Hey guys, Trevor here with e-Commerce Paradise. Welcome back to the ultimate guide to drop shipping mini course. This video is all about actually running your drop shipping company. In the last video I told you guys at the end that I wouldn't be covering the actual demo site setup process or getting suppliers here in this mini course, because I think I've already gone over enough about how to find them. Getting suppliers is pretty straightforward. Setting up a demo site is straightforward. Shopify is really easy to use. In my drop shipping master class I actually show you step by step how to do it. So I think that's a big reason why you should sign up for that course.
But right now I want to talk to you a little bit about how you run a drop shipping company, so you can kind of see what you're going to look forward to when you get into this. Now I talked about this sort of in the first couple of videos briefly. I want to go over more into depth on how it goes and what kind of things you'll need to prepare yourself for so that you're ready when the time comes to handle these issues.
Running a drop ship business, an e-commerce business, is just like running any kind of business. You're always going to have customer support, sales issues, you're going to have warranty support issues. You're going to have returns to deal with. You're going to have all sorts of stuff. Depending on the niche, of course. If it's a complicated niche, you'll have all sorts of product-specific question. If it's not, you probably will have more just like general broad questions. So with that said, let's get into it.
Number one, you just really have to understand that things are going to get messy, right? And it's really good to stay organized. So I keep spreadsheets, and I actually show in the drop shipping masterclass how you can use spreadsheets to organize your entire drop shipping business. To create systems so you can optimize and scale your e-commerce business to huge levels, right? So with that being said, things are still going to get messy. And it's going to be daunting. Every single day you wake up, you're going to have to dig into your business, find out what's going on and how to fix it and how to put out fires. And then also how to stop those fires from happening in the first place in the future.
And then you get to get into building your business, and how to make more sales, right? So business development is a big thing. And so I go into all different types of that in the course. But right now we're going to talk about just basically keeping it simple. You have to understand that things can get really complicated, but as long as you try to keep the processes really simply and easy and straightforward to follow, then it's really easy to do.
So like I came up with a five-step process for scaling your business, for instance. It just basically means, it just basically includes getting suppliers, adding their products, optimizing their products, promoting the products, and getting more suppliers. And so that's how you scale a business. Oh yeah, and by the way, creating more content. That's the fourth step. Content related to the products. So there you go. I mean, it's really simple if you think about it on the broad level. But then you dig into each one, and it can get quite complicated and quite confusing and hard to manage the process of actually doing it, right? And so that's what I teach you how to do, I teach you hacks on how to manage your Gmail account. I teach you hacks on how to manage your spreadsheets. I teach you hacks on how to manage your Fiverr account so that things get done, and that things get done well. And that the optimizations actually happen. And that your business scales and grows and people get followed up with. Okay?
That's really important. You're going to have to be doing stuff like this. One of the main things that you're always going to be dealing with is when orders get messed up. There's either going to be some sort of shipping damage issues, shipping delivery issues, the wrong product gets sent out. There's all sorts of things that can happen.
Number one, you always want to be taking responsibility for this kind of thing when it happens. Own the mistake. Instead of saying like your supplier this, your supplier that, talk about our warehouse this, our warehouse that. Because if you use a term like our warehouse, you sound like a bigger company. And you're taking responsibility, right? Instead of speaking about a specific person at your supplier, say our warehouse manager Ben said this. Okay, so you're saying your warehouse manager, and it's true they might even manage the warehouse over there. But the truth is that you just want to be as professional and straightforward as possible, okay? So own the mistakes.
And then of course you want to make it up to your customers. If things go awry, make it up somehow. Give them an extra discount, give them a free gift, give them some free content, give them a free membership, give them a free gift card. All sorts of free gifts to give away. Normally, give them a little bit extra something in return. Hopefully, that makes it good. If not, sometimes the customer's can be really a pain, and you have to know when to draw the line with people. But still, make it up to them somehow.
