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Posts Tagged ‘Return Policy’


Using Drop Shipping for eCommerce Success

Posted on: December 29th, 2008 by Joe Giordano No Comments

How to use drop shipping to eliminate overhead costs and boost profits in your eCommerce business.

Drop Shipping Warehouse

If you have been a retailer for more than a month, you doubtlessly know that the costs of stocking, packing, and shipping inventory can significantly decrease your profit margins and create additional hassle for you and your employees. In these rough economic times, it might be time to consider a method of product fulfillment that avoids many of the costs associated with eCommerce and leaves you free to concentrate on building your bottom line.

Drop shipping is an agreement with wholesalers where you provide them with your collected orders and your supplier then packages and ships the product right to your customer’s home leaving you to simply collect the profits. With drop shipping you do not need to worry about having too little or too much inventory, making the time to pack and ship your products or any of the numerous other worries associated with product fulfillment.

In this guide we will show you exactly what to do to start drop shipping, and also some common problems to look out for. Here are some advantages and disadvantages of drop shipping to consider.

Advantages of Drop Shipping

  • Little overhead and minimum setup fees
  • Your suppliers manage your inventory
  • Your suppliers package and ship your products for you
  • You only pay for the products you sell after you collect payment from the customers

Disadvantages of Drop Shipping

  • Products might change without notice
  • Supplier’s fees could rise at any time leaving you to pay more for each product
  • You won’t get bulk discounts because you buy each product individually
  • No control over shipping times and quality

How to Find Drop Shipping Suppliers

Finding the right suppliers is essential to using drop shipping in your online store. Good suppliers mean good prices, high quality customer service, excellent order fulfillment skills, and a good selection of products to choose from.

You may be surprised which companies offer drop shipping so to get started make a list of all manufacturers and suppliers who offer the products you want to carry. Be careful when considering overseas suppliers or “wholesale drop ship directories” as many of these places have questionable business practices or are involved in the sale of less than legal goods.

Once you have located the suppliers you would like to contact, it’s time to start making phone calls. The first thing you will want to ask is if they actually offer drop shipping services. Don’t waste your time asking about their products before you know if they will even work with you.

Once you have established that the supplier does drop shipping here are some other essential questions to ask:

  • Is there a minimum order requirement?
  • Are there any other requirements to open an account?
  • What are the fees involved in drop shipping?
  • What type of product support or information do they offer?
  • What are their prices and will they offer you price breaks based on quantity sold?

Drop Shipping Agents

Another option available to you as an eCommerce merchant is a drop shipping agent. Much like a travel agent who gets you good deals on holiday vacations all over the world, a drop shipping agent will provide you instant access to an endless supply of products at a discounted price. Not only do you get access to a wider variety of products at a cheaper rate that if you do it alone, but you also receive a significant time savings because you will only need to deal with one agent instead of numerous suppliers.

Drop shipping agents will likely charge you a significant monthly fee, however in drop shipping the old adage “you get what you pay for” often holds true. Unfortunately, there are a number of less than moral companies out there who will overcharge you for products or provide you with terrible service. Be sure to carefully compare different agents, get testimonials and compare prices before choosing the agent that is right for you.

Common Drop Shipping Issues

Even though your suppliers will be packing and shipping products for you, it’s ultimately your responsibility to ensure that your customers’ orders arrive promptly and in good condition. Most suppliers will provide you with tracking information so it is important that you stay on top of this information and stay in contact with your customers should there be any problems.

You should also have a system in place for handling back orders or out-of-stock items. Unfortunately this is sometimes a reality when you do not have direct control of your stock so make sure you are prepared. You might consider taking a loss and buying the product elsewhere and then sending it to the customer yourself. This will show your commitment to customer service and keep people returning to your store time after time. If this is not option, you should immediately contact your buyer and explain situation while offering them a full refund.

Finally you should make sure to have a cohesive return policy. Your suppliers will likely not all have identical policies but it is important that you establish your own standard for how you handle returns and stick to it. Even if it costs you some money when your supplier won’t accept a return and you have to take a loss, the accumulated goodwill will be far more valuable to your company in the long run.

Conclusion

Drop shipping can be an incredibly valuable way to increase your profits and grow your business. Without the costs and hassles that plague many eCommerce sites, you can focus on increasing your sales and beating your competition.  Because you don’t have to maintain any stock, you can offer an endless supply of products on your online store with no additional costs or risk.

Despite its considerable upsides, there are also some reasons you might choose not to use drop shipping. Because you are not buying in bulk and because you must pay considerable drop fees and agent fees, you might face margins that are significantly lower than in a traditional eCommerce model. Also by giving much of your product control to an outside vendor, you risk customer service issues that you could more easily prevent in house. Finally drop shipping has attracted many less than honest people whom you must be cautious of if you choose to follow these strategies.

