical limitations (it only has so much space), then your primary factor would be based on likelihood to sell. That is, all things being equal, you would choose items that you know your customers would be likely to buy. Alternatively, you might choose items that would draw in new, incremental customers. Regardless, you wouldn’t add items that just sat on the shelf.
Despite having virtually unlimited shelf space as an online retailer, you should also approach product selection with the same sales objectives in mind: pick those items you know will drive purchases, whether from your existing customers or from incremental customers.
This chapter will explore the different avenues by which you can find and then whittle down the list of potential SKUs.
Let's start with where to find SKUs:
But even with all these ideas, you will still be left with a difficult conundrum: which of the items on your expansion wish list will drive sales? Part of the answer is price, and we’ll tackle that in another installment of this series. The other key input is demand: what do people want in the first place?
We already discussed one place you can look for that answer in search data. A related source is your customers’ direct feedback. You likely have a large buyer base, and now is a good time to engage those customers -- what would they want to see in your store? A simple survey could generate at least a handful of ideas that will be helpful in prioritizing your inventory wish list.
There are several resources online that can help influence your thinking. For instance, Amazon’s Selling Coach includes product opportunities that identify ways you can “...increase your selection on Amazon by adding listings for [specific] products, which customers have recently shown interest in and which have limited availability on Amazon.”
Another great resource is Terapeak. Terapeak has agreements with sites such as eBay allowing Terapeak to summarize key information like listings, purchase volume, and prices -- all key inputs to understanding what buyers are looking for and ultimately purchasing.
The series is broken up into the following chapters:
- Part 1: Products -- What Can I Sell, What Should I Sell?
- Part 2: Pricing -- What's the Best Pricing to Sell?
- Part 3: Placement -- Where Should I Be Selling?
- Part 4: Promotion -- What are the Best Ways to Increase Awareness? Entice Purchase?
- Part 5: Policies -- What are the Business Policy Best Practices I Should Employ?
- Part 6: Procedures -- How Can I Operate at Scale?
Part 1: Products
Suppose you were the proprietor of a corner store looking to add new products to your shelves. Which products would you choose? Since the store has physical limitations (it only has so much space), then your primary factor would be based on likelihood to sell. That is, all things being equal, you would choose items that you know your customers would be likely to buy. Alternatively, you might choose items that would draw in new, incremental customers. Regardless, you wouldn’t add items that just sat on the shelf.
Despite having virtually unlimited shelf space as an online retailer, you should also approach product selection with the same sales objectives in mind: pick those items you know will drive purchases, whether from your existing customers or from incremental customers.
This chapter will explore the different avenues by which you can find and then whittle down the list of potential SKUs.
Let's start with where to find SKUs:
- Deep Catalogs: probably the easiest source of SKUs are those items in your suppliers’ catalogs but you are not yet listing, especially those in the categories in which you are already selling. Alternatively you can add suppliers who have different selection in the categories in which you already list.
- Complementary Products: Look at your current selection and find items that complement your current inventory. For example, if you sell parts and accessories for power sports you can add t-shirts, gloves, and other apparel for the power sports enthusiast.
- Adjacent Categories: A buyer coming to your site for a given item likely has interest in other items in a related category. For instance, a rock climber shopping for climbing shoes is likely also camping as part of their climbing adventures -- why not offer camping gear as part of their shopping experience?
- Hard Goods and Soft Goods: Smaller merchants are often focused on either hard goods (e.g. electronics) or soft goods (e.g. clothing). A SKU expansion opportunity, then, is to add the other to your selection. For example, a retailer catering to electronics enthusiasts could add t-shirts from popular TV shows which the enthusiasts watch (e.g. “Big Bang Theory”). A home & garden retailer focused on bedding and bath could add vacuums and fans.
- Seasonality Refresh: For merchants selling SKUs that have a season (and only sell well in that season), refresh your selection in the “off season” with products that will sell. For instance, a winter sports specialty site can add shorts, flip flops, and standup paddle boards to help drive sales when the snow is starting to melt.
- Mine Your Search Data: most retailers offer a search button for buyers to enter keywords. Take a look at those keywords to find ideas for items your customers are already looking for but you don’t have. It’s perhaps the most valuable data you have!
But even with all these ideas, you will still be left with a difficult conundrum: which of the items on your expansion wish list will drive sales? Part of the answer is price, and we’ll tackle that in another installment of this series. The other key input is demand: what do people want in the first place?
We already discussed one place you can look for that answer in search data. A related source is your customers’ direct feedback. You likely have a large buyer base, and now is a good time to engage those customers -- what would they want to see in your store? A simple survey could generate at least a handful of ideas that will be helpful in prioritizing your inventory wish list.
There are several resources online that can help influence your thinking. For instance, Amazon’s Selling Coach includes product opportunities that identify ways you can “...increase your selection on Amazon by adding listings for [specific] products, which customers have recently shown interest in and which have limited availability on Amazon.”
Another great resource is Terapeak. Terapeak has agreements with sites such as eBay allowing Terapeak to summarize key information like listings, purchase volume, and prices -- all key inputs to understanding what buyers are looking for and ultimately purchasing.
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