Besides manufacturing products, you had to set up a warehouse to store your inventory. You’d need to buy trucks. Then you’d have to hire reliable staff to drive them.

This was all before figuring out how to ship products across multiple countries and currencies.

Then came dropshipping. What is it? For many people, dropshipping is a business model that has made online entrepreneurship possible for the first time.

Dropshipping: what it is and how it works

Dropshipping means you’re outsourcing key areas of fulfilling eCommerce orders. This includes procuring products, storing and shipping them to customers.

How to dropship depends on the partners and providers you use. In the most common scenarios, your focus as a seller is on marketing and attracting customers to your online storefront or marketplace. Then, as orders get placed, sellers confirm them to customers, pass the order information to their dropshipping service partners who fulfill them.

For sellers who master how dropshipping works, eCommerce becomes highly efficient. Instead of making their own products, for instance, they can sell goods from other vendors and take a cut. As long as they can ensure a good customer experience across the entire eCommerce journey, it can be a profitable business model.

Researchers estimate dropshipping will grow on a global level by nearly 24% between now and 2032, becoming a market worth more than $1.9 billion.

That said, sellers shouldn’t be fooled by images of sitting by the beach running an eCommerce business with little more than a laptop. Dropshipping has become highly competitive. You have to keep a close eye on profit margins and other key data points. Supply chain disruptions can grind your business to a halt. There are also a number of legal issues and liability risks to consider.

This post will not only answer the question, ‘Dropshipping: what is it?” We’ll also walk through the essential areas you need to know. We’ll not only cover what dropshipping is, but the differences of dropshipping on Amazon and other marketplaces.  We’ll also look at the technologies you need you have in place for dropshipping and how to get started.

Dropshipping without a VAT number: Is it possible?

Dropshipping allows you to begin thinking about growing your business on an international scale from the moment you launch. While digital channels have made it easier to market and sell to customers in almost any geography, you also have to take into consideration legislation that governs these processes. The United Kingdom’s value-added tax (VAT) is a good example. Read before you try dropshipping without a VAT number.

Having a VAT number is a standard practice for many businesses, but the requirements from HM Revenue and Customs (HMRC) differ depending on where you operate. This is true for those using dropshipping suppliers as well. If you’re based in the U.K., for example, you’ll only need to register for a VAT number if your turnover exceeds more than £85,000 a year.

For those selling from outside the U.K., however, dropshipping without a VAT number is impossible if your target market includes U.K. customers. This includes those based in Italy or many other countries.

Fortunately, HMRC has simplified the process by offering VAT number registration through its website. Remember to talk to your accountant about whether expenses associated with VAT registration and import fees can be written off as part of filing your business taxes.

ATECO code for dropshipping

One of the most critical steps in getting your VAT number is using the correct ATECO code. First introduced by the Italian National Institute of Statistics in 2008, ATECO codes are a combination of letters and numbers that classify businesses according to the scope of their economic activity. This informs your business in terms of tax rates and social security contributions.

In this case, the ATECO code for eCommerce businesses, including those that use dropshipping services, is 47.91.10. It applies to both online stores that operate as a single brand as well as marketplace entities such as eBay, Amazon and Zalando.

Once you’ve submitted your ATECO code as part of the VAT registration process, you’ll also need to register your business with INPS to determine how much you’ll pay in contributions based on your business revenue. There are also fees you’ll need to pay to the Chamber of Commerce and municipality in which you’re operating. These range from €53.00 to a maximum of € 128.00. Always do your research to check for any changes to these requirements and consult a taxation or accounting expert to field any other questions.

Dropshipping suppliers: Which are the most reliable?

Although dropshipping takes away many of the headaches associated with selling online, you’ll only succeed based on the quality of your partners.

When you’re looking at manufacturers, for example, you may want to order samples to ensure your customers will get quality items. There should be consistency between what they see on your web site and what arrives at their doorstep, for example. It should work or fit as customers expect.

You also can’t afford to sell products that arrive damaged or incomplete. Items should be properly packaged and in a reasonable timeframe. For some product categories, pricing can be highly competitive, and you don’t want to opt for a manufacturer whose prices will cut in too heavily to your profit margin.

