31/10/2023 Franck Bugnet Tip Guide

Selling dropshipped with PrestaShop

Ah, leave your boss, go into online e-commerce and gain your independence and regain a form of freedom. But it seems impossible when:

  • Your children refuse to let you turn their bedroom into a storage area and packing shop
  • .
  • You don't have the budget to build up a stock
  • .
  • And don't have the time to manage shipments


Then dropshipping (or indirect selling) may be for you, if you follow our advice and learn to avoid the pitfalls specific to this model.


The principle and advantages of dropshipping



The indirect sales model:

  1. Customers choose their products and buy on your site.
  2. Automatically (or manually if volume allows), the order is transmitted to your dropshipper.
  3. It's the dropshipper who packs the products and ships them to the customer, on your behalf.


For customers, it's transparent, the whole business relationship is between you and them:

Principle of dropshipping

Advantages:

  • No need for cash flow.
  • Large range of products available.

The constraints of dropshipping

  • Sometimes difficult to achieve a sufficient margin (3 to 20%).
  • Potentially very large catalogs to create and maintain.
  • Have good stock synchronization to avoid selling unavailable products (back ordering).
  • Large competition on the same products, at the same prices, same photos, same descriptions.
  • Responsibility retained, but logistics delegated.
  • It's not free and can be more expensive than shipping products yourself
  • .
  • You can lose control of your own reputation.

Things to remember:
  • If you're fighting the big low-price sites, you've lost in advance.
  • To succeed in e-commerce, you need to differentiate yourself and build a solid brand image.
  • Don't imagine that all you have to do is put a new store online with thousands of products to sell them.

Can you stay profitable by selling dropshipped?

Yes, but that requires calculating your final margin, before you launch, to choose the right dropshipper, the right products and sell at the right price. Don't work blindly, never confuse turnover (the total amount of sales, gross) and profit (what you're left with when you've deducted all costs from turnover).

Example of margin calculation with auto-entrepreneur status



Expenses:

  • Fixed registration fee (±400€/m)
  • PA=Purchase price to wholesaler, with VAT
  • Social contributions: 14.5%
  • Transaction fees (ex: 0.25€+3.8%)
  • Other fixed or variable costs (e.g. accommodation)
  • Income tax (1% or real (5.5% or 14%) on 29% of sales)



Revenues:


CA (sales) = ∑ PV, VAT-free

Margins:


Gross margin on PA = PV-PA Net margin=∑revenues - ∑expenses

How to create and manage a large catalog



This requires rigor and time


ex: Each product will need to have a unique identifier of the "supplier reference" type)



Most importantly, requires a flexible import and mass management tool from the Merlin Backoffice ™ class:

  • Easy and fast to create and/or update, work en masse.
  • Allowing choice of headings when importing (fast stock updates).
  • Enabling automated margin management.
  • Automatic processing of images, features, variations, etc.
  • Automatic management of products that disappear from the catalog to avoid selling them and having to refund, which can kill your reputation in a matter of days.
  • Allows you to quickly reorganize your store.
  • Who can very quickly create/activate/modify discounts on thousands of items (promos, sales,...).
  • That gives you visibility over your sales.

How to choose your dropshipper

The choice of your partner(s) is essential to success. Here's a list of important criteria, there may be others depending on the theme:


  • Legitimacy (SIRET, INSEE,...), terms and conditions, opinions of other e-tailers.
  • No counterfeits, product quality....
  • Quality of support? easy to contact? in French?
  • Monthly subscription that increases costs?
  • Type of products corresponding to your sales strategy (rare or high-volume/good-market products).
  • Packaging quality. Personalization possible (private label shipping)?
  • Error and returns rates.
  • How will returns be managed? Return of products refused by the customer?
  • Keeping control of customer relations, from A to Z.
  • Format of files supplied (sometimes only xml or via a proprietary API that prohibits the use of third-party tools).
  • Richness and quality of info provided per product, photos, descriptions (even if they'll have to be redone).
  • Frequency of stock updates.
  • Import system provided: check that it doesn't "reset" your manually established margins.
  • Purchase price in relation to the market (margin) and cost of delivery charges.
  • Don't choose a dropshipper who imposes sales prices.
  • Ideal (but very rare): have exclusivity in France.
  • Large volume: existence of a module to automate the ordering process.
  • Payment possible at the end of the month?
  • Within or outside the Euro zone? (to avoid customs declarations and VAT issues).
  • Avoid very large wholesalers (Chinese) if you're very small.
  • You have values and ethics? sell products made in France, non-polluting and paying their manufacturer or producer well.
  • Be able to test the dropshipper with a few products before signing a contract.
  • Written contract only. Read the fine print.