And then you always have to be kind of the middleman between your supplier and your customer. So if things are going crazy, do what you need to do, but follow up with both on each issue and every single communication that happens. So when you're doing the back and forth and something needs to be followed up on, follow up with the supplier and the customer. And the customer sends you, follow up with the supplier, and then tell the customer okay, I followed up with our warehouse. We'll wait, and then we'll tell you when something's happening. Because that way, you're following up with them immediately and you're telling them there's some communication that's happening. And that's really good customer service.
If there's something that goes wrong with a product that's damaged or defective, make sure your supplier comes through on their warranty policy. So suppliers are always going to have a warranty policy, like what happens when a product arrives defective or damaged. Well, make sure that they come through on that warranty policy. And if they try to skimp or they don't come through on it, read the specific facts back to them and make sure that it's going to be a supplier you're going to work with in the long run. Because if they don't want to support their warranty policy and make sure the end consumer is happy, it's probably not a supplier you want to work with in the long run. So this is one part of weeding out bad suppliers, is actually working with them and seeing how they perform.
One big issue you're going to run into with your e-commerce business is, and running them, is inventory and back orders. And multiple suppliers and multiple products per order. And all these sorts of things you have to deal with. Just understand it's one thing at a time. So when you get an order and the product's out of stock, for instance, you just want to write the customer or call them and tell them ... Usually both, you want to call and write ... You want to tell them that there was an inventory mishap, the product said it was in stock but it's not. This kind of thing happens from time to time. It's very rare. But that we are willing to make it up to you by giving you an extra this or that, discount or free gift.
And here are the other options that are available and here is the lead time for when that product is expected back into stock. And then you get to wait and see what they say. If they want to cancel the order, that's fine, you can let you know that you get your products from the same warehouse everybody else gets it from, and if they go and order from somebody else, they're going to have the same issue. So tell them that.
And then the other thing is that if they want to place the order with you and they ask for a deeper discount, just tell them that you can't, that you can offer them an extra gift card or something like that to use at your store. So definitely try to keep the orders. And manage the back order process really well. Let people know when you're going to follow up with them, and put notes into the Shopify orders so that you know what's going on with that order process. And make sure you follow up with the supplier on a regular basis and you keep them to their lead times.
When you get an order with multiple products and stuff like that, and it doesn't happen to be profitable because of that, still fulfill it. If you're going to lose a little bit of money, it's better to keep that customer than it is to lose the customer, right? So definitely still fulfill those orders that you're going to lose a little bit of money on. Because you're going to make a lot more money later on down the road by having all these customers you can re market to and get referrals from. So that's important to understand.
You want to make sure that you're picking the products that you sell on your website very carefully. So go out and make sure that they're high quality on other marketplaces first before you just list them on your website. Otherwise, you're going to run into a lot of issues where you have defective products and damaged products showing up. And people are going to be upset and blame it on you, not the supplier, right? And you can try to blame it on the supplier all you want. But really they're going to come to you, because you're the one they bought it from. So understand that and try to pick the best suppliers and products to use to sell on your website.
And then definitely try to keep your website updated with inventory. Now I don't actually do this on my websites. I say everything is in stock all the time, because I like to handle back orders. I think it's one of our unique value propositions for us to be able to handle a back order. Whereas a lot of these bigger websites won't because they're too big; it's too messy of a process for them. So we like that, and we get to keep more sales. Yes, it's more time intensive, but it means more profit for us. And a back order in March means more revenue in June when it ships out, you know? And that's how long back orders can go for; one, two, three months. But as long as the customer's okay with it, they really want that product, then it's worth it for you to do the follow up work to actually get that thing shipped out.
Just make sure that your cash flow is in line. Because sometimes suppliers want you to place a pre order for that, so that takes that cash flow out of your account. Make sure you keep up on that; you can keep that as part of your spreadsheet. You can keep track of all the pre orders that are happening. A big thing about running your business is you're always going to be wanting to save the suppliers' invoices somewhere. So I show you how to do that in the course. You're going to be saving it in our spreadsheet into Google Drive. And so you can have access to every single invoice for every single order.
You can also put it into the Shopify orders comments as an attachment, so I show you how to do that as well in the course. It's really cool and a really easy way to keep track of all your invoices so it's easier to do bookkeeping quarterly and at the end of the year.