Apply the same attention to detail when you seek out dropshipping suppliers who will handle other stages of your customer experience. Depending on your target market, you’ll want to work with those who have warehouses in reasonable proximity to your customers to save on shipping costs. Suppliers should also be able to demonstrate speed and efficiency in every stage of fulfillment and delivery.

Take the time to discuss critical processes that will have an impact on customer satisfaction and your overall reputation. Things can always go wrong with e-commerce orders, whether it’s sending the wrong size or the customer simply changes their mind. Choose suppliers with reasonable return policies and refund policies. Check to see that they have adequate insurance to cover off any unfortunate errors.

Some sellers launch their business by having a network of several different suppliers that handle each aspect of manufacturing, order management and fulfillment. Another option is to work through an online marketplace. These sites may already have the visitor traffic you need to entice the kind of customers you want.

Better yet, marketplaces often operate a range of dropshipping services that make the process far more streamlined. Here are some of the most common examples:

Amazon dropshipping

Amazon is one of the best-known marketplaces in the world, especially in North America. That means there are likely a lot of potential customers browsing for their next purchase, which could include what you’re trying to sell.

Amazon dropshipping rules include making sure you’re the seller of record. This means you’re not only registered to let consumers make purchases, but that you’re setting prices and taking responsibility for returns. Even if you have other dropshipping suppliers shipping orders, you’re accountable to collecting sales tax and recording your revenue.

eBay dropshipping

It may have started as an online auction house, but eBay has become another giant in eCommerce and sees nearly 740 million visitors a month.

The biggest consideration for eBay dropshipping is to ensure you own the product you’re selling. For example, eBay does not allow you to take orders for a product from a listing you’ve posted and then purchase from another party that is also selling on eBay.

As long as you have a dropshipping supplier who can store your products on your behalf – or if you have a wholesale agreement – you can drop ship on eBay, which it also calls “product sourcing.” Other standard eBay dropshipping policies include making sure your items arrive safely based on the timeframe your listing includes, and that you take ownership of customer satisfaction and service.

Zalando dropshipping

With a focus on selling clothing and accessories, Zalando has continued to become a huge player in the European eCommerce market. Its most recent reports showed the overall volume of active customers have grown by 6%, reaching a total of more than 51 million shoppers.

Dropshipping on Zalando can be done through its Partner Program, which provides sellers not only with access to its marketplace but resources such as Zalando Partner University and the ZDirect platform to manage your online presence. Zalando governs dropshipping and other sales approaches based on its customer experience model (CXM), a set of key performance indicators it monitors to ensure it has the right members in its partner program.

What to sell through dropshipping? Discover the most searched products

The dropshipping model works for almost any physical product. You can find sellers who have been successful creating eCommerce businesses around everything from air fryers and camping gear to interior décor and pet toys. Fashion, however, represents one of the most promising dropshipping niches.

In a study that compared categories such as electronics, toys, furniture and food, fashion emerged as the top dropshipping segment. The same research has forecast fashion dropshipping to reach a compound annual growth rate of nearly 25% by 2030.

Signature clothing and apparel is a natural choice for dropshipping sellers. The products are always in-demand among online shoppers and easy to advertise through digital channels such as social media. Luxury fashion and style products also present considerable upsell and cross-selling opportunities, given that footwear and accessories can often complement existing purchases.

A category like fashion also provides a good reminder of choosing the right supplier. Signature clothing may be more prone to competition and returns, which means sellers should aim for providing an experience that is as easy and seamless as possible. Customers will expect to find the items they want quickly, and feel confident they’re ordering what is already in stock.

How much can you earn through dropshipping?

The revenue you’ll generate by operating your eCommerce brand with dropshipping services can be difficult to predict. Research the following areas to inform your calculations:

• Google trending searches: Use keywords that represent your niche and its products and get a sense of how often consumers are using them as they browse online. This can give an indication of current and future demand.
• Average order value: Explore retail industry analyst studies that show how much consumers tend to spend on the kind of products you’ll be selling.
• Average monthly visitors: Estimate the traffic you could achieve through online advertising and other marketing tactics. Alternatively, look at visits to popular online marketplaces where you could feature your brand.

With these data points in place, you can develop a conservative estimate based on a conversion rate of 1.01% and 1.04% and apply it to your expected average monthly visitors based on the average order value.

