Reverse dropshipping is an unpopular kind of business model. As a seller, you can sell high-quality premium products to countries with comparatively cheap options but yearn for quality options.
Quality products increase the profit margins because of their pricing. Hence you can make a decent share.
Though almost everything in reverse dropshipping is similar to the conventional dropshipping method, there are some factors, tricks, and techniques you should know before getting started.
So, in this post, you’re going to learn.
Let's dive in.
What is Reverse Dropshipping?
Reverse Dropshipping is a business model of selling high-quality products procured in western countries (i.e., UK & US) and selling them in Asian countries (China, India, Pakistan) that produce cheap products.
As the name means, the principle of this model is the opposite of dropshipping.
Dropshipping is about sourcing products from countries famous for cheap product production and selling them across the globe via ecommerce platforms.
As a seller, you need to find dropshipping suppliers, upload inventory on your ecommerce site, and market it to the right audience.
With this, dropshipping is considered an easy way to start selling online. The value of the global dropshipping market size is expected to grow to 476.1 billion US dollars between 2021 to 2026.
Image Source: Statista
In dropshipping, you don't have to worry about product procurement and warehousing – which is the biggest reason people find it easy to start with.
Despite being easy, almost 90% of dropshippers fail in the first quarter. Plus, the success rate in dropshipping is only 10%, with the biggest cause of low success rates being product quality.
On the contrary, in reverse dropshipping, you have to deal with dropshipping suppliers from western countries and sell products in Asian countries.
Though Asians are known for being online sellers around the globe, they are quite active in online shopping.
According to Statista, the number of online buyers in Asia is expected to reach over 3 million users by 2025. In 2022, the projected eCommerce market volume will be over 1 billion, with most revenue generated in China with an annual growth rate of 8%.
Not all Asian buyers are interested in local cheap quality products. Some are ready to purchase high-quality imported goods at a slightly higher price for the improved value.
That's who you have to target for your reverse dropshipping business.
How Does Reverse Dropshipping Work?
Reverse dropshipping works on the same model as regular dropshipping. But unlike sourcing your products from cheap markets, you source them from the UK or US.
Otherwise, all steps are similar.
First, you have to decide on a product you want to sell. Remember, online shoppers are ready to purchase quality products at a premium rate. So, choosing a great product with a higher value for money would be a great option.
If you fail to deliver great value for money, you might fail at building trust as an online seller. It can affect your reputation in the eCommerce world.
Once you decide on a product, you need to find a supplier. The supplier will be handling product procurement and fulfillment.
You can search for a dropshipping supplier on the following platforms.
When you find a supplier, set the deal. Check the product description, weight, size, and handling guide if a sensitive or perishable product.
Make sure to test the product before you set your eCommerce site live.
List products with details like category, product images, pricing, and description. You need to come up with an order flow as well.
These days many dropship suppliers have automation features. They offer a plugin or extension to automatically help you upload products on your eCommerce site.
Lastly, you have to put in some effort to get audience traction. Keep everything set for SEO, social media marketing, and email marketing to get as much search traction as possible.
Once you start receiving orders, your suppliers will fulfill them. You and your customers will get an order tracking link to see how things are going.
After successful delivery, you can send the review page link to the customer and ask for feedback. That's how reverse dropshipping works.What Are The Pros and Cons of Reverse Dropshipping?
Although reverse dropshipping is quite fascinating and is more likely to succeed than the regular dropshipping model, it comes with some risks.
A better understanding of these risks will help you understand whether it is suitable for you or not.
Pros
Lesser Competition
Reverse dropshipping is relatively new in the eCommerce world. Many sellers are not aware of it. So it brings lucrative opportunities to grow.
The Asian eCommerce market is exponentially increasing and is expected to grow in the coming years. Moreover, only a few people are executing this model, which leaves a lot of room for you to come in and excel.
Better Margins
Reverse dropshipping is about high-ticket products which give you a great profit margin. It is one of the most appealing aspects of the reverse dropshipping business in contrast to the standard model, which deals with cheap and low-price products.
