Dropshipping business: competition and cost of goods

Dropshipping business competition and cost of goods

Starting a dropshipping business not all entrepreneurs take into account the competition. Experienced people in this field know very well that many people want to do this business. This is because dropshipping and sales are synonyms for them. But this is not so because large dropshippers greatly reduce the price, dumping, making a profit by increasing the number of their sales. 

It is worth understanding the main thing – just because of the low price you can not successfully sell a lot of goods. It is important to competently advertise the goods, to convince consumers, to influence them with various promotions or discounts, special conditions, and other marketing programs.

Relevant will be to work with several suppliers in dropshipping – this will help you get constant availability of the goods and thus smoothly sell them to customers.

How to outsmart and outperform your competition?

If you want to separate yourself from the thousands of other people who are thinking about starting a dropshipping business in 2022, you need to do some tricks. You need to find a way to be better and smarter than your competitors. How do you do that? The same way champion sports teams like the Philadelphia Eagles or Golden State Warriors prepare every week – by studying the competition:

  • Determine the competition: start by searching for the top sellers in your niche on Amazon and eBay. Also, note how many sellers are in the niche.
  • Analyze their product lists: how do they customize their product lists? What are their photos like? What commercial copy are they using? Find ways to make yours better. You can identify unique selling points or other improvements that will make your product lists more appealing to potential customers.
  • Read customer reviews: take the time to review customer reviews for a few of the top sellers in your niche. Pay attention to what customers liked and complained about so you can improve your approach to customer service.

What price to set for your dropshipping goods?

Imagine you have a list of suppliers who are willing to work with you and catalogs with prices. To find out what markup to do, you need to study the prices of competitors.

To do this, check the search results for the products you are interested in, check ads, accounts in social networks and sites ads. Insert all collected information into the table and calculate the average markup for popular products. Once you calculate the average markup on the market, you can understand what price to set for your products.

If you want to have a good flow of customers with minimal advertising costs, your price for your goods should be as attractive as possible for the customer and competitive. But you also should take into account the fact that there are different suppliers that offer different conditions.

Let`s take a supplier of children’s toys. Some of them give very good discounts of 10-15% for their partners (wholesale purchases). With the amount of 1 000 dollars, you can get a profit of 150 dollars. 

Therefore, working with this supplier there is no need to make a markup at all. All you need is to sell these toys at the same prices as the supplier. In such a way your price will be one of the lowest on the market and very attractive for both wholesalers and retailers. People will buy goods very well.

You can create pricing rules, price your products in bulk as well as fulfill and track orders automatically with the help of our Ali2Woo plugin. It is one of the best dropshipping plugins for WordPress dropshipping stores. With it, you will optimize your work processes and sell more. 

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