The dropshipping industry reported $111.28 billion in 2018 and has a projected compound annual growth rate of 29% between 2020 and 2025. As of 2020, Ecommerce and dropshipping profits have surpassed $4 billion (a 7% profit over the previous ten years) and all signs point to continued profitability in the near future.
In the changing world of COVID-19, a business model that combines high profit potential and the ability to be established and managed from a home office has particular appeal to many entrepreneurs.
While anyone can start a dropshipping business, there are several approaches to maximizing profit and fulfillment efficiency. One of these strategies is known as ‘Drop Surfing’.
Drop Shipping vs. Drop Surfing: What’s the Difference?
In order to understand Drop Surfing, we need to first understand what dropshipping is.
The Traditional Dropshipping Model
Most simply put, the traditional dropshipping business model ships goods directly to the customer from the supplier, allowing the retailer to profit without having to manage direct distribution issues or stock merchandise.
In this model, the retailer first looks for a dropshipping supplier to offer goods from. While dropshipping suppliers operate across the world, most dropshipping stores source their items from Chinese merchants operating on sites like AliExpress and DHGate.
Once the retailer has chosen their dropshipping supplier and decided on which products they want to sell, they list them on their storefront.
Then, when a customer places an order, the order is re-routed directly to the supplier for fulfillment and distribution. All of this is invisible to the customer, who simply receives the order as they would any other.
There are multiple advantages for the business owner working within this model.
- Start-up costs are low.
- Overhead is substantially reduced by cutting out inventory management costs and the necessity for stocking and storing products on-site.
- Distribution, including packing and shipping, is managed by the supplier, saving the retailer valuable time and expense.
- The retailer takes on less risk by not having to pre-order a set inventory and sell-out to make room for more.
- Drop Shipping allows the freedom to work any time from anywhere.
Dropshipping minimizes the backend operations involved in running a business. A dropshipper’s main challenge is therefore marketing and generating sales. Social media marketing (paid ads on Facebook or Pinterest, Instagram influencer shoutouts etc.) is the preferred customer acquisition method.
While dropshipping has proven to be an incredibly lucrative opportunity for many, it is not without its potential downsides, and this is where Drop Surfing comes into play.
Drop Surfing: Dropshipping On Steroids
When choosing to execute a dropshipping business model, a great deal depends on the reliability of the supplier to satisfy customer needs.
The retailer must be sure that their supplier can fulfill the volume of orders for each particular item. The supplier must be able to provide the retailer with a clear and accurate snapshot of order turnaround time (which may vary depending on whether the supplier is domestic or international) to maintain customer service standards. Finally, the supplier must be able to satisfy a seller’s needs to sell new products as new trends emerge.
It goes to reason that access to multiple suppliers can improve inventory offerings, the efficiency of order fulfillment, and overall customer satisfaction. Which brings us to our definition of dropsurfing:
Drop Surfing is the practice, within a Drop Shipping business, of checking multiple suppliers for improved inventory availability, rapid shipping, lower costs, and trending products to ensure that the retailer is providing the best products, at the highest profit margins possible.
Some definitions of Drop Surfing have been reduced to simply “riding the wave” of product trends to ensure that the products offered by a retailer are the most popular in the market. While this is certainly a major part of the Drop Surfing method, it is just one small facet of a practice that can have many complex and meaningful influences on a successful Drop Shipping business.
Drop Surfers ‘surf’ different suppliers to sell new products or increase profitability
Naturally, the ability to easily hop between different suppliers is possible because there is almost zero additional cost in doing so. In fact, most dropshippers have engaged in drop surfing without even knowing it.
Advantage #1: Increased Profit Margins
One of the easiest ways a retailer can use Drop Surfing to their advantage is to simply track the cost of identical items across multiple supplier platforms to ensure that the product being offered to the retailer’s customers is acquired at the lowest possible cost to them.
For example, a retailer lists a pair of sunglasses for $20.00 that cost $3.00 from Supplier A. By conducting a quick search with other suppliers, the retailer finds the exact same pair of glasses at a cost of $2.50 from Supplier B. Switching to Supplier B and purchasing inventory at a reduced cost immediately increases their profit margin $0.50.
Reducing cost is the most direct and easy way for retailers to boost profit margins and one of the primary uses of Drop Surfing. We’ll discuss specific methods of Drop Surfing a bit later.
Advantage #2: Speedier Delivery
Scanning suppliers for the most efficient shipping options is another way Drop Surfing can be employed to improve a retailer’s customer service and satisfaction. Many dropshipping suppliers are located in China where products can be produced quickly and offered to retailers at a much lower cost. The obvious challenge when dealing with overseas suppliers becomes that of packing and shipping.
Products that ship from overseas can take far longer to reach customers in the U.S., sometimes even weeks or months. Longer delivery times can lead to dissatisfied customers who have only the retailer to blame, although the retailer themselves has no control over the supplier turnaround.