Successful sellers spend a lot of time in this area, factoring in macroeconomic conditions, tracking regional online shopping trends and ongoing analysis of the top competitors in their respective niche.

Dropshipping and invoices: Step-by-step operation

Managing stock, order fulfillment and other areas bring a lot of value to busy eCommerce sellers, and your suppliers deserve to be paid consistently and on time.

Invoicing for dropshipping services works a little differently than in a traditional physical retail environment, where a customer pays a merchant directly for a product it manufactured itself. The process usually looks something like this:

Step 1

A consumer browses the seller’s virtual store, which is fed with product catalog data connected to all key suppliers.

Step 2

Consumers place orders which are sent by the seller to the dropshipping suppliers, who then fulfill the orders.

Step 3

Suppliers generate a purchase order and invoice the seller for each item. This is where special discounts, dropshipping service fees, returns allowances and other terms are applied.

Step 4

Sellers pay the invoices, often through a business credit card or payment portal.

Step 5

Suppliers sent a receipt to sellers confirming payment.

Sometimes sellers can work out agreements with suppliers to be invoiced on a weekly or monthly basis. Volume discounts may also be available for sellers who manage to achieve high conversions and orders.

While dropshipping and invoicing may look simple at a high level, there’s a lot that can go wrong behind the scenes. That’s because everything in the steps above is predicated upon using accurate and up-to-date data across both seller and supplier eCommerce platforms.

Invoices don’t just been to be dated properly, for instance. Each one needs to be associated with a PO number from the seller’s ordering system. Ship dates, tracking number, delivery method, handling fees, miscellaneous charges – these are all key pieces of the puzzle. The invoice status needs to be recognized too, as either “outstanding” or “paid.”

Besides ensuring all parties are clear on return policies and handling fees, sellers and dropshipping suppliers will need to negotiate whether batch invoicing is permitted. Advertising co-op dollars and rules around paying for single-item orders are just two examples of other variables to consider. When it’s done well, invoicing should be a simple formality that both dropshipping suppliers and sellers take for granted.

Advantages of dropshipping using Suvae.org

The potential upside of using dropshipping to power an eCommerce business brings a lot of new players into the market. When it comes time to find the right tools, however, you’ll want to work with solution providers with a proven track record that you can trust.

At Suvae.org, for example, we’ve created the technologies that can bring greater peace of mind and confidence to sellers who see dropshipping as the backbone of their business. Work with us because:

• Suvae.org is already the product feed management and marketplace integration services platform of choice for some of the world’s leading retailers.
• Our software ensures the product catalog data shown on a seller’s site or within an online marketplace is the most recent and accurate picture of what’s in stock
• We can not only assist with selling through a seller’s web site or marketplaces but through the most popular social media channels, including Instagram, TikTok and more.
• We work fast – many brands have gotten up and running on marketplaces like Amazon and Zalando in a matter of weeks.
• We’re a true partner – our team provides deep expertise in eCommerce to help guide your long-term marketing and sales strategy.
• Suvae.org is constantly evolving with new features and capabilities to keep pace with the expectations of eCommerce brands and their customers.

Ready to take advantage of dropshipping? Connect with our team to learn more about our solutions, and how we can help you move forward today.

The post Dropshipping Guide: How to sell online anywhere, anytime appeared first on Suvae.org.

A few years ago, marketing research firm Gartner described this as a shift to a composable enterprise, where organizations would adopt technology like a series of interchangeable building blocks. This would lead to greater speed, flexibility, and resilience, its analysts said.
Achieving composability as a business may sound like a lofty goal, which is why the MACH architecture brings together all the principles that you can keep in mind to ensure you’re choosing the right solutions along the way.

What is MACH architecture?

As a MACH architecture backgrounder on TechTarget noted, MACH is more of a concept that businesses should use to develop a strategy rather than a one-size-fits-all blueprint.
The four principles include:

Microservices-based

No one wants to encounter the “domino effect” in software, where you touch one piece of an application and it affects every other part. Microservices avoids this by treating each application function on an individual basis. That makes it easier to update, enhance or remove specific services more readily than you could with monolithic applications.

API-first

For a long time, internal development teams within organizations or those within vendor companies would begin writing code and even launch applications, then realize their work wasn’t done. They might need to integrate with other tools or add some kind of enhancements. This often leads to a search for the right application programming interface (API). An API-first approach puts the horse before the cart, understanding that starting with APIs will give them more options later on.

