In this podcast, we look at dropshipping and the challenges and benefits both new and existing online store owners might experience.
Today I’m chatting with AJ Morris, lead of products and marketing at iThemes. AJ was part of the team behind building the WooCommerce managed hosting over at Liquid Web, the parent company of iThemes. They started creating hosting packages for specific needs, one of them based on dropshipping and WooCommerce.
I chatted with AJ about:
- What dropshipping is.
- The challenges that come with entering the dropshipping space.
- Perceptions of dropshipping.
- How adding dropshipping to your existing online store can benefit you.
- Dropshipping on your store vs. on a platform such as Amazon.
- The unique hosting package offered for dropshipping with your WooCommerce online store.
Today’s transcript is brought to you by GreenGeeks Web Hosting, where you will find WordPress hosting that’s faster, scalable and eco-friendly.
Bob: AJ Morris, lead of Products and Marketing at iThemes, is joining us today. How are you doing AJ?
AJ: Good. How are you, Bob? Thanks for having me.
Bob: You bet. I invited you on the show because you’ve had some experience in eCommerce and working in the dropshipping area. Lots of people are talking about dropshipping. I guess it’s like one of those things every year, somebody says, “Oh, this is gonna be the big thing.”
From what I’m reading, that people are becoming a bit more curious about it, maybe thinking about diving into it. And then I think a lot of people just absolutely … you know, even though it may be the right solution to them, they don’t have any idea.
So why don’t we start first with your experience around dropshipping— just to kind of lead into the rest of the show—and the questions I have specifically around it.
AJ: Absolutely. So … last year, we at Liquid Web, started to build a managed WooCommerce offering. This was a different offering than what you traditionally see in the market, with managed WordPress, in that when you look at managed WordPress, you get the features like backups, and securities, and caching, and updating of WordPress, so that you don’t have to worry about those pieces.
When you think about managed WooCommerce, there’s a lot of different things at play; mainly around your shopping cart. At any given time, there’s somebody likely on your site who is making a purchase decision, or going through checkout. And so, there’s different set of criteria in order to call yourself a managed WooCommerce player.
As we started to define that space, we spent most of 2018 working with established stores. These are stores that maybe they were hosted by other providers, and just weren’t experiencing the benefits of what we were bringing to the table, in terms of caching, and infrastructure, and performance tests, and all the other things that we’ve classified as managed eCommerce.
So around September, we started focusing on how can we help beginner stores. We launched a number of beginner plans to really help people that wanted to just get in and get their feet wet a little bit, in starting an eCommerce store. One of those startup strategies is dropshipping.
Dropshipping is a common way to start a store. You don’t have to keep inventory, here’s not heavy overhead to running a dropshipping store. So it made sense for us to build out a solution on our platform that works with dropshipping stores.
Bob: Now you’ve already kind of touched a little bit on what dropshipping is, and I think there are some people who get it, there are some people who absolutely have no idea of what we’re talking about, and might be intrigued with it, and then there’s those people who think they know what you’re talking about, and they don’t really understand it. So can you give your basic definition of what dropshipping is?
AJ: Yes. The first thing that most people think about when they hear dropshipping, is something being actually shipped, that, for instance, you’re getting shipped cheaper products from China. That’s a lot of what people think about around dropshipping. The simplest definition for dropshipping is that it’s a supply chain method in which the retailer keeps no goods in stock, but instead, transfers those customer orders, and those shipment details to the manufacturer; possibly another retailer, or maybe a wholesaler, who then ships those goods directly to the customer.
So I have no worry about keeping any type of stock on hand. I’m not actually fulfilling the orders. I have somebody else do that.
Bob: That is a perfect definition. I think when people hear that, they get a little excited, because they’re thinking, “I don’t have to have inventory.” But obviously, when you’re considering getting into it, especially at the first stage, there’s got to be some challenges that you don’t foresee
So you think, “I’m ready to go. This is gonna be easy peasy.” But what are some of those challenges?
AJ: The first challenge? If I’m gonna build an eCommerce store around the dropshipping model, I need to figure out what I’m going to sell. Do I want to sell freshly roasted coffee? Or cell phone accessories?
Obviously, those are two very different types of products.
Secondly, you need to understand if there’s any associated wait time from when an order is placed to when it is shipped, especially when you’re working with a manufacturer or wholesaler. They might allow you to take orders at any time, but you might have a three-to-five day wait period before the order can be shipped.
Like most people, I love Amazon Prime. I go o their website and order something, and within two days, I have it in my hands. But in a dropshipping model, that may not be always the case. You may have to wait three or five days to get something even to ship, not to mention where is it shipping from, what is the shipping cost. So you want to understand that kind of thing.