A retailer can improve customer satisfaction and retention by choosing suppliers that have the fastest shipping times, either through practice or simply by country of origin. Adding the delivery component to the formula for choosing the best stock, gives retailers another way to maximize profit and provide customer service that will earn loyalty and repeat sales.
For example, if an item costs a retailer $1.00 less than the current offering but takes an additional two weeks to be delivered to the customer, it may make more sense to choose the item that costs $0.50 less but can be delivered in 3-5 business days. By analyzing this data across multiple suppliers, the Drop Shipper can optimize their retail operation by choosing the best supplier on a per-product (or even per-customer order) basis.
Advantage #3: Culling Underperforming Suppliers
Spot-checking suppliers for best practices in packing and shipping is a challenge for dropshipping businesses. The retailer will have to either order items to be delivered to themselves or rely on customer accounts to determine which suppliers follow the best shipping and handling practices.
While this is a strategy that must almost necessarily be analyzed in-person, it is critical to preventing costly and time-consuming supplier errors that the retailer must correct at their own expense. For instance, if a customer receives an order from the supplier that was poorly packaged, leaving the merchandise damaged in transit, the retailer must take full responsibility for the error and its correction. This may include costly re-orders, manual packing, and shipping, or even a lost sale and customer.
Although shipping and handling are the areas of least direct control by the dropshipping retailer, Drop Surfing makes it possible to immediately halt fulfilling orders from unreliable suppliers and switch to new ones. This allows for a level of involvement and accountability that can ensure the business is being run to the most efficient and highest standard of best practices possible. And, as with any business model, eCommerce businesses thrive when every effort is made to ensure the highest quality customer experience which leads to return business.
Advantage #4: Seizing New Trends
While the practice of Drop Surfing cannot be reduced to trend-spotting alone, there is no denying that trend-spotting is one of the most important components of Drop Surfing that can make or break the dropshipping entrepreneur’s business.
Tracking the top-selling products offered by competing successful eCommerce retailers and then choosing the best options from the available suppliers is what keeps retailers relevant in a highly competitive and fast-paced market. Because dropshipping often relies on identifying ‘untapped’ products early, many dropshippers have no choice but to drop surf in order to source said products.
When combined with the Drop Surfing strategies outlined above, trend-spotting can be the key strategy that allows a business to stand out and thrive in the online marketplace.
Drop Surfing In Practice
Now that we have an understanding of what Drop Surfing really is, the question becomes how to put the method into practice. There are two primary solutions to this challenge.
Manual Research
This is exactly what it sounds like. The retailer would check item listings on dropshipping supplier bases like AliExpress in order to pick products and suppliers. They would evaluate shipping and handling, identify trends by conducting market research (e.g. on Google Trends) and assess the acquired data to make decisions for their eCommerce business.
Depending on the size and scope of the business, this method can be prohibitively labor-intensive, consuming valuable time and resources. However, on a small scale, conducting research in house can save the retailer a lot of money, keeping overhead low, which is a primary draw of dropshipping in the eCommerce landscape.
Software-Aided Drop Surfing
A number of dropshipping tools exist to allow retailers to quickly identify trending products using data from marketplaces like AliExpress. Users can quickly match themselves with suppliers that offer the lowest prices or fastest shipping times.
While most marketplaces like AliExpress already feature best-seller and trending lists, as well as sort and filter options, dedicated drop surfing tools provide additional insights and a further layer of automation that can make a dropshipping business more competitive.
Automating these important elements of the Drop Surfing technique can allow retailers to expand their business size and scope without increasing labor and time investments. In this way, the business owner is truly able to do more for less within their business.
Disadvantages of Drop Surfing
While we’ve discussed several advantages of drop surfing, the approach also has obvious disadvantages:
- Increased micro-management of suppliers
- Inconsistency in product quality and shipping times can make it to harder to build a reputable brand
- Relying on switching suppliers and catching new trends to maintain profitability is not a sustainable business
Alternatives To Drop Surfing
In the world of dropshipping, constantly testing new products and ‘drop surfing’ is the most popular path taken by entrepreneurs. While it has the highest profit potential and the lowest barriers to entry, other dropshipping strategies are more sustainable and not as easily replicated by other sellers. These are:
- White Labeling, which involves selling the same items, but with your branding. Dropshipping suppliers on AliExpress often facilitate this, and they can be dropshipped or purchased in bulk.
- Print on Demand, which involves selling various goods with unique graphics printed on them. Companies like Printful and Teespring dropship orders, handling manufacturing, printing and order fulfillment on your behalf.
- Amazon FBA, where your inventory is managed and dropshipped by Amazon. This drastically improves shipping times and provides a better customer experience. Most sellers use research tools like Jungle Scout to be competitive.
If you are interested in launching your own dropshipping business, some of the top retailer platforms include:
- Shopify
- WooCommerce (running on WordPress)
- BigCommerce
- Ecwid
Dropshipping tools include:
- Oberlo (Shopify plugin)
- Dropified
- Sellbrite
- Spocket