As with any business decision, you should carefully consider the pros and cons of drop shipping before starting. Examine your current business model and calculate for yourself if drop shipping would be advantageous for you. Many businesses have found drop shipping to be highly profitable and rewarding while others have determined that conventional eCommerce practices are ultimately superior. With sufficient research, it should become quite clear if drop shipping is the right strategy for you.

15 Steps to Revving Online Sales This Holiday Season

Posted on: November 6th, 2008 by Joe Giordano No Comments

Happy Holidays

Here’s how to ensure your online business doesn’t need a government bailout this holiday season.

#1:  Make sure all your products are included in your online store.

People can’t buy it if they don’t know you have it.  Make sure your inventory is current and priced correctly.

#2:  Promote shipping and return policies.

Make it easy for online shoppers to know when and how their merchandise will arrive to them.  Prominently feature shipping times and costs before the order checkout process.  Use low flat-rate and free-shipping promotions to attract and convert price sensitive shoppers.  Let your shoppers know how returns will be handled.  Recent studies show merchant return policies to be amongst the top concerns of online shoppers.

#3:  Clearly communicate why people should buy from you.

Competitive products and suppliers exist in most every industry.  Rarely does a product or service have zero competition.  Buyers need to understand why they should buy from you instead of your competitor.  Communicate how you are different from others in ways that bring value to customers.

#4:  Market to existing customers.

Existing customers are on average five times more profitable than new customers to your business.  Market to existing customers regularly.  Send out newsletters and promotional offers, including gift card options for holiday season sales.

#5:  Create original product descriptions and pictures.

Most online sellers use pictures and product descriptions provided by manufacturers, making it hard for consumers and search engines to differentiate one merchant from the other.  Create unique descriptions that contain product numbers, manufacturer names, and answer the question, “Why should I buy from you now?”

#6:  Synchronize your SEO and keyword buys with your landing pages and product catalog.

You absolutely must direct shoppers to the page of your website most relevant to their search.  Do not send all visitors to your home page and then have them navigate through your website or storefront to shop.  All shopping pages of your site should contain reasons why shoppers should buy from you and compel the visitor to go deeper into your website.

#7:  Help a shopper trust doing business with your company.

The internet is full of scam artists and spammers.  Help prospects understand that you are not one of them.  Prominently feature above the fold and on as many web pages as possible your website security certificates, BBB and other indicators of business ethics, logos of shipping partners, payment methods and more.  Your job is to overcome consumer fears, uncertainties and doubts.  Most of all make it easy for customers to contact you.  A telephone number prominently displayed on your web pages makes you very different (in the right way) from most of your competitors.  

#8:  Provide reviews, user feedback and competitive information.

Let your shoppers know the experiences of others. 

Encourage customers to leave comments that can be seen by other shoppers.  Provide testimonials from others and offer customers the option of seeing competitive products.  After all, an insurance company made a fortune by allowing others to compare prices of competing products.  Your buyers can search for this information anyway…keep them on your site in your store by making all pertinent information available to them.

#9:  Promote and sell gift cards and free gift wrap if applicable.

It’s estimated that gift card sales will exceed $100 billion this year.  They are the most-wanted gift among women and the third most-wanted among men.  Take advantage of the trend and make sure you promote gift card sales from all relevant pages of your online store.  You’ll also be amazed at what free gift wrapping will do for conversions and sales.  It’s a better option than cutting your price and it is a huge motivator for the busy shopper.

#10: Synergize online and offline efforts.

Many consumers use the web to research offline purchases.  Harness this activity by promoting store locators, hours of operation, and in-stock availability of popular products and items.  

#11:  Position yourself as a one-stop shop.

Use site search so that shoppers can find what they are looking for, quickly and easily.  Many shoppers have a long shopping list, making gift guides and gift finders a huge help to them and a big boost to your bottom line.  Gift finders and gift guides can even suggest items by recipient (mother, father, teacher, etc) and personality.  This helps increase your average order value while helping your shopper at the same time.  You may also find suggestive selling techniques applicable to your online store.  Suggest related products and services…McDonalds made a ton by suggesting you add fries to your order.  

#12:  Get out of your own way.

It’s important to eliminate anything that would turn off a customer.

Act like you are a customer on your website and go through all possible options someone can take when buying from you.  Is the process clear and concise?  Is the shopping cart efficient and easy?  How about payment processing and product delivery?  Use the customer service options (online and telephone) and make sure your company and its services are performing at their peak.  Take corrective actions where needed so you put your best efforts into this holiday season.
Check your analytics throughout the holidays to make continuous improvements in merchandising enhancements for products, suggested items and discounted specials.

Be ready for shoppers early in the holiday season, especially with flat-rate and free shipping offers.  You can expect the season to start in mid-October in most instances.  And the season runs late-many online sellers report strong activity well up until the 20th of the month.

#13:  Offer live online chat.