The third challenge, is, you need to understand, with your dropshipping supplier, if you can make individual purchases, if you can purchase one item at a time from them. Because you are purchasing that product on behalf of your customer, and then having it shipped. And sometimes those suppliers may say, “No, you need to order 20 or 30 at a time.” And so you have to do either a pre-sale, or you have to add a shipping time that’s associated with the product.
Then the last step is, you want to make sure that whatever you’re using for your store, in this case, it’s WooCommerce, that you can connect to your dropship supplier, because you’re gonna be sending over those order details of what somebody has purchased from your store; you’re gonna be sending over that shipping information so that it can get shipped over to your customer.
Bob: That makes me think of another question which ties in everything you just covered. And that is, do most of these vendors make it easy for you to find out that information? Or is it digging deep, and contacting, and talking to people? Have you heard from store owners where the challenge is in that piece of it? Getting that information?
AJ: Yeah. So there’s two ways to look at it. And thankfully, the first way is: WooCommerce provides a REST API. That’s built into the core, even into the core of WordPress. WooCommerce can use that API. So in many cases, you’re able to make that connection. It may not be as simple as installing a plugin, and then everything’s connected. You may have to do some setup on the supplier side to get that working.
But it is fairly trivial to get that up and running. When you’re looking at suppliers. though, there’s many different places you can go to find them. When you’re talking dropshipping, you hear of AliExpress, Banggoods, there’s a few others. And these are all mainly China-owned companies, or Asian Pacific-owned companies that will ship products to you.
So when you’re wanting to create something like a cell phone accessory store, you’re able to do that fairly easy. Again, you’re gonna have to look at the individual supplier site to determine. Does this product have a wait time associated with it? What’s the shipping cost? The caveat to the shipping cost is, is you can get free shipping, especially through something like China, where it’s their media mail. But who knows how long it’ll take to get something delivered to you.
Or if you’re going pay for faster shipping, especially to somewhere in the United States, you’re may almost be paying more for shipping than it costs for the product. So you have to weigh that out as you’re looking through things. Now the opposite end of that is, when you’re looking at suppliers. Let’s use my coffee roaster example. A lot of times, you might find a coffee roaster that does wholesale orders and they might be doing dropshipping as a method, branding your coffee the way you want it, calling whatever roasts you want your names, but they may not have as easy of a connection.
So, what I’ve used in the past, and what I’ve heard some other folks use, is something like the REST API with Zapier, getting your hands dirty figuring out how that works. But the great news is that when you’re small, and you are just trying to do something like that, a lot of suppliers are willing to work with you.
You can say, “Okay, I’m going to give you every order as they come in, you’re gonna roast them and ship, and just bill me at the end of the month.” You have some of those negotiating powers, and negotiation tactics that you can use to help with that dropshipping process.
Bob: Right. If I have a store, and let’s say I’m selling some products, and it’s my single online source of income… I’m gonna say I’m selling products, WooCommerce, maybe I’ve created some products, is it feasible, or is it a good idea to start thinking, “Well, maybe I should also sell on my store … do some dropshipping,” add some other products, but throw that into the mix, as far as me selling my own physical products, and now me selling some products that I drop ship?
Is that a good idea? Or is that insanity?
AJ: This is actually a great question and one I think that I’ve seen be the most common case for wanting to implement some sort of dropshipping method into an existing store. It’s very common for some businesses to sell products, whether digital or physical, that they own and maybe they carry the stock on hand, but then they also want to augment and increase their total cart purchase by adding a dropship supplier or two for some various products that maybe they don’t make.
I ran into this with a customer a few weeks ago, a coffee shop. They do their own roasting, they have all of their own coffee online and available for order. But one thing that they wanted to do was offer customized mugs, or different coffee-making tools, for lack of better words. So looking at Chemex coffee makers, or an AeroPress, or filters for those coffee makers.
What they were able to do is take their existing WooCommerce site that already has all of their physical products in stock and available, and find a shipping supplier, a dropship supplier that offered some of the products they wanted to sell. And then they imported those products into WooCommerce. And so, when you go to their site, you see all the products. So as consumers, we don’t even see that it’s coming from a dropship supplier. It’s gonna look like it comes directly from the coffee shop. It’s very easy this way for them to bump up that total cart value without needing to worry about what they have on stock.
Bob: So it’s the perfect opportunity to grow your store by offering more products without actually having to create more products. And if it’s a natural fit, like the example of the coffee roaster, it seems almost seamless. Yeah, people would think, “Well, this is cool. Now they offer this in addition as well as …” you know, it’s like those … even when somebody opens up a physical retail shop and they start adding little things, more things, other products. So yeah, that makes total sense.