All right, so with that being said, order fulfillment can be kind of a tedious process sometimes; it depends. Some suppliers accept orders via email. Some suppliers require you to place orders on their website. Some requires require you ... You know, especially if you have multiple orders and things like that, that you submit it via FTP or EDI, all this crazy stuff. But usually I just work with suppliers that accept email orders or website-based orders.
So it's really important that you understand, not really to set up the automations too much. I mean, it really depends. You have to test them out. In Shopify you can set up an automatic order forwarding automation, and I show how to do that in the course. You just have to be careful and you have to test it like I show you how to do in the course and make sure when you get an order for that product, that the email gets sent to the supplier properly. So set that up, you test it, and then if it works well, then you can use it.
Basically you want to make sure that just the right amount of information is going to the supplier. You don't want to see all the pricing information and discount that you're giving the customer, but you want to make sure they see the product and the free gifts and the add-ons all properly. So I show you how to do that. You have to go in and adjust the purchase order within Shopify; that's in the course as well. It's all step by step.
And then, that's about it. I mean, there's a lot of stuff beyond that. You're going to have to deal with things like fraud a lot, so I show you in the course which fraud protection company that I set up with. And how to get it set up and automate the process so that it automatically works for you. You don't have to go in there and approve things manually and stuff like that. But they'll actually automatically set up a thing where it'll approve your order manually as soon as they accept the order as being non-fraudulent, and take responsibility for it. And it's an insurance company, so they'll do that. So show you how to do that in the drop shipping master class. It's really good. You definitely need to set that up, especially for high ticket items. Because if you get a thousand dollar order and it ends up being fraudulent, you'll have to pay that $800 or whatever the cost was for that product back out. And that sucks. It's happened to me before, so just something you have to learn in life. It's part of doing business.
So and you just have to be careful. You can always call the customer yourself and make sure. You kind of know when you're getting a fraudulent order. A lot of people that are fraudsters, they like to place orders over the phone. So one of those things is they'll call in, they'll request next day shipping, they'll say they're willing to pay more. They want to buy two or three of the product. And they have a different shipping address than their billing address. And maybe it ships to some kind of a third party fulfillment warehouse, or it ships out to somewhere else. Just make sure you recognize all these red flags of fraudulent orders and you understand that, and that you know to avoid them.
Okay, and then along with that comes friendly fraud. And what that means is someone places an order on your website, and they feel like they got the product and it wasn't up to snuff or it wasn't the kind of product they were hoping for, and they place a chargeback saying that the product description is bad. Usually the bank or PayPal or whatever will tell you you need to make it right with the customer. As soon as the customer returns the product, give them a refund.
But sometimes the bank will just go ahead and give them a refund. And it really sucks. And it's happened to me before where we had friendly fraud. Somebody just decided that they wanted to try a chargeback and it was, I think, Amex. And they just refunded the customer. And we were out $1,400 of sales revenue. I think it was a $1,200 product. So that was pretty rough to deal with. And we tried to send them collection letters and all that, and nothing ever came of it. So it was just part of doing business. And over the long run, we made a lot more money than that, so we didn't really have to deal with it. We just write it off on our taxes, no big deal.
But you have to understand that is a potential possibility. So you have to have really clear terms on your website as to what happens in case of all these things. And you have to understand that when you are dealing with the credit card company when you get a chargeback, you have to give them all the evidence. Every single communication you have with the customer. Every single order, all that stuff, so that the credit card company understands what's going on. And they'll require the customer to ship that product back to you before they refund the customer.
We have won lots of chargebacks. That was one out of like 20 that we've had, or more, and we've won all those chargebacks, because we've provided all the evidence. So don't think that getting into this you're going to have all these chargebacks and lose all of them. It just might happen eventually if you screw up and don't give them all the evidence.
All right, and then there's returns. And you really do have to think about returns as an important process to understand. And make it easy for your customer, and make it hassle free as well. If a customer just decides that they don't want a product, make a process for that. If they get a product and it's defective or damaged or whatever, make a process for that. And have really clear terms laid out on your website. I have templates for all this stuff, and really great processes and apps you can use in the drop shipping master class where I show you step by step how to use them. So I think that's a really great reason to sign up for that class.