Properly deployed online chat services aid shoppers and increase profits.  It’s that simple.  Online live chat allows for customer interaction with your company in a way that drives shopper satisfaction while increasing your sales.

#14:  Use multi-channels for your marketing.

Shift variable advertising towards paid search.

Use email marketing to promote gift ideas and shipping offers/delivery times.

Drive traffic into your brick and mortar store by offering online an in-store product pick up option.  This brings the customer to you twice and gives them additional chances to spend more with you.

Try different marketing channels, comparison shopping engines, vertical search engines, shopping destination sites and other areas to market your storefront product catalog.  Find out what works best by testing and measuring.

#15:  Spread a little holiday cheer all throughout the year.

Use automated email systems to communicate and bond with your customers.  Thank them for visiting your site and looking at your products.   Use email for order confirmation, delivery tracking information and delivery confirmation.  Continue the relationship with newsletter follow-up, loyal and preferred customer promotions, new product launches, specials and promotions. 

RSS Ray is the host of the radio program Online Marketing with Ray, carried live each week on wsRadio.com.  He specializes in helping small and mid-size retail and service businesses increase profits, grow revenue and improve lifetime customer value through internet marketing.  Get Ray’s monthly internet marketing tip sheet and free internet marketing podcasts.  Visit Ray online at RssRay.com.

Are Free Returns the Competitive Advantage your eCommerce Company Needs?

Posted on: October 23rd, 2008 by Joe Giordano No Comments

New Forrester Research study shows how to use your return policy to boost profits and gain market share.

Forrester Research: Crafting a Returns PolicyWith the economy plummeting, many eCommerce retailers are frantically searching for ways to boost their sales and remain profitable. Many have turned to using sales and other promotions to acquire new customers while many more have resorted to targeting their existing database of customers in an attempt to encourage increased spending from their core customer base.

While both of these methods are responsible for great successes for many online retailers, it is often a case of everybody making the same moves, thus eliminating the competitive advantage that they could provide.

In a recent Forrester Research study commissioned by UPS, researchers suggested a third, often neglected method, for gaining competitive advantage, acquiring new customers, and ensuring customer loyalty. They suggested that by providing a free or subsidized return policy, retailers can build customer trust, encourage increased online spending, and differentiate a company from its competitors.

Four out of every five (81%) people interviewed for the study agreed that they are more likely to buy from a retailer that makes returning products easy and that same percentage also agreed that they were more likely to remain loyal to a company that has a generous return policy. On the other side, seven out of ten (73%) of consumers are less likely to buy again from a company with a difficult return policy.

This suggests that the vast majority of consumers are influenced both to buy from and remain loyal to eCommerce retailers with generous return policies. It is surprising then that the majority of online sellers do not offer return policies that encourage sales or loyalty. The study found that many retailers saw the cost of offering free returns to be too high and instead there was an increased focus on reducing returns altogether.

There are a few companies, such as Zappos and Netflix, which have redefined returns from an evil to be avoided at all costs to something that increases loyalty and boosts profits. They know that returns are an unavoidable reality for online sales because consumers can not touch, feel, or try out products before they buy them. Therefore by demonstrating to customers how easy and inexpensive returns are, these companies have managed to garner a significant competitive advantage.

According to the survey, over half (55.2%) of respondents saw the difficulty of returns and the cost of re-stocking fees to be the biggest problem with online purchases. This is likely because on average, people spend 27 minutes and $7.85 on returning an item they purchased online. It is no surprise that the top frustrations when returning an item are paying for the return and actually going to a shipping carrier. Researchers also found that because of these returning hassles, one-fifth (22%) of consumers have reduced their online spending habits.

On a more positive note, consumers are far more likely to make purchases from retailers who offer flexible return policies across all vertical markets. This trend is particularly noticeable in soft goods where almost nine out of ten (87%) respondents were likely to return to a retailer with a flexible return policy compared to only two out of ten (19%) respondents who were willing to return to a retailer with inflexible returns. Similar results were found for grocery and convenience items, media, other hard goods, and electronics. Consumers were also much more likely to recommend a company with a flexible return policy then one that did not make returns easy (85% compared to 11% for soft goods).

It is also interesting to note that when asked about the importance of free returns compared to free shipping when making a buying decision, the results were almost equal. This means that a company offering free shipping could have equally strong results offering free returns while offering both could allow a company to gain a significant advantage over the competition.

It is clear that offering free returns can have a significant impact on customer loyalty and sales patterns for online retailers. Obviously this will not be the right strategy for all companies, particularly ones that incur high shipping and return costs, but many companies can benefit significantly from being the first to offer this type of deal. Even if some money is lost to increased returns and shipping costs, the benefits of additional referrals, increased customer retention, and overall sales from offering free returns makes it an excellent way to increase market share and overall profits.

Download the Forrester Research study: Crafting a Returns Policy that Creates a Competitive Advantage Online



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