ropshipping is one of the most popular ways among merchants to start their online business and dive into e-commerce. Whether you are an experienced dropshipping store owner or just starting out developing your dropshipping strategy, this article will help you to understand how you can generate extra revenue by re-organizing your product offerings with upselling and cross-selling techniques.
One of the most crucial steps in starting a dropshipping business is choosing a dropshipping niche. Once defined and established, you can divert your attention to consideration of new sales opportunities and ways to make your business more profitable. Some of the most common ways to accomplish this are the following:
- Adding new products or services to your current offerings
- Finding new markets or sales channels
- Creating partnerships with other companies
Undoubtedly, these are effective ways of scaling your business. However, they do not necessarily guarantee success and they may require some investment to get started.
But, what if you want to make more profit without investing more of your time and money?
What if you have already found your niche and feel as though your current selection of products is already sufficient?
What if you would like to provide your customers with a better shopping experience while improving your online store's performance at the same time?
Well, the good news is that there is already an easy way to generate more profit while using the same dropshipping store, the same range of products, and the same sales channels. If you haven't guessed by now, we are talking about an effective e-commerce technique called upselling.
This article will provide you with some key insights on how and why you should start upselling in your dropshipping store, and give you an actionable checklist to begin.
STEP 1: Define your dropshipping business's strategy with SWOT
SWOT analyses are one of the most fundamental marketing tools. Before setting up your store for upselling, we recommend you write out your strengths, weaknesses, opportunities, and threats in order to analyze your current situation. This will help you formulate your digital business strategy and help you decide on your next steps.
If you want to leverage your strengths or minimize your weaknesses, then you should definitely take the advantage of the upselling/cross-selling opportunities. You might ask yourself what the difference is between upselling and cross-selling. The next step will go over these two e-commerce techniques in detail, and help you decide which is best for you.
STEP 2: Understand the difference between upselling and cross-selling
Getting a new customer is generally more expensive than retaining an existing customer and convincing them to purchase from you again. Once a customer is engaged by a product in your store, this is your chance to increase their value with upselling and cross-selling techniques. Upselling is a term for encouraging a customer to purchase a more expensive version of their selected product. For example, let's say a customer is looking to buy a blue t-shirt. You can upsell them by offering to upgrade the shirt with a customized text of their choosing.
Cross-selling, on the other hand, is a term for when you increase the order value by offering the customer other products that are relevant to the original item. Staying with the same example, a blue t-shirt, we could cross-sell by offering the customer a matching blue hoodie. You can also offer a similar item, like a white T-shirt, or any other product that may be associated with the initially chosen product.
Upselling and cross-selling are both beneficial when done correctly. They maximize value you provide to customers and increase your sales without incurring much more expenses. Next, we will cover some of the main upselling tactics that you can implement in your dropshipping store through Shopify.
STEP 3: Decide if upselling fits in with your dropshipping store's goals
Are you still unsure about whether upselling or cross-selling are a good fit for your dropshipping store?
We have outlined some of the major benefits of upselling and cross-selling below. A few of them will be more applicable to some stores than others, but you won't find out unless you try them yourself. Here is a general idea of what you can expect:
- Increased revenue: On average, upsell conversion ratios will be around 5% but can increase your store's revenue by up to 30%. For instance, Ohsnap! has managed to generate $44k in just 1 month after integrating an upselling tool into the store. You can read more about their story in this case study.
- Improved customer experience: Companies that excel at upselling or cross-selling are effective in helping customers visualize the value they are getting by ordering higher-priced or related items. By showing visitors how other versions or models might better meet their needs, you can increase your average order value (AOV) and help users feel more satisfied with their purchases. Customers may be grateful for the recommendations since you know your products better than they do. Also, cross-selling can make users aware of products they weren't previously considering, further building their confidence in your expertise.
- Quick and affordable to start: In most cases, scaling your business will entail making additional investments in marketing channels or awareness. Upselling and cross-selling, on the other hand, leverage your existing customers to extract more value from what you already have. The E-commerce market is full of great apps and tools for adding these strategies to your online store. However, if you are running your dropshipping store on Shopify, then we suggest you check out Candy Rack.
- Demonstrating your catalog breadth: Cross-selling involves identifying products that satisfy additional, complementary needs that are not met by the original item. For example, long-lasting batteries could be sold across to a customer who is purchasing an alarm clock. Quite often, cross-selling introduces users to products they would have bought anyway; but, by showing the product to them at the right time, a business maximizes their chances of making the sale. Upselling encourages customers to think about the added benefits they would gain if they upgrade an item they've already selected. In e-commerce, upselling and cross-selling are often used on product pages, during the checkout process, and in life cycle campaigns. They are extremely effective tactics for generating repeat purchases and demonstrating the breadth of a catalog to customers.