It's essential to differentiate

For example, dropshipper Brandsdistribution claims 60,000 resellers, who are all direct competitors among themselves! good luck to them, there will be few chosen.

What strategy to adopt?


  • Broad range or specialization? specialize. It's better to have few, well-referenced products in the catalog than thousands that don't bring in any visitors.
  • Low price or high-end? choose the high-end, which often offers better margins.
  • Choose a very large market and therefore accept very big competition (e.g. mobiles, sex toys) or on the contrary a niche? this is debatable, some have succeeded on hyper-saturated markets like refills for electronic cigarettes, but it's often because they were among the first on the scene. We advise you instead to look for a niche, if possible with a low-competition market, which will make referencing easier.
  • Whether or not to go the multi-shop route, with differentiated strategies per store? it's not forbidden, but only if you have the time to do things right and the budget it requires. If you succeed with your first boutique, do it later. It's not the "volume" of the offer that makes it successful.
  • Adapt the style (theme) of the site to your strategy and brand.
  • Prefer private label shipping (your brand appears on delivery packages).
  • Prefer a market that helps build customer loyalty, so with a high probability of new purchases. Ex, if you sell water packs, it's easy to encourage them to recommend them again and again. If you sell phone covers, it's unlikely that your customers will recommend a second one the following month.
  • Plan for a marketing and SEO budget at least as large as the technical budget. Take this into account in your preliminary analysis of estimated sales margins.


The fatal weapon of war is SEO


  • If you're not present on the first or second page of Google search, you won't sell anything.
  • Good training and tools. We recommend you take out a subscription to the Semrush SEO tool:
  • Rework names, product descriptions, meta fields with Merlin following Semrush's advice. Enrich vocabulary (with MagicEdit in Merlin, which lets you replace words with synonyms). Don't underestimate this recurring task!
  • Hyper important: create real additional, referencable content (CMS, forum, advice pages, blog).
  • Also be present on social networks to make yourself known and build your e-reputation.
  • Avoid the false ease of paid referencing (Google Ads), which is very difficult to make profitable.
  • Be very patient and persistent, SEO takes a lot of time.

Conclusion: is choosing indirect sales with PrestaShop and succeeding with dropshipping possible?

Yes, by following these recommendations:

  • Choose a niche market (or several with several independent brands and boutiques).
  • Go for the high-end (or very high-end, but it's almost impossible to find), which allows you to make more money.
  • Always make your margin calculation, taking all costs into account, don't forget any charges, taxes, subscriptions, fixed costs....
  • Take the time to choose a field where competition is limited. So avoid anything sold at low prices on Amazon.
  • Don't get involved in the lowest price war (too much competition, no margin possible).
  • Once you've chosen your domain, choose your products carefully. In the beginning, the fewer you have, the more you'll be able to concentrate on the quality of your site's content and differentiate yourself.
  • Your catalog will be big in the end though (to offer choice), and it's imperative to replace the descriptions and SEO meta field to differentiate yourself. It's therefore essential to be able to work quickly with a mass management module like Merlin Backoffice, which costs around a hundred euros and pays for itself quickly, especially as you only pay once, with no subscription required.
  • The tool you choose should also be able to automatically manage obsolete products to avoid back ordering (having to cancel dearly acquired orders).
  • Invest in your SEO and e-reputation. If you're invisible, you won't sell anything.
  • Start with microenterprise status, but leave it quickly if sales take off because this status makes you pay charges on all sales. With the other statuses you pay more charges, but only on the actual profit.
  • Don't spend too much, but at the very least invest in a quality site and two tools, an SEO management tool like Semrush or SERanking and Merlin Backoffice.
  • Take the time to choose your dropshipper(s) carefully. If possible, test them with a few products.
  • Don't count your hours and don't believe in sirens (scammers of all kinds who sell you pseudo techniques to earn thousands of euros quickly).
Don't hesitate to share your opinions, advice and experiences on this complex subject. We'll use this information to enrich this guide.

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