Andras Marcell Marko

Jan 06, 2019

posted by Andras Marcell Marko

Dropshipping Sales Success With Product Recommendations in Shopify

What does a ‘partnership with a dropshipping supplier’ mean in the life of a ‘traditional’ e-commerce retail business? A fast scaling-up of the virtual warehouse but the traffic growth doesn’t follow it necessarily. If you want to increase your dropshipping sales with skipping the phase of having a physical stock and the ‘struggle’ with your own unsold items, most of the experts advise to start up with a 100+ virtual stock. Either way you go, you will see your product volume multiply. Sooner or later you will lose the sight of the single products and you will calculate in categories, attributes and tags. A painful but necessary milestone of growing up.

Both Dropshipping Features and Recommendation Engines are available from the first phase of the Store’s life

Midweight e-stores listing 1000-5000 various products are usually likely to deploy dropshipping features. Because this is not the business size that could afford this amount of stock in the self-owned- or in the contracted fulfillment partner’s warehouse. This stock volume, should it be virtual or real, must be transparent and clearly categorized both for yourself and for your customers. Employing a recommendation engine in your back-end can do a great help in this.

Costs of a Dropshipping Business

Dropshipping is the business you can run from the price of a wellness weekend. Applying a recommendation system as a helping hand to your business costs nothing in the first month. Source: Dropshipping Lifestyle

General Benefits of Recommendation Engines in e-Commerce


In the recent years, product recommendation systems or engines have become inevitably essential plugins for e-stores over 20-25,000 pageviews per month. After you have adjusted and configured the product recommendation engine algorithms powered by artificial intelligence they will track and analyze every unique user behavior and predict user preferences by displaying relevant products in the e-store’s presentation layers. To serve the most up-to-date and relevant offers to the store visitor, the system works in real time. Algorithms can react in any second if they detect any change in the customer’s behavior. They do this without losing the other edge of the recommendation engine-backed stores: transparency. No market researches needed to find out that customers prefer to buy in a store where everything is well-visible. A system that provides them with the maximum help in finding the right product.

Netflix revenue increase

Netflix recently published the estimated revenue increase due to its integrated recommendation engine: the system produces $ 1 billion a year. The results are very revealing: Netflix’s gross profit has risen from 1.75 to 4.03 billion, and, if these trend expectations are anything to go by, they will be around 5 – 6 billion per year in the next 5 years. 80 % of the content watched in Netflix is viewed by users who arrived via recommendations.

The Price Sales Growth and Transparency

Following the standards used to evaluate the stock- or real estate market assets, the business value of a recommendation engine could be the forecasted annual extra profit driven by the engine multiplied with 10 -15 years. Let’s imagine a store with a gross profit of $100,000 per annum. From this amount, the recommendation engine produces $10,000. Consequently, an engine should be a horrendous $100,000-150,000 initial investment for the store! It used to be like this 15 years ago when only Amazon or e-Bay were able to afford it. But nowadays recommendation engine providers charge only after the monthly revenue surplus in the end of the month. For market entrant and beginner stores, this means only $30-50 per month. The immense revenue increases a well-adjusted and maintained e-commerce product recommendation engine can accomplish will dwarf these minor expenses.

A well-groomed engine can be account for 10-15 % of the store’s revenue. Let’s see the 5 benefits that e-businesses including dropshipping-backed e-businesses can gain by using recommendation engines:


Revenue  / Conversion Growth

Boosting sales is probably the most impressive advantage of using e-commerce recommender engines. The following recommendation logics can drastically help dropshipping sales. They should look familiar to you even if you encountered them only as a customer:

-’Who bought this item also bought’,

-’Recommended for you’,

-’Best deals for you’,

-’Similar products’,

Recommender widget

‘Just for You’- recommender widgets. Source: Shopify Blog


E-Stores can multiply the product options with the help of recommender widgets. You can display more tailored product variations than the visitor would be able to discover by him/herself. This augmented pool of options is a first-class ticket to the improved KPI-s such as:

-average value per order,

-decreased bounce rate,

-more pageviews that lead to higher conversion rates,

According to McKinsey statistics, 35% of Amazon total revenues in 2015 arrived via customers previously clicked or tapped on product recommendations.


Customer Satisfaction  and Loyalty

E-commerce product recommendation systems create an intrinsic sense of satisfaction in your customers before, during and after shopping or even during their searches. The visitors get more and more appropriate suggestions which, if you place them at the right time and place will help customers struggling with the decision anxiety to find out what they really want. Accordingly, product recommendation engines that analyze and predict the customers’ preferences and behaviors generate vasts of visitor returns.