Now it's important to understand return merchandise authorizations. They are what your supplier is going to require, so your customers can't just ship a product back to them. You have to contact the supplier first, get an RMA, return merchandise authorization, and they will then give that to you which you give to your customer. And the customer will usually have to pay for the shipping to send it back. And there's complexities there, too. If it's a big product, they might want to use the same shipping company that shipped it there, and get some sort of a call tag or something.
And usually they'd have to pay for that up front. But regardless, it's a whole process. You have to understand how to take care of that. And I show you an example return in the drop shipping master class. So you guys will understand exactly how the process works and goes through.
Now understand you can charge restocking fees. So if there is that buyer remorse return that's happening, you can charge like a 10, 20, maybe even 30% or more restocking fee. And that's really important because that will lower their ability or inclination to actually follow through on the return. So definitely charge that restocking fee; don't be afraid to do that. I think it's really important. Some people think it lowers conversion rates. I don't think so. I think that it actually makes it so that you get more serious buyers. And those same buyers will still buy; they'll just be more serious about keeping that order because they know the restocking fee is there.
On certain lower cost items, they may even buy from somebody else before they return it to you, and they'll just say I decided to return to them because they have a better return policy. So having a restocking fee is very beneficial. I highly recommend doing that.
As far as defective items go, I definitely recommend having some sort of a template in place. And I provide this in the drop shipping master class. But create some sort of template in your store where you are going to be able to provide a step by step process for them to get that product fixed right away. They receive it, it's damaged, what do you do? Well you've got to call or email. And then you've got to wait to get a response back. And then you've got to figure out how to send those pictures over. So you have to ask the customer, send pictures. And then you have to go to the supplier and you have to say okay, supplier, can you send out a new product, here are the pictures.
And they'll say yes or no. And then whatever they do end of sending out, you follow up with the customer and you say did you get that product and did it fix the main product? And they say yes or no, and then you go from there. So it's a pretty simple process, but you have to make sure it gets done. You have to do the follow up. Because if you don't, that can be one of the main reasons why people never come back and buy from you and never refer you to anybody else. But if you do follow up well and it does get fixed, they will come back to buy from you, and they will refer you to other people. So it's totally worth following up on that kind of stuff.
And there's all sorts of other weird shipping issues you might run into. Like, for instance, you just listed a new product on your website, and the cost of shipping is much more than you thought it was going to be and you end up not profiting or even worse, losing money. I highly recommend doing something where you actually call the customer, email them first to ask them if they're willing to pay extra for that. And some customers are; they don't care. And some customers aren't.
So if you do it, at least you know. And if they're not, then fine, you can still send it out. You might lose the money. If it's too much, you can always just cancel the order. But I recommend keeping the order if it's not too much or just breaking even.
So shipping is really important to understand. Sometimes you actually need to have your own freight company for big orders. You usually use the supplier's shipping connection, like UPS Freight, or FedEx Freight or whatever. But when it comes to freight, sometimes they want you to assume the liability. So you're going to have to go out and get a third party shipping company, like UPS Freight, an account with them, and then set up that freight shipment through their website. So you have to provide them the product details, you have to provide them the size and weight of the package, and the drop shipping location of the customer.
And then they're going to do that. And then they're going to have to set up a time and date with the customer to receive that package. So it's quite a complicated process. And it does take some time. But it's worth it. You're making profit on that product, right? And you can also outsource this to a VA to handle as well. Can things go wrong? Yes, of course they can go wrong. You have to have attention to detail when it comes to this kind of stuff. And it's really not as bad as it sounds. It's a very simple process. It's just like shipping anything else out. And once you've done it a few times, it becomes really easy and second nature. So just consider the first time you're going to do any of this stuff, it's going to be hard. And then beyond that, it's going to become a normal, everyday process for you that you can do just like anything else you do in life. So there you go.
Now handling international shipments is quite a bit different. You have to fill out all sorts of stuff like bill of lading forms, and all sorts of other things depending on the product that you're selling. And so you have to be really careful. Usually when it comes to international shipments, I like to actually accept cash payments from the customers. So that means a direct deposit into my bank account. Because that way they can't file a chargeback if they weren't to get the product. Because returning a product can be very expensive, just like shipping it can.