I think maybe sometimes it’s an opportunity that some store owners aren’t even thinking of, and they can get a little creative with.
AJ: Yeah, as I like to say, it’s an easy way to make extra cash.
Bob: Right. Now I’m hoping this is a clear enough question, but do you find that most people who do dropshipping, are they more likely to want to do it on their own site, a website they’ve created? Are there pros and cons in doing one or the other? Or is it just kinda the way it is that one is more heavily used for that particular reason than the other?
AJ: It’s absolutely common to see companies have their own website that’s running on WooCommerce, and you can order products through there. But meanwhile, they’re also going to sell those same products on Amazon, or another type provider. The reality, though, is that we can’t forget about Amazon. They’re the 1,000-pound gorilla in the room. Anytime you think about ordering a product, most people would tend to just go to Amazon, order it, and be done with it.
So you want to get some of those customers looking at your products. You want to make them aware of your products, and purchase your products. And so it’s not uncommon to see Amazon as another channel for your product distribution; whether that’s you selling your products directly to Amazon, and they’re doing all the fulfillment and that kind of stuff, or if you’re using it as a channel for an eCommerce platform where you still do the order fulfillment, or your dropshipper does the order fulfillment.
The reality though with Amazon, is they have a ton of rules. To be participating in their program, you have to meet certain criteria. And it’s definitely a difficult process to get through all that. So you really want to make sure that you have an established store that’s up and running, and you’ve got some revenue that’s coming in off your main store before you try to go to Amazon, because Amazon’s gonna take percentages of each sale, and they’re gonna stipulate certain things about what products you can sell, how you sell them, what shipping, and all that kind of stuff.
Without going too deep there, Amazon’s possible and it’s very common to see established stores go there.
Bob: So you might have burst the bubble for everybody who said, “Boy, I can get on Amazon, and I can just sell away. I hear it’s so easy, and…” I’ve even thought that myself. But it can’t be just, “I’m just gonna sell my stuff.” It’s not just, you decide to do it, you get hooked up, and you’re off and running. It sounds like it’s quite a process to go through.
AJ: Yeah. I know when I was doing a ton of research at the tail end of last year, really gearing up for our dropshipping plan, I was getting all sorts of Facebook sponsor ads all about how dropshipping’s gonna make me a millionaire, and I can live on a boat in the Baltic Sea, and drink champagne at 8 o’clock in the morning.
That’s just not the reality of dropshipping. And when people really start to get into it, they start to see, “Oh, okay. It’s really just a method for selling my products and fulfill my orders.” And there’s all sorts of ways that we can utilize that in our existing stores to help augment various income and revenue we’re trying to make.
Bob: So it takes away the misperception that if I’m gonna drop ship, I just put the pieces in place, have it run, and I sit back and watch the money roll in.
AJ: Yeah. Yeah. Now the opposite end of that is, is that you also don’t have to worry about finding a warehouse and hiring people to fulfill your orders. You can spend that money that you would otherwise spend on the infrastructure of running an eCommerce business on the marketing and sales side. So you have more money to play with on the front end; running Facebook ads, or Google ads, or Twitter, or Instagram, or wherever your audiences are, you’re able to focus that money and spend it a little more wisely.
So you can test out the idea to see if your following, your brand, is going to bring in revenue.
Bob: And that is a plus for sure. Let’s go back to what Liquid Web is offering through the dropshipping piece. I find it interesting because that alone tells me that there’s so many working parts to it to make sure it works well for you, and being able to pull together something that basically lays it in people’s hands and says, “Hey, we have a lot of this in place already.” So can you share a bit more about that?
AJ: We’ve integrated with a number of partners across our managed WooCommerce plans, and when we started to take a look at that, we realized just how much dropshipping can help bring revenue into a business. Whether you’re starting a business, and you have an idea that you wanna test, oryou have an existing business, and you’re like, “You know, I wanna offer some other product to help augment my revenue,” dropshipping enables that.
So for us, we saw it as a great way to test a product out, or test an idea out. And so that’s kinda where we spent a lot of our time focusing on building this plan. With our dropshipping plan at Liquid Web, we partnered with a company called ShopMaster. And ShopMaster’s idea is that it really makes dropshipping easier. ShopMaster allows you to connect your store to all sorts of suppliers.
Some of the named suppliers are AliExpress, or Banggood, Chinabrands, and Gogomall. And ShopMaster brings your inventory or product management into one central place to help keep track of all of your dropshipping products. It then allows you to integrate with Amazon, Ebay, or of course your WooCommerce store.It’s really your back office hub, so to speak, of the day-to-day management of your store.
