The most common way for most small business owners who sell physical products is by selling them directly to their customers
By selling directly to their customers, you will be able to cut out any middleman fees and get the highest profit margin.
The only downside to doing this is that they limit the potential volume of products they will be able to sell.
One way of increasing sales volume is by getting more people to help you to distribute your products. A popular way of doing so in Malaysia is by recruiting dropship agents.
Dropship agents are people who help sell your products but don’t keep any stock. Instead, they act as your marketers and promote your products on your behalf. Once a sale is made, they will pass you the customer information and you will fulfill the order. For their effort, they will be paid a commission.
Although this means that your profit margins will be reduced, the benefit of doing this is that you could earn more money thanks to a higher volume of sales achieved through more distributors.
Now that you have a basic idea of how dropship agents can help your business, let’s take a look at the type of businesses which will benefit most from having
Businesses That Can Benefit from Using Dropship Agents VS Businesses That Can’t
Unfortunately, not all businesses will benefit from using dropship agents. So which businesses would benefit and which would not?
Generally speaking, the businesses that would benefit most are
- Products that are not controlled by distribution policies. Some companies are strict about how their distributors sell their products and may not allow you to use dropship agents. You should not dropship products like these.
- Products that are not part of a Direct-sales and Multi-Level Marketing (MLM) company. Most direct-sales and MLM product companies will not allow the retail distribution of their products and so it may not be the best products to sell using dropshipping.
- Consumer products that don’t require warranties. Although you can
dropshipproducts that have warranties, personally I would avoid them because of how costly refunds can be when you have a middleman ( dropshipper) involved.
- Your own handmade products. These may include things like soaps, accessories and stationery items that you may want other people to help spread the word about.
7 Traits of Highly Successful Dropship Suppliers
The success of your any dropship business is not only dependent on the dropship agents but also on you, the dropship supplier.
Here are some tips to help you become a more successful dropship supplier:
They don’t only depend on their dropshippers to do marketing
While your dropship agents will help you with marketing your products, you should not rely on them to do all of it.
As the dropship supplier, you should also be active in running marketing campaigns as a way of building more brand awareness for your products.
They provide their dropship agents with enough marketing materials
As the dropship supplier, the more marketing materials you can provide your dropship agents with, the more effectively they can convey your message to potential customers.
Before you start any dropship agent recruitment, do make sure to have proper marketing materials like promotional banners, social media images and testimonials ready for them.
Your dropship agents may eventually create some materials themselves, but you will need to help them get started.
Their products are in demand and easily marketable
Even though dropship agents can help you to market your products, if your products are not something people want to buy, no amount of marketing can help you move your products.
So do make sure that you only get dropship agents to help you market and sell products that you have confidence will sell.
They are reliable
Your dropship agents will be the face facing your customers while you take care of the orders behind the scenes.
This is why it is important for you to make sure that you help your dropship agents
If your dropship agents receive bad reviews because of your failure to fulfill their customers’ orders, they will not be able or will not be willing to continue selling the products for you.
So make sure to package your products well, ship them on time and never send out any faulty products.
They communicate clearly with their dropship agents
As with any business and marketing campaign, there will be changes to things like pricing, promotions and product line.
Make sure to communicate any changes you make to any of these to your dropship agents so they will be able to share the latest news with their customers.
The last thing you want to happen is for your dropship agent to be selling your products at the wrong price or promotion to your customers.
They offer competitive incentives and pricing
If you ensure that your dropship agents make enough money then you will be able to better motivate them.
Keep in mind that your dropship agents have their own costs to bear and the margins you give them should allow that.
Though theoretically, it is up to them to mark up the prices as much or as little as they can, there is a realistic markup and an unrealistic one.
If you price your products too high, your dropship agents may not be able to offer competitive prices and die off or choose another supplier.
They treat their dropship agents like partners
In conclusion, dropship suppliers treat their dropship agents like partners will find it easier to achieve their business goals faster.
Whenever you design a dropship agent recruitment program, it is important for you to keep this in mind and care about the needs of your dropship agents.
How to Find Dropship Agents?
Now that you know how dropship agents can help your business and what you can do to increase your chances of success using dropship agents, let’s now take a look at how you can start recruiting them.