Personalization 

Do you remember the Christmas gifts arrived by the recommendations of your friends and family members? Compare the joy you felt with the disillusionment you had when you got useless gadgets you had nothing to do with. The people around you know you better than anyone else, so their choices hit the target of your expectations. The reason they are good at recommending gifts is the sound knowledge of your preferences and this is what recommendation systems model.


Helping Discovery 

Customers generally prefer those recommended items which they would like, but they would never be able to discover by themselves in the abundance of goods. Shopping at an e-commerce site that seamlessly relates to her/his choices will entail that she/he will be bound to visit that store again.


Typical Dropshipping Pain Points that Recommender Systems can Eliminate

Painful Procedure with the Returned Product 

In the complaint period keeping the client’s satisfaction and loyalty is a real challenge. Especially when the supplier doesn’t take the customer complaint handling and the retailer has to manage the entire complaint process. If a supplier appears to be hectic or capricious (changes its prices or shipping timespans frequently) but on the other hand it’s still popular among your customers, you don’t have to throw the baby out with the bathwater: with the help of recommendation engines you can offer alternatives to the products on the product page itself.


Recommendation box with 3 alternatives: one popular product but hectic shipping history grouped with 2 other ones whose shipping deadline is guaranteed.


Your Customer Satisfaction Depends on Others

Someone else produces and sends the item, which covers ⅔ of the overall user experience. What stays at you? The customer service only but you cannot be quick and affable enough to eliminate the anger caused by a broken product. Spocket’s limited and curated list of suppliers guarantees the quality, but you can still raise extra walls of safety with using product recommendation logics: if your buyer is ready to opt a cheaper but low-quality item, during their checkout you can display and upsell him more expensive items whose quality or shipping deadline is guaranteed.


Higher Probability to Stumble Across Copycats

This is what cannot happen with Spocket’s clients. But, bear in mind, in several industries customers are also going for good-quality copycats. If you insist on a broader scope of items you can set up groups like ‘1.ORIGINAL / 2.BEST QUALITY COPY / 3. SECOND BEST QUALITY COPY’ with the help of recommendation logics. This umbrella-method automatically gathers all relevant choices in-house, and your store becomes to be a price comparison site. But your visitor will not wander away to look for copycat – and non-copycat alternatives.

You might also like these - Recommendation widget

Don’t let any of your customers go! With applying recommendation boxes and smart pricing you can hold your customers that would turn away because of the high prices of original products. Also, if you have the copycat versions of a given product it makes sense to dropship the original version as well.


Reach Higher Conversions With Recommender Engines!

Dropshipping Sales promises a Decent Revenue Potential regarding the low investment

Your money will not sit idle in dormant stocks any more! You can turn that into other investments such as recommendation engines to automatize your onsite optimization.


Freedom and Comfort, Less Overhead

The retailer initiates the purchase only after the buyer’s money arrived or the purchase is secured. As a drop shipping-based company you don’t have to take the burden of manufacturing, warehousing, inventory tracking and packing costs. The recommendation tools’ investment barrier is also very low. Most of the recommender engine provider uses revenue sliders to present to cost of the service. This share is usually between a 1-4% of the monthly revenue growth driven by recommendations.


Develop an Immense Virtual Product Pool that Looks Real

…however they are not on your shelves yet. Scaling your size with providers like Spocket is quite simple and it does not imply significantly higher product/operating expenses. But a diligent categorizing is a must unless you can easily get lost in the maze. Fortunately, dropshipped goods usually come with easily adaptable attribute sets that are already prepared, you just have to integrate them into your product database. Recommender engines will help to connect them based on your visitors’ behavior.


You are Not Forced to Buy Wholesale Lots

Forget the unwanted stocks causing you sleepless nights how to get rid of them via fostered discounts! It is easy to add and remove products, also to change the directions of your dropshipping business profile if the current one does not play out well. Pivoting your business doesn’t need significant investments either, unlike the traditional way of e-commerce that would need reinvesting in new supplies. Only the re-categorization and re-assortment will take away your time. But once you have completed these they will feed the recommender engines helping your dropshipping sales!

If you are still hesitant, jump on a 30-day trial of Yuspify to see how a recommendation engine can boost your dropshipping sales!

Sign up for email updates

Get regular tips and updates from the world of eCommerce and big data.

We take your privacy seriously. No spam. See our Privacy policy here.

Recent Blogposts