You have your WooCommerce and WordPress side of the front-facing part of the store, and there’s day-to-day management that you’re going to do there. But all of that back office management that you normally do, if you had products on hand, you would need to use some sort of inventory management control system, and that’s what ShopMaster does.
I spent a good week writing an eBook about all the things you can do in ShopMaster, so you’re able to really take a look and find the products, connect to the various suppliers that you might want to use, and that’s one core component of our dropshipping plan.
The rest of the dropshipping plan is that you get the same great managed WooCommerce hosting infrastructure that we include in all of our plans. You get our awesome support team that’s available around the clock, every day of the year. They’re partnering with our WooCommerce team to provide help you with the sometimes difficult questions you might need answers to as you run your WooCommerce store.
We also integrate with Jilt. That way you can create great abandoned cart campaigns to help drive a lot of revenue. I was reading a statistic the other day that 70% of your carts are dropped. And so even if you can get just a fraction of that back, that’s more money back in your pocket.
And then finally, we also work with a number of WordPress and WooCommerce plug-ins. We did a ton of testing when we built a managed WooCommerce plan to find the best theme out there. Because when you’re just starting out, the last thing we want you to be struggling with is what plug-ins to use, what theme to use. You know, everybody has opinions on it, but we went and tested around 30 themes. We kinda said, “okay, here’s the best one given our constraints, and what we want to do.”
And that is Astra Pro. And I’m sure the page builder people are gonna be like, “Oh yeah, that’s my theme. That’s what I use.” They just really do a great job, and they offer a lot of features while not putting so much weight into the overall page speed and performance, which is important when you’re talking eCommerce.
We then looked at page builders and, obviously, our leader is Beaver Builder. The page builder we have all known and grown with— and love. So that was a no brainer for us. It works great with Astra Pro. The folks at Astra Pro have gone as far as crating an additional plug-n called Ultimate Beaver Builder add-ons. And we include that as well. So just right there you have a ton of ability to go and create the store of your dreams. But that wasn’t enough. We also wanted to do something more. And so we partnered with IconicWP, to provide all of their plug-ins across the board, to all of our WooCommerce plans. This lets you take what WooCommerce does out of the box, and make some changes to it.
IconicWP has a number of plug-ins that, if you want to do something like scheduling a local delivery time, or changing the variations, or the way the variations look on the product page, you can do that. And so we really give you all of the tools that you need to run your eCommerce site out of the box. And you pay one monthly price.
Bob: Those are incredible elements to wrap into the bundle. And I know that I’ve written about a lot of that. It’s interesting because I’ve started writing about some of the IconicWP plug-ins, because I’d seen them before, I’d started playing around with them, and I thought, “These are pretty cool.” They have some really unique features they they pull into Woo. I have a few more to go here before I’ve written about all them.
But yeah, that’s a nice package. And the availability that, if your store needs something specific, like you said the delivery options and things like that, it’s there for you. And I can attest to … I’m a big fan of you guys, and Liquid Web, also a big fan of iThemes.
As a side note, we had Cory on our other podcast recently and I was telling him that the very first theme, I ever used when I first got into WordPress, was from iThemes. And I was so incredibly proud of that site because it was the first time I’d ever actually created my own site, I came from print background, and I didn’t really like web design initially.
But when I was able to create a site that actually looked like I knew what I was doing, I was so impressed and so proud of it. He said that the theme I used is actually still out there and supported .We’re talking probably 10 years ago or so…
AJ: Yeah. I was gonna say, you and I actually met for the first time about 10 years ago. I think it was after you switched from that theme and moved over to Headway, when I was doing some work there. I think it was at New Media Expo, or Blog World, they’ve changed the name a few times, but it’s crazy to think how a theme that long ago is still available and still updated.
Bob: Yeah, we have known each other for quite some time. We’ve both gone through all sorts of phases in WordPress.
AJ: Yeah. Yeah. We should all start a support group.
Bob: Yeah, really I think so. I’m trying to picture that right now and … that’d be interesting. Well, where do people find AJ around on the web?
AJ: I’m available on all the usual social channels; Twitter, Facebook, Instagram, LinkedIn. It’s typically AJMorris, @AJMorris is my twitter handle. I blog irregularly at AJMorris.me. I’m in the middle of kind of revamping what I’m doing there and will be launching a couple of things in 2019. And I love to chat about dropshipping. It’s become almost a pastime of mine in the last few months. I’m sure there’s questions that people have around it.
Bob: And as it evolves, and we see more of it, I’ll probably need to swing back and have you on again. I want to thank everyone for tuning in. You can always find us on the regular channels in all the podcasting platforms. And AJ, thank you for taking the time for joining us today.
AJ: Thanks for having me.