To make enough, you need to sell thousands of low-price products. However, in reverse dropshipping, only a hundred sales would be giving you high profits.
This means you can focus and concentrate more on marketing to the right audience and delivering a better experience rather than worrying about each sale.
Target a Huge Market
China is the world's most popular country, with a population of over 1.4 billion. This huge population is quite interested in online shopping. As per Statista, China's retail e-commerce sales value amounted to around 2.64 trillion US dollars, representing a 14 percent year-on-year growth.
By 2026, online retail sales in China are forecasted to grow by over 4 trillion US dollars. With reverse dropshipping, you can target this huge market.
Excellent Return Policies
Sellers in the US & UK markets are way ahead of Chinese suppliers in offering a return policy. Chinese suppliers are known for their strict return policies. In many cases, there is no option to return a product.
Even if possible, in some cases, the process includes a painful experience leaving the customer frustrated.
To avoid this unsavory experience, you should partner with suppliers offering an easy return policy.
However, a great return policy could be sending a new product without asking for the previous one. But it is considered an ideal condition.
Still, western countries are known for their compelling return policies. In a 2019 survey, 67% of respondents in the US stated they found the return process of online purchases easy and convenient.
Better return options promote a better customer experience and improve customer satisfaction.
Cons
Different Market Conditions
For reverse dropshipping, your target country is China, where Google and Facebook are banned. This means if you are a pro in FB and Google ads, it will not help you with sales in China.
Instead, you will learn entirely different market conditions on new platforms. In China, they use Baidu as a search engine. For its better use in eCommerce marketing, you need to understand its basics and trends and develop a strategy.
Language Barrier
Mandarin is the national language of Chinese, and only a small proportion of China's population can speak and understand English.
It means your eCommerce site, marketing content, activities, customer support, and almost everything should be in Mandarin. Without it, you will face several hardships at all stages of your reverse dropshipping business.
Unpredictable Challenges
As selling in China from across the world isn't common or usual, you will encounter several unpredictable, challenging situations.
At first, you will have to figure out a trustable and reliable shipping service provider. Then, you would need to deal with strict regulations and requirements of customs during the shipping process.
USPS, UPS, FedEx, and DHL all offer shipment services from the US to China. But you have to select one which offers the fastest service with better quality experience within minimum rates.
But the key issue is delay in custom.
Beijing airport is known for being constantly busy. Plus, you will be required to submit several documents causing delays.
The government also changes its policies from time to time. So you will have to stay updated about that too. Any mistake can cause severe delays in product delivery.
These regulations are unpredictable and would need you to be very careful. The best course of action here is to do proper research. Prior research related to business registration, custom requirements, taxes, and other regulations would help you on this bumpy ride.
How Can You Start a Reverse Dropshipping Business?
You can start a reverse dropshipping business in five steps.
- Create a business plan
- Fix a deal with suppliers
- Setup your eCommerce store
- Translate your store
- Run marketing campaigns
Here are the details of each step.
Step 1: Create A Business Plan
For a stable reverse dropshipping business, you need a proper well-thought-out plan to execute. In-depth research before launching your business could play a key role. It can save time and help you analyze possible hassles in your journey.
Before getting started, you have to do in-depth research about
- Business niche
- Profitable product
- Competitive research
Business Niche
Not all niches are the same. You have to decide on a particular segment of products to sell on your online store. But before selecting your niche, you need to do research.
A better way to do niche research is by using the Baidu Index – an equivalent of Google Trends. It is a tool that represents normalized search volume and helps track the online behavior of Chinese buyers.
Notice Baidu search trends to understand if your selected niche is trending and has a future or not. If people search for products in the same niche, you will have strong statistics to help you forecast future trends.
Profitable Product
With the data acquired in the niche research, you have to dig deeper into different categories of a selected segment and find the most searched keyword.