Cloud-native

Similarly, many applications that were initially developed to be installed on a company’s own premises have been revamped over the past number of years to run in the cloud. This includes many CRM systems, ERPs, and marketing software tools. Today, the advantages of a software-as-a-service (SaaS) model have led to a cloud-native approach, where applications take full advantage of the elasticity, scale, and resilience of public, private, and hybrid cloud environments.

Headless

When many brands set up their first eCommerce sites, they were limited by content management systems that forced them to stick with the user interface (UI) that came with it. Today they have more options, thanks to headless commerce tools that decouple components like the UI from the back end where product data and other information are stored. This has eased the path for rendering content across mobile devices, wearables, and even “smart mirrors” in their store locations.

MACH architecture example

Several well-known brands are already demonstrating compelling MACH architecture example use cases. As Diginomica reported, pet food giant Mars Inc., furniture retailer Ikea, and Interflora are all moving to MACH solutions to improve the way they operate.

The article also profiled footwear brand ASICS, which sees MACH as a way of providing richer product data, such as details on how many of its running shoes have information about heel drops. Focusing on MACH principles is allowing the company to deploy solutions that will surface more of what customers want to know amid omnichannel shopping experiences.

MACH architecture pros and cons

Companies don’t change the way they adopt IT very often, and there can be an understandable reluctance to upgrade or migrate to solutions that aren’t fully mature. Deciding on whether MACH architecture is right for you will come down to weighing the following:

Pros

Greater uptime
Having an application crash or lag can have a detrimental impact on the business, particularly when you’re trying to sell to customers online. MACH solutions can help avoid this scenario because microservices, for instance, allow for greater fault isolation. That means pieces of an application can be remedied before a problem cascades to the rest. A brand’s digital presence can have higher availability as a result.

Faster upgrades
Brands may often be interested in bringing on new tools to assist with their sales, marketing, and online orders, but need to check first that solutions will mesh with what they already have in place. The composable nature of MACH solutions provides a more streamlined and accelerated path to integrating with a greater variety of applications and tools. This in turn could help brands gain a competitive advantage or speed up the time to market with features that customers want from a digital experience.

Scaleable growth
More customers, more orders, a greater mix of inventory – nothing should get in the way of brands increasing the rate at which they achieve their business goals. When IT can’t deal with large volumes of data or creates other impediments, it’s obviously not going to provide the expected return on investment. Opting for MACH solutions could provide peace of mind that they can grow at an exponential level without significant risk their IT will fail to keep up.

Cons

Lack of expertise
Many brands may not employ enough (or any) in-house developers who can create their own bespoke MACH architecture. This can be mitigated by working with trusted technology partners that have already developed their solutions based on MACH principles

More tools
MACH solutions that are developed or deployed internally may require additional tools to monitor and manage their performance. In other cases, however, SaaS tools will have measurement and reporting capabilities built into the core product

Legacy issues
Moving to MACH solutions could involve retiring older, monolithic applications that have been in place for some time. Rather than seeing this as a project calling for a complete revamp of your entire tech stack, look for specific areas where deploying a MACH solution will bring business value while putting you on the road to composability.

Selecting MACH Solutions

The criteria for what you need in a MACH architecture will depend on your business and its needs, but aim to cover these bases:

• Purpose-built: You want best-of-breed building blocks that were designed with specific business outcomes in mind versus more generic, all-purpose solutions
• Pre-built integrations: APIs and webhooks should make it easy to bring on applications and tools without causing significant business disruption
• Strong SLAs: The most trusted SaaS solutions include service-level agreements that let you move forward with confidence
• Continuous delivery model: Automatic updates eliminate the risk of solutions becoming out of date or creating vulnerabilities
• Access to expertise: Look beyond the solution itself and establish that you’re working with a company whose team can guide your shift towards a MACH architecture

MACH solutions for eCommerce

For areas such as product feed management, marketplace integration, and local inventory ads, Suvae.org offers an example of MACH architecture in action. This includes a cloud-native development path and sophisticated use of APIs, as well as pre-built integrations that make it easy to connect product listing to leading platforms such as Salesforce Commerce Cloud.