STEP 4: Choose the right upsell type for your dropshipping business
There are two main types of upselling:
- Pre-purchase Upsell, which occurs prior to customer finishing the transaction.
- Post-purchase Upsell, which occurs after a customer has finished their purchase.
Both of these methods are great ways to boost your store's revenue and average order value. The one you settle on will depend on which on your specific circumstances and business. Once you have decided on a type of offer, you will need to decide how to implement it.
The most popular examples of upsell offers are:
- True Upsell - This is usually a one-click upgrade of a chosen product.
- Bundle Product – Offering a bundle of related products from your catalog, usually at a slight discount.
- Smart Auto-Upsell – Fully automatic upsells based on the product recommendations API, frequently used in Shopify stores. This uses an algorithm to determine which related items to suggest in the upsell.
Do you have a one-product store? Great! One-product stores often have high traffic and conversions as well as many other advantages that you can check in this article. One-product stores are especially suited for upselling and cross-selling since you can easily curate related products or services to go with your main product.
By now, we have covered how you can upsell and cross-sell additional products in your store. However, you are not limited to products. Services are a great way to increase your store's revenue, regardless of whether you run a one-product or general dropshipping store. Some examples include:
- Gift Packaging – Offering premium gift wrapping services.
- Extended Warranty – Give the option to extend their warranty.
- Premium Email Support – Offer enhanced post-purchase email support or explanations.
- Custom Gift Notes - Allowing your customers to include a personalized notes with gifts.
- First in Line - To set a priority for the order and process it faster, or reserve out-of-stock items.
STEP 5: Constantly analyze and optimize your upsell offers
Creating upsell offers as well as developing your dropshipping strategy both require continuous improvement and optimization. The best way to do this is by using analytical tools to track how your offers perform after implementing them. Below, you can see an example of the in-app analytics dashboard in Candy Rack - One Click Upsell.
You may find it useful to consider not only the views and sales volume but also the take rate. The take rate refers to the percentage of users that take action on an offer. The take rate helps you to analyze the effectiveness of your offer and measure how changes can improve or deteriorate your sales.
Checklist for your first Upsell
Now that we've covered how upselling and cross-selling can increase your business's revenue by leveraging your existing customer base and product offerings, let's do a quick recap. Upselling is the practice of encouraging customers to purchase a comparable, higher quality product than the one in question, and cross-selling is the practice of encouraging customers to purchase related or complementary items. Although they are often used interchangeably, both offer different benefits. They can be used together, but you should analyze your results on a case-by-case basis.
Below you can find some final recommendations to help you set up your first upsell offer for your dropshipping store:
- Create relevant cross-selling offers – Do not offer completely random products only because you hope someone may buy them. Spend some time to tailor the offers to make sure they are related to the product the customer is purchasing in the first place. Group previously purchased products together or come up with related services your customers can benefit from.
- Integrate your upsell offer naturally – When you offer an upsell it needs to be in line with a natural purchasing flow. It needs to improve your customer experience, not interrupt it. This is done best when it looks like a "feature" rather than an upsell. For example, you can set a pop-up that will be triggered when a customer clicks on the "add to cart" button on a product page, so your customers would feel that you just want to recommend something they might have overlooked.
- Do not repeat upsell offers – We do not recommend showing your upsell offer many times. Once customers have added the upsell item to their cart, it can be irritating to see it again and again.
- Allow customers to easily decline your offer – You should not force anybody to buy something extra. The main reasons for upselling are to offer your customer something he or she might benefit from while gaining additional revenue. Overly aggressive upselling will only alienate your customers and make them unlikely to finish their purchase.
- Keep it simple or "Don't make me think" - Steve Krug, a famous expert in user-experience, wrote about this in his book on human-computer interaction and web usability. Krug pointed out that people tend to choose the first solution available for their problems. So, you should be designing your upsell offer to take advantage of our desire for simplicity. You should strive for a simple, responsive design that works on both desktop and mobile devices and presents the best items first.
- Sometimes less is more - Three upsells are much better than ten. One offer at a time often works more effectively than overloading your customers. You can also experiment by asking your friends to go over your upsell flow and give you some feedback on how they feel about it. Then, they can draw your attention to anything that made them feel uncertain.
- Use familiar ‘trigger words’ - Trigger words are words or phrases that your customer is already familiar with. Common examples are ‘Related products’, ‘We also recommend you try..’, ‘Similar’, ‘People also like...’, ‘Frequently bought together’ etc.
If you are thinking about trying out some apps for upselling and cross-selling, we recommend you consider Candy Rack. The same company, Digismoothie also has an application called Candy Cart, which brings the upsell/cross-sell experience inside the checkout page. If you are looking for something different, there are plenty of alternatives in the Shopify app store. Just make sure the one you choose works with your dropshipping network (i.e. Dropcommerce, Oberlo) or the other apps that you use.
Guest post by Alla Udovenko