Competition among dropshippers grows tender and tender every year. More people have a shot at dropshipping: they buy courses, learn to create their own online stores, find trendy products, and launch effective advertising campaigns to promote them. As a result, growing competition makes the margin drop across the market, since the more players, the less efficient every single ad is. And the product that only one dropshipper offered yesterday, is today offered by five or more virtual merchants. This makes dropshippers seek new ways to boost their dropshipping store's profit margin and eventually win price wars with their rivals.
One such method is cashback services—i.e., services that refund part of the amount spent on purchases from specific sellers.
Here's How It Works:
- A supplier aspires to enhance the order flow and is ready to pay for leads that turn into buyers. The supplier pays the percentage of the amount that is agreed on beforehand.
- A cashback service finds buyers (dropshippers in our case) and drives them to the supplier's website. The cashback service earns a commission, part of which it pays to the dropshippers as cashback.
- The dropshipper buys the product using the cashback service and saves.
Down the road, all three stakeholders are with again, since each of them successfully reaches the goals set.
And here, the big task for a dropshipper is to choose a cashback service. Let's talk about the core aspects to check out when choosing one.
1. Key Suppliers
Dropshippers often start looking for cashback with a clear vision of what they are going to buy and from what supplier.
Example: A dropshipper plans to buy a product from AliExpress. In this case, the dropshipper looks for a service that cooperates with AliExpress.
However, the dropshipper must keep in mind that their main supplier's rivals may also offer a similar product. In this case, the dropshipper needs to compare the product price with offerings from different suppliers, considering the cashback rate.
Example: A dropshipper planned to buy a product on AliExpress, for he found out that it's 1% cheaper there than on Banggood. A cashback service offers 5% cashback for AliExpress orders and 10% for Banggood orders. Thus, the dropshipper can save more if they go with Banggood.
2. Cashback Rate
We have shown you in the previous example how the cashback percentage may affect a dropshipper's decision in choosing a supplier.
But, when one compares different cashback services, one may want to compare the cashback rates that one supplier offers.
Example: A dropshipper plans to buy a product from AliExpress. Cashback Service A promises 5% cashback, while Cashback Service B provides 6%. Apparently, Cashback Service B looks better in this case.
3. Number Of Affiliate Products
Even if a dropshipper knows what product they are going to order and from which distributor, this never means the distributor is ready to pay cash back for that very product. There is a category of non-affiliate products for which suppliers do not pay. This is why, selecting a supplier, a dropshipper needs to confirm that that very distributor pays for that very product they need. Based on this, the dropshipper selects a supplier and thus, a cashback service.
On the other hand, if the product dropshipper likes are non-affiliate, they don't have to look for another supplier. A dropshipper may try to reach the supplier and reclassify the product, making it an affiliate.
4. Cashback Service Reliability
A dropshipper's overall income depends not only on the cashback rate but also on cashback payout probability. Unfortunately, dropshippers often suffer from a situation when a cashback service refuses to pay for large orders.
Before you start ordering using a cashback service, make sure it works with dropshippers. There are some B2B-oriented services (in particular, focusing on dropshippers). One can read about it on the service's website. If there is no information about it on the website, ask support and make sure they promise to pay for dropshipping orders.
The reliability of a cashback service implies that it is not going to disappear the other day. Before using cashback services, a dropshipper may want to make some inquiries and learn how long the service has been around, and evaluate its market presence. The more popular the cashback service brand, the longer it has been existing—the lower the probability of an unexpected shutdown.
5. Order Automation
If a dropshipper places orders manually, they can stay with any cashback service that provides discounts for cashback-enabled orders. In this case, the dropshipper just needs to follow the link provided by the cashback service whenever they place an order.
But, if a dropshipper handles a good number of orders (e.g., from 20 every day), they will most likely use one of the fulfillment services (Oberlo, DSers, Dropified, etc.) to automate the order flow. In this case, the dropshipper needs to find a cashback service integrated with the fulfillment service they use.
If a dropshipper needs to be sure that they will get cashback for their orders and wants to automate the order flow with a fulfillment service, they need to engage a B2B cashback service.
To date, there is a limited number of B2B cashback services for dropshippers. Probably, the only cashback service that specializes in B2B users is Admitad Cashback. According to the company website, Admitad Cashback cooperates with dropshippers: the website mentions fulfillment services integrated with Admitad Cashback and provides guides on connecting various fulfillment services to Admitad Cashback.
6. Cashback Service Convenience
The previous four points are key determinants in choosing a cashback service. But one shouldn't forget that cashback services aim to get as many users as they can, which means they will try to make the service user-friendly and offer extra features. Here are some of the features you need to check out:
Competent Technical Support
When a dropshipper starts using a cashback service, they may have a lot of questions about connecting a cashback service to a fulfillment service. And here, technical support will be a great aid. An ideal case is a cashback service providing a personal manager to tackle all the matters. But, what every credible cashback service must provide is comprehensive connection guides.
Data Analysis Tools
Detailed statistics will help assess cashback flows to alleviate the repercussions of a sudden cashback rate drop. You can always check for what products the cashback rate decreased and why. For instance, a supplier may make a product non-affiliate. Non-affiliate products are not subject to cashback. Also, cashback services accumulate rich statistics on user orders, and they may share these data. For instance, Admitad Cashback sometimes sends its users ratings of TOP 1000 popular items.
A cashback service may also offer a set of tools that are supposed to