Here are some methods you can use to recruit dropship agents for your business:
Create a section on your website for dropship agents
If you already have a business website, you can create a section to recruit dropship agents. On the page, you can provide a brief description of the program and also how people who are interested can sign up.
Announce it on your social media accounts
If you have social media accounts, you can announce your dropship program on your social media accounts. A common practise for business owners with Instagram accounts is to write it in their profile description that they are looking for dropship agents for their business.
Submit your business to our dropship agent directory
Entrepreneur Campfire is compiling a premium list of dropship suppliers in Malaysia.
If you are interested to recruit dropship agents more easily in the future, do submit your business details using the form below:
Dropship Supplier Directory Form Submission
Note: Each submission will go through further quality checks so not all submissions are guaranteed a feature.
Getting dropship agents to market your products for you can be an easy way of growing your business without spending too much money.
Although any supplier can recruit dropship agents, to be successful, you need to make sure that you are a reliable dropship supplier. For long-term success, you need to treat your dropship agent like a partner in your business.
To recruit dropship agents, make sure to include a section about it on your website, announce it on your social media accounts and even submit your business info to Entrepreneur Campfire’s upcoming dropship supplier directory.
That’s it! Are you a dropship supplier? How has the experience been for you? Share it with us in the comments below.
What is the best software to track my dropshipper sales, commission, ordering and their affiliate link?
Hmmm that depends on what you mean by best. There are many solutions in the market. If you use WordPress, you might consider AffiliateWP. Otherwise, OnPay.my has a dropship system integrated with their e-stores.
Hope this helps!
– Lu Wee
Hi Lu Wee,
Informative article. care to share what are appropriate commissions to dropship agents? also, does a dropship supplier sell to dropship agents at regular bulk rates and the agents sell at retail? or do suppliers sell to agents below bulk rate prices so agents can sell at bulk rate?
Your inout will be much appreciated.
Thanks. For the commissions for dropship agents, I would say 3 – 10% is pretty common for products with a 10 – 30% gross profit margin. If you have a higher margin product, maybe 40 – 50%, you can consider giving 15 – 20%. Just think of the dropship agent % as what you would have spent on marketing on platforms like IG, FB etc.
I’m not sure if I’m understanding your second question correctly, but I’ll try to answer (let me know if I’m wrong). Dropshipping usually means small quantity items. So you can’t give them the regular bulk rates. Instead, you’ll give them a different rate to your regular bulk order clients.
Bulk – MOQ 100pcs – RM1/pc, selling price RM3
Dropship – 1pc – RM2.5/pc, selling price RM3
Both will sell at regular prices to customers.
Hope this answers your question!
I am plannimg to sell my product @ RM80.00. If i want to sell in bulk to my appointed dropship, how much i can sell to them.
It depends on your profit margin and bulk qty. For most product owners, I see a profit margin of between 50 – 70%.
If you sell in bulk, e.g. 100pcs, you would usually give a margin of around 30 – 50%.
If you sell in 10pcs lots, maybe 10 – 20%.
Again, without knowing your exact business model, I can’t give you an accurate calculation. So take these with a pinch of salt.
– Lu Wee
Hello! This is such an informative article, thank you so much for it!
I’m currently looking to start a small perfume business as a sideline and I plan to have only a handful of dropship agents (maybe 3 or 4) down the road.
Pricing wise, I plan to sell my perfumes (in 5ml bottles) at $6 and $8 each (different grades). I’m buying perfumes and storing at my house so it is considered as ready stock. Do you have any advice how I should price my products specially for my agents and how should I set commissions for this business model?
very informative! currently, im still new in creating a dropship and agent structure. what can i do to improve the recruitment?
if you have a good product, here are a few tips I can offer you:
– advertise your program on FB and IG
– offer attractive commissions for dropship and agents
– make sure all marketing collaterals are complete and attractive
Hi Lu Wee. I had just submitted the Dropship Supplier Directory Form Submission. Kindly verify that you'd received it. Looking forward to working with you on this. Cheers.
Thanks Benny! Will take a look.
Hi. I have recently started home-based business. I am looking for someone to market and sell my product. How does drop ship work? Where do I find them? Are drop ship agents like resellers? Do they keep our products and sell as and when they get an order or do they notify me to deliver an order?
Do they prepare any marketing materials? I am very confused about this. Please assist on clarification and where to find these agents.