Dropshipping saves time and space. Your business takes orders, and your manufacturer sends the products to your customers. You don’t need a warehouse or to spend time packing and shipping.

Despite its ease, your success as a retailer depends on your ability to grow your business. Take on a growth strategy to help you become a major player in online retail.

This guide discusses how to grow a dropshipping business, including:

  • Increasing demand
  • Increasing supply
  • Increasing price

How to grow a dropshipping business:

Increasing demand

It might seem a little obvious that the first step of how to grow a dropshipping business is to get more sales, but there’s more to increasing your demand than that.

To build a business that can expand, you need customer loyalty and excite potential new ones. Ultimately, your business needs to continue to improve its reputation in addition to its sales.

Market research

To increase your demand, you need a targeted approach to your marketing. Carry out market research throughout your business journey, not just at the beginning.

The more customers you have, the more you can learn from them and change your approach accordingly. For example, after a sale, send customers surveys and ask what they like about the product.

You can offer each participant a discount code on their next purchase. Ask about their demographics, experiences and lifestyles. Also, find out which social media platforms they use and what they want from future products.

Demographics are characteristics you can use to group people together to help with marketing. 

Possible demographics could include:

  • Age
  • Gender
  • Income
  • Education
  • Occupation

To learn more, check out: what is market research in business?

Target audience

With information from current customers, find the people most likely to buy from your store. These potential customers are your target audience, and understanding them is crucial.

Put together customer profiles (sometimes called customer avatars), these are hypothetical summaries of people who represent your audience. Use your research to detail their daily habits.

Your research-backed findings will inform your decisions on your vital marketing factors.

See also: how to define your target audience in six steps.

Branding

Branding is the public-facing identity of your business, it’s how people view your company. Your brand is essential for dropshipping because competitors likely sell similar things (e.g. printed t-shirts).

If your research suggests you need a rebrand, consider if you can lose recognition from current customers. Instead of changing, you most likely need to increase your brand awareness (learn more here).

Marketing messages

To make more people recognise your business, think about your marketing messaging. Although it’s essential to sell your products, make sure you also get across what your brand is in a memorable way.

Find something special in both your business and your products. Those will be your unique selling points (USP) and can be the main messages you get across.

Marketing channels

The channels you use to spread your messages should depend on where your research suggests customers are likely to be. For your online business, social media is probably your most effective tool.

Your customer profiles and demographics should point you toward specific social platforms. For example, young adults are likely to use TikTok.

Increasing supply

Improvements to your marketing will likely lead to more sales. So to meet that, the next stage of how to grow a dropshipping business is increasing your supply.

Manufacturers 

Changes to demand will put pressure on current suppliers, so make sure they can meet it. As you grow your business, you don’t want product quality or shipping service to deteriorate.

As a dropshipping business, you have a responsibility towards your customers. If they have a negative experience, they will blame your brand, even if it’s issues with suppliers.

Suppose you put extra time into increasing your sales through marketing. In that case, don’t let that go to waste with a loss of reputation from poor deliveries.

To ensure there aren’t problems with increased supplies, speak to your manufacturer to check. You might even find that you can negotiate a better deal if you buy many more products from them.

When suppliers can’t meet increased expectations, it may be time to find a new one. A vetting process makes sure you get the right business for your needs.

Vetting could include checks on:

  • Competency — are their current customers happy?
  • Finances — is the business likely to go under?
  • Ethics — are they environmentally friendly?

See also: how to find suppliers for an online shop.

Increasing price

If demand and supply increases, grab the opportunity to increase your prices. When it comes to growing a dropshipping business, the critical point is to continue the process for consistent growth.

Strategy

To increase your demand, spend more on your marketing. Price increases could help you raise the money to grow even further.

Note that you risk a decrease in your sales if customers don’t think it’s worth the raise in prices. You likely have a lot of competitors in your market, so try to make price changes subtle and competitive with other brands.

Low increases may put off a few customers, but most are likely to continue to buy from you. After one price increase, monitor changes in demand. It will help you decide which strategy to use moving forward.

To learn more about measuring changes of demand from price, see: What is price elasticity, and how does it work?

Extra funds help you increase demand and supply, which possibly means you increase your price again to keep growing. 

Many new businesses start with low prices when they enter the market and raise them slowly as their brand builds recognition.

Don’t drop the ball, keep finances ship shape with Countingup

A growing business can mean growing costs, which could mean that you struggle to keep track of them. Mismanaging money can mean you spend more than you earn, which hurts your profits.

Countingup is a business account with built-in accounting software, easy to use and accessible through your phone. Its expense categorisation feature sort costs automatically with HMRC approved labels, so you avoid any nasty surprises.

Get started for free.