For this, you can use Baidu Keyword Planner. It is a great tool that lets you understand the online buying behavior of the Chinese audience with a clearer understanding of what search terms they use.
With Baidu Keyword Planner, you can access valuable data, including
You can also identify the keywords they use to search for a specific product with the intent of making a purchase.
With a better look at the search trends of your target audience, you can forecast the potential of your target niche.
Competitive Research
Now that you have decided what you will sell in your store, it will be wise to check how tough the competition is. Understanding the competition in your niche and how well your competitors are doing can help you see through things.
Your competitors might have important clues to success. You can study their marketing campaigns and the net revenue and figure out a solution for things they are doing wrong.
An eagle eye over your competitor's performance, including website, product price, shipment options, marketing methods, product description, and overall reputation, can help you learn how well they perform.
With such a strategy, you can develop a better marketing plan and have better sales.
Step 2: Scout For Suppliers
Finding a supplier is a critical step in your reverse dropshipping business. You have to find reliable suppliers who ship genuine products from US and UK brands.
Without a supplier, you won't have any products to deliver.
With DropCommerce, you can easily find suppliers from the US market shipping products of real brands with features like fast and reliable shipping and order tracking.
You have to consider several factors for a supplier, including the product price, minimum order requirement, fulfillment facility, and currency conversion.
Moreover, you have to make sure that the product is of high quality and that the fulfillment service is reliable and fast. For this, it is suggested to place a test order to understand the workflow quality.
Step 3: Set Up Your Store
Once you are done with the product research and suppliers, it's time to take action. Setting up your eCommerce is easy. You can use any top-rated eCommerce platform or build a site on Wix or WordPress.
Your reverse dropshipping website should be responsive, easy to navigate, and of fast loading speed.
Moreover, it should contain all important and necessary information in an accessible format. For example, product images, descriptions, reviews, order placement options, live chat (if available), and contact information.
Step 4: Translate Your Pages
Since you are selling in Asian countries, mainly in China, it is important to convert your web pages into their native language. For this, you should work with fluent Mandarin (Chinese) speakers and writers who can help you translate web pages.
Otherwise, you can use translation apps. But that wouldn't be of that much help as Mandarin is a diverse language, and the chances of screwing up your content would be higher with a translation app.
Step 5: Focus On Marketing
Marketing is a crucial part of your business plan. Unlike the regular way of marketing we use on Google and social media, you will have to learn new ways because people in China use different channels for search and social interactions.
This means you can't rely on conventional information and figure out things for better results. Baidu has all the tools you need to get started, but you would need to spend time understanding the search engine.
You can also run paid ad campaigns that are considered more profitable than organic ones. Although 74% of people are tired and done with social media ads, 48% of people have reportedly purchased something via paid ads.
But instead of Facebook, you would need to run ads on WeChat – the most popular social app in China.
Though you might need to learn and understand the platform before coming up with a marketing plan, running an ad campaign on WeChat would help you see things.
Deliver a Remarkable Post-Purchase Experience in Any Language with Rush
Once you start receiving orders, automate the fulfillment process to make things easy. Many platforms offer order tracking features, but you can also use other apps like Rush to handle things independently.
Rush will let you deliver an outstanding post-purchase customer experience to help you increase sales and boost customer retention.
It comes with a multi-language feature letting you automatically translate your tracking pages and email notifications. By letting Rush’s team set up your automations, you can save time, brainstorm new business ideas, and improve your customer experience.
Takeaway Points
Reverse dropshipping is relatively new in eCommerce but holds huge growth potential. You can get a significant share of Asia's growing eCommerce market by spending some time on research and strategies.
Setting up your reverse dropshipping business is easy. But how you handle your marketing campaigns would need a bit more effort.
Customer experience could be a big question mark for you because of the language barrier, but apps like Rush can help you handle all that. With Rush, you can automatically translate email notifications and product tracking pages into 23 different languages.
Start your Rush 30 day FREE trial now.
With all the actionable tips, it's time to kickstart your reverse dropshipping business.