Many different industries are growing due to the proliferation of big data. The dropshipping industry is among them.
Paul Glen of IBM’s Business Analytics wrote an article titled “The Role of Predictive Analytics in the Dropshipping Industry.” Glen shares some very important insights on the benefits of utilizing predictive analytics to optimize a dropshipping commpany.
Glen states that a data review can help you understand if your dropshipping company is profitable. Data reviews can also give you insights into what products customers prefer, aiding product making and curation decisions. A data analysis can also answer important questions about your company’s financial health like: how much income was earned this quarter and where does most of your traffic come from? Understanding the data is key, but also knowing what to do with the data gleaned from it.
Glen points out that dropshipping companies account for 33% of all ecommerce sales. Therefore, entrepreneurs that use predictive analytics strategically can earn a large share of this growing market.
New Dropshipping Entrepreneurs Should Utilize Predictive Analytics to Develop a Competitive Edge
Surprisingly, dropshipping is a unique type of fulfillment business model in which you can start with the minimum and even no money at all. You can start dropshipping as a part-time business at any age and organize a successful business that can include other business models. The main reason why dropshipping is a perfect start for entrepreneurs is that the dropshipper does not have to produce or store any goods. The main dropshipper’s task is to organize an online attraction platform where customers order goods. These orders are sent to the actual Manufacturer by dropshipper. The Manufacturer can execute the packing and delivery and minimize the list of dropshipper’s tasks.
Unfortunately, creating a successful dropshipping business is easier said than done. The good news is that new advances in predictive analytics can help companies develop an edge.
So, let’s dig into details if dropshipping is a reality with null investments and how to start without money and use predictive analytics to have an edge over your competition.
Use predictive analytics to organize your dropshipping business
The success of dropshipping is in three aspects which depend on a dropshipper:. Predictive analytics can help in a number of ways, including the following
- Predictive analytics can help you choose the right product. New AI algorithms can evaluate a number of different economic and market variables to gauge the future demand for various products, which makes it easier for dropshippers to succeed.
- TechTarget’s Mary Pratt points out that predictive analytics can help you promote your online store and your products (the price of a product consists of 25% actual product price and 75% of the advertising campaign). Predictive analytics employs multiple methods to uncover patterns in existing and past data. This allows companies to comprehend facts from the past, establish why things occurred, anticipate what could occur, and finally decide on the best way to optimize outcomes. This allows them to better position their online ads and organic marketing efforts.
- Predictive analytics can help you choose the right manufacturer, wholesaler and sales partners. Many predictive analytics models can evaluate likely outcomes of different partners based on variables showing which types of companies have been successful in the past.
You can successfully structure dropshipping businesses can be performed on different platforms and predictive analytics tools can help you succeed. But since we are talking about free methods, the most popular commerce platform Shopify will not be discussed here, as it has a monthly fee. Some time-consuming steps can be improved through numerous paid services that you may use later after you receive profit from your first orders.
The list below is a simple guide to becoming a dropshipper without investments.
1. Find your niche and winning product.
The first stage of the process is to find the best products to promote. Predictive analytics technology makes this process much easier.
For this task, you need only a computer and an Internet connection. You can research social networks, AliExpress, the most popular requests in the search engines, Amazon, news trends, and all other available resources to discover the winning dropshipping product. In addition, you can try a free trial version of any dropshipping product research tool that uses predictive analytics technology to minimize the most time-consuming and challenging preparation step. Typically, the product has a price of less than $200. The top niche categories for recent years were: beauty, pets, technology, and kids.
2. Find a Manufacturer/Wholesaler/ Seller (Supplier).
For this task, you need the same resources as for task one. You need to find a Company that is willing to work with dropshipper. It can be a Chinese manufacturer or a local company that can’t perform sales alone. It also can be wholesalers with excess goods they want to sell with your help. You need to conclude with your Supplier a contract/ agreement with all terms of production, delivery, returns, and refunds. You should agree to pay for the goods you perform after the Customer pays you, as you do not have initial money for advance payment.
You can use predictive analytics tools that determine whether a company will do a good job or not based on reviews and other key factors. However, it is important to do your research instead of relying entirely on your predictive analytics model. You need to always use common sense when choosing a business partner, but the predictive analytics model can at least help you create a good short list of partners.
3. Organize the online store.
If you already have popular social networks and websites with many subscribers, you can start selling products there. For other dropshippers, you need to find a free platform (like Bigcartel). If you want to sell many products, you need to find a tool that will reprice the products from the Suppliers price to yours, including a dropshipping fee. A dropshipping fee is your profit, which you set individually. Usually, free platforms allow you to have a limited number of products, from five to ten, but you can organize several stores.
You need to create a colorful presentation of products to attract Customer’s attention. And for sure, you need to create your logo and find an excellent unique brand name; there are a lot of free tools (business name generators and logo creators).
You can use data analytics to improve the success of your store down the road. Many platforms allow you to integrate Google Analytics or other analytics solutions.
4. Make the business legal.
You must open a bank account and determine the customer payment method (Visa, MasterCard, Stripe, or PayPal). Also, remember to pay all taxes and become the official entrepreneur in your country based on local codes.
5. Start promotion company
After you have made all the preparation steps and are ready to open your online store, you can start an advertising campaign to attract customers. Again, there are a lot of free methods:
- Actively use your social networks.
- Make videos.
- Communicate with bloggers and organize barter.
- Do guest blogging.
- Comment on popular forums.
If you have a website, you can use numerous free SEO tools to improve your position in search engines. It would be best to focus on proper keywords and backlinks, make proper metadata, take care of the time required to download a webpage, etc. You can find the complete list of advice for sure you can receive only with paid tools, but by using several free versions, you still can achieve a high SERP.
Order fulfillment
If you perform all steps correctly, after step 5, you will receive the first orders. You will not face any expenses for order fulfillment, again only PC or even smartphone.
Typically, order fulfillment goes the following way:
- You receive the order from the Customer.
- You send the other to the Supplier.
- You inform the Customer about the delivery date.
- The supplier produces the goods and delivers them to the Customer.
- You receive feedback from the Customer about successful/unsuccessful experiences.
As the Customer does not have direct contact with the Supplier, all questions regarding production and delivery should be on dropshipper (customer service). Moreover, all complaints and refunds are the tasks of the dropshipper. So, it is essential to have constant communication with your Customers to receive positive reviews and promote your website.
Predictive Analytics Technology Helps Dropshipping Companies Thrive
As you can see, predictive analytics technology plays a crucial role in helping dropshipping companies succeed. Dropshipping is a perfect opportunity to work anywhere and not deal with inventory and shipping products. Why not take advantage of the right analytics tools to get off on the right foot?
You may start a business without investments and can try different products before you find the best one. There are no storage, production, or staff expenses; you can perform all tasks yourself unless you expand your business to a large market.
As a middleman, you have fewer risks than a Manufacturer, but you receive a lot of knowledge on how to deal with Customers, Delivery Companies, and Suppliers. With all this experience, you can invest in addition to your profit in another type of business or expand your dropshipping website to a global market. So remember to invest your profit into marketing.
As you see, you can take a few simple steps of dropshipping business, creating several online shops simultaneously with the use of predictive analytics technology. There are no limits in dropshipping business!