Dropshipping is notoriously well known in the ecommerce entrepreneurship circles. Why? Because it requires no upfront inventory and platforms like AliExpress, and apps like Oberlo make it so easy that even children can get up and running in a matter of hours. But the ease of it all creates lots of frothy problems which can be distilled into two major categories:
- Competition: The low barrier to entry means there is a lot of competition
- Lack of Trust: Unknown brands look untrustworthy which makes customers unwilling to buy
So does this mean you shouldn't dropship?
No. Dropshipping is a great way to get introduced to the ecommerce world and de-risk your learning. After all, you need to learn about this industry and your market, earn a few scars, and develop some grey hairs before you're in a position to benefit from success. I would never dissuade someone from trying their hand with AliExpress dropshipping, but you should be aware of the pitfalls so you can take steps to avoid failure. In this post I'm going to offer up an idea on how dropshippers, or any type of entrepreneur, can mitigate the two problems above using the 'Concierge Approach'.
Turning Dropshipping Weaknesses into Opportunities
Basically, we want to solve for the question, "Why should customers buy from you, and not the hundred other places that offer the same?"
Since the barrier to entry is so low there may already be lots of competing stores, as well as the risk of competing stores popping up if they learn you've started finding success. This is a threat. But when you consider the fact no one knows your brand the threat turns into a weakness. And this weakness will keep you from making sales.
But as the Instagram diagram above shows, we're going to develop an Opportunity from the natural dropshipping scenario. We're going to do this through developing a one on one relationship with your potential and current customers, and it starts with you becoming their concierge. You need to become like their butler when it comes to the niche your store is focused on. It's an idea from Eric Ries' book, The Lean Startup, he calls the 'Concierge MVP'. The idea is to embrace a service mentality to supplement your product until you build enough brand trust and expertise that you can focus on product sales.
What is the Concierge Approach?
Our Concierge Approach comes from the 'Concierge MVP' which gets touched on in the book as a phase entrepreneurs should spend time in before doing a full "launch". Essentially, the concierge MVP is where the founders manually do the tasks their software is supposed to automate. For example, if your product is designed to analyze your website visitors and give you a recommendation about what content to post next, the concierge approach would be for the founders to contact the customer and communicate the recommendation personally. The benefit here is you learn exactly what the customer is looking for, and learn more about their pain or passion. The two-way conversation allows the founders to ask questions and really get to the bottom of the need for their proposed solution. This way, they can be sure they are building the "right" software once they start coding.
How to Apply the Concierge Approach to Ecommerce
In our adaptation for ecommerce, instead of manually doing what the software is supposed to do (since platforms like Shopify and BigCommerce have already done the coding for us), the entrepreneur's objective is to serve their audiences passion or problem. The idea is to provide a concierge service before or after the sale. The biggest problem with AliExpress dropshipping stores are the incredibly long shipping times that customers will experience, sometimes reaching as much as 8 weeks! Without going into the obvious reasons for building customer relationships (our blog is full of posts explaining the importance of customer relationships), let's agree you need to treat your customers like assets, not transactions. If your product is going to take longer than 2 weeks to ship, you might want to consider getting ahead of your customer's frustration and reach out to proactively develop a relationship. Call up your customer, let them know the product will take some time to reach them, but that you're available anytime if they need support. This is where you can extend your services as a concierge. You can also use this approach if you've run out of inventory and new inventory will take a while to come, or you're doing pre-sales for a new product.
Example of an Ecommerce Concierge Service
Let's assume you have started a surfing related ecommerce store. You sell surfboards, surfing equipment, snorkels, apparel, etc. but are having a hard time getting more than a sale or two per week or month. We all know how frustrating this can be, you have traffic, abandoned checkouts, but the sales conversion is way too low.
This is because your brand doesn't carry trust. No one has heard of your brand, and few trust your website. Sounds harsh, I know. But one of the most common misconceptions for new ecommerce merchants is assuming their audience will trust their store with their money. New merchants overlook the fact that consumers don't know who they are. Just because you have an online store doesn't automatically earn your operation trust. 10 years ago it was hard to have an online store, so anyone that had one automatically earned trust because people knew there is probably a team behind the product. Today, with platforms like Shopify, a 14 year old can make a decent looking online dropship store. The ease of setting up a store also spiked the number of competing stores, giving buyers the luxury of shopping around and doing business with the website they think understands their needs best. So again, why should they trust your brand over the countless others?
The concierge approach solves your trust problem. With this approach, you develop a deeper relationship, and you're proving to your customers that you care about them. You would call each of your customers after their purchase (within 24 hours).Thank them for trusting your store, and provide details on their order like shipping times. Even if you're not dropshipping from AliExpress and the product will only take a few days to ship, it's a good idea to reach out to each buyer and just say thanks. Here is another post I put together about the benefits of saying "thank you" to your customers.
What you do next lays the groundwork of the most bulletproof relationship any brand in your sector has. Ask them if you can be their personal 'Surf Concierge'. Tell them you will update them with the best swells and waves in their area. If they are beginners, you can suggest the best lessons (bonus points if you strike a deal with local surf schools and score discounts for your customers). You can even send them links to interesting new Kickstarter campaigns for surfing related equipment. The point is, go above and beyond in serving your customers' passions and solving their problem.
Reid Hoffman, co-founder of PayPal, LinkedIn, and early investor in almost every social networking startup in Silicon Valley had a great quote about people, “Opportunities do not float like clouds in the sky. They’re attached to people. If you’re looking for an opportunity, you’re really looking for a person.” This holds even more true in Ecommerce. When merchants say they're just looking for an opportunity to sell, what they should really be looking for are people. And treating those people like their brand assets so those connections can one day turn into loyal and recurring buyers.
Results of the Concierge Approach
When you do this, who do you think they are going to contact next time they need surfing equipment?
That's right, you.
This kind of post-sale service will blow your customers' mind. Customers expect to be treated like transactions. Once they spend their money, the business is happy, and they don't expect the business to care about them anymore. That's why if you care MORE after the sale, it will signal something special to your customers. This is what will ignite repurchases and word-of-mouth, which will grow your brand value and your sales.
How to Get Started as a Concierge
If you have a Shopify store, install the free Scout app so you can be alerted about pre- and post-sale customers. As soon as a customer is ripe for relationship building, Scout will alert you about the customer and enable you to reach out either through SMS, Phone or Email.
If you're still not quite sure what a concierge does, or is, check out this post about the traditional job title. Typically if you close your eyes and image a concierge, you probably picture the person behind a standing desk at the entrance of a hotel. Their job is to service hotel guests with whatever they need; such as dinner reservations, show tickets, even last minute gift wrapping.
I know some of you are thinking this is a completely non-scalable strategy. How is spending so much time looking after a few customers be a good use your time?
It's not meant to be scalable for new stores (big stores can scale through VAs and outsourced call centers), for small stores it's meant to build a base of loyal customers which will drive new sales for you. Until you have enough sales to grow your business by re-investing profits, there is no reason not to try this approach at least once. I guarantee you will be shocked by the brand value your business will generate through your concierge approach.