The other thing, too, is I like to let them know ahead of time that they either need to pay the duties and taxes up front with us, or they're going to have to pay them with them. And we usually charge them more money than they would have to pay if they just took it directly, just to make sure it's covered. So when you fill out the bill of lading, you're going to check a box that says I will pay it or you're going to check a box that the customer will pay it. And so that's the same information you have to relay to the customer. And yes, I know, this sounds complicated and yes, it is.
But again, the first time you do it will be the toughest time. The second time, third time will be easier. And after that it will be like second nature. Okay, so just understand how it's done and I highly recommend as you're doing this kind of stuff, actually film videos of yourself doing it so that you can outsource it later or teach somebody else how to do it later, and you don't have to be the only one doing this stuff all the time.
So let's get into customer service. Customer service is one of the biggest things you're going to have to deal with when you're doing your drop shipping business. It's a pain in the butt sometimes, but it can also be a very fulfilling and fun process at others. Now there's different ways to do it. My method is very simple. I use Shopify orders comments and Gmail and Grasshopper for the phone systems. So it's a very simple three-way process.
Now there's other platforms you can use, if you decide. There's things like Help Scout and Zen Desk. And those things are great. They're just more complicated and you don't really need them, when you can do all this stuff within Shopify order comments and within Gmail. There's tons of free add-ons for Gmail that are free. And I show you how to do all that stuff that's free and easy to use within the systems you already have in the drop shipping master class. So it's really cool.
But some things to keep in mind when it comes to customer service is good phone support etiquette. You always want to be saying your company name when people call. You always want to thank them. And you also want to have a nice, friendly tone with them. You don't want to be irritated or speak loud towards them. No matter how irritated or loud towards you that they're being, you always want to maintain a professional, friendly tone with them. Some people get really upset because they're afraid they're not going to get their money back; they have this fear of loss thing. And you just have to understand that. And that's okay. Sometimes you have to treat people like a small child that's having a tantrum.
And when you do that, you can say, it's okay, I totally understand where you're coming from. If I were you, I would be saying the same things or thinking the same thing. And this is how I can solve your problem. You know, that kind of stuff. Because that's what people love to hear. It's good to be empathetic in customer service. If you're looking for more customer service training, go on YouTube and type customer service tips. There's tons of training out there. Big corporations pay tons of money for this kind of stuff. So it's definitely something you should look into if you're going to be building this for the long term, which I know you are.
Definitely have that 1-800 number. I talk about in the course how to sign up for that and how to go through that process of setting it all up. But I recommend Grasshopper. It's ecommerceparadise.com/grasshopper or ecommerceparadise.com/resources. It's in the resources section there as well. Grasshopper is great because it's a professional 1-800 number that forward either to your cell phone or a virtual assistant or you know like a virtual receptionist service or whatever. And you can take messages there, you can text people there, you can take faxes there. You can set up your own personal greeting; you can have multiple extensions. One for sales, one for support, one for warranty, one for returns, one for whatever. One for yourself as the CEO or marketing manager.
And it's really important to understand phone support is key to making sales online in high ticket drop shipping. You're going to have to have your phone number on the top of the site, on the bottom of the site, the product page, everywhere. And you have to be really promoting the fact that people can call you and place the order. And then you have to be there when they want to place the order with their phone. So you have to have a VA if you're going to be overseas. And you have to be available those hours otherwise. So make sure that you're there, and make sure you're answering your phone, because you might lose sales if not.
And that's it guys. That's all the tips I have for you in this video of how to run your drop shipping business. Again, in the drop shipping master class I teach you how to do this stuff super in depth step by step. So definitely get enrolled in that today. Go to the bottom in the link in the description and click the link for the drop shipping master class. Get yourself enrolled and we'll see you out there.
In the next video, we're going to be talking about the key elements of success; to kind of wrap everything up here, and to give you a full, overall picture of what all this looks like tied together. Okay? We'll see you in the next video.