Moving to a MACH architecture doesn’t have to be a headache. Connect with our team to learn more about how to know if you’re investing in solutions that will turn your brand into a composable business.

The post Why MACH Architecture offers Greater eCommerce Flexibility appeared first on Suvae.org.

As Vogue Business reported, some of the luxury world’s best-known fashion houses have used everything from pop-up shops to limited-edition merchandise to cater to local interests. Others have set up permanent physical locations that reposition their brands from mass-market merchants to an integral part of specific neighborhoods.

This builds upon a long tradition of local advertising that connects with discerning consumers through their language, their sports teams, or cultural celebrations.

The Case For Selling Products Locally

Local online marketing and selling products locally became an even greater priority in 2020, when lockdowns amid the early COVID-19 outbreak restricted many consumers from shopping with brands nearby.
At the time, research from consulting firm Accenture found that 56% of consumers were shopping in neighborhood stores. The overwhelming majority (79%) said they were planning to continue this behavior in the long term.

The increased reports of floods, forest fires, and other impacts of global warming are also influencing shoppers’ decision-making. Data from Meta, which owns Facebook and Instagram found that “sustainable fashion” is nearly 12 times more likely to be discussed on Instagram than any other topic.

As shopping locally becomes the norm, global brands may need to combine their marketing activities with changes in where they source materials and how they manufacture goods to align with their customers’ values. This will not be without its challenges, but with the right strategy, it opens the door for deeper, more personalized relationships.

Local Online Advertising: Challenges And Strategies To Consider

Global brands that use local advertising need to market themselves to consumers in specific locales in a way that’s both authentic and credible. In other words, the ads they create or tactics they use need to demonstrate a genuine knowledge of, and interest in, the characteristics of specific communities.

If you’re ready to begin selling products locally, keep the following principles in mind:

1. Being present everywhere in the omnichannel journey

A 2022 survey of consumers found that 75% of people who use their mobile phone to make a local search end up visiting a store within 24 hours. For the quarter who choose to shop locally online, the customer journey needs to be just as simple. That means making it easy to find products on digital storefronts and displaying them with local pricing and currency information.

Remember that customers may also turn to brands with a local presence when browsing on social media or other channels. The path to purchase should always be as smooth as possible.

2. Ensuring every local brand promise is kept

If local advertising for a limited-edition product drives interest among niche clientele, they will have expectations that product inventories are accurate and up to date long before they walk through the door. The same research found that 58% of consumers who found incorrect information on a brand’s website would leave and not give them a second chance.

This is why smart global brands use local inventory ad campaigns. By showcasing products that appeal to them – and are ready to be picked up or shipped – they can have confidence they’re delivering a positive customer experience. This, in turn, means customers will have good things to say about a brand to their friends, family, and visitors. Another study showed that nearly 80% of local businesses believe their reputation is their greatest differentiator.

3. Reinforcing local inventory ads with brand visibility

Local online marketing works best when it resonates with the lived experience of its target audience. Beyond the pop-up shops and other examples mentioned above, there are plenty of local advertising opportunities global brands could pursue. These include:

• Creating products or merchandise tie-ins that connect with a locale’s history or heritage, such as images that include an element from a national flag, an iconic building, or local cuisine.
• Sponsoring a local charitable initiative, such as a food bank, that speaks to a locale’s unique needs
• Collaborating with local suppliers or artisans to boost the fortunes of an entire community
• Develop ads featuring the stories of local people that reflect their aspirations and milestones

When this is done well, brands can make a positive impression on consumers – one which can be reinforced by the local inventory ads they see later.

Next steps: Working with an experienced Local Online Marketing Partner

The way forward will have brands taking a two-pronged approach: marketing to the world at large but also honing on local communities that represent significant sources of potential growth. It may require rethinking how marketing budgets are allocated, the advertising content that is created, and even the people they hire.

In such a fast-changing industry, we believe innovation is the key to success. That’s why you should consider incorporating the right technology into the process.

An effective product feed management solution, for example, ensures customers are never disappointed. That’s because this technology allows you to organize all your product data in one place while running local inventory ads that cover a broader range of items within a specific radius.

Reach out to us for a consultation with our product feed management experts to get started.

The post Local Online Marketing: How Big Brands Respond to Local Competitors appeared first on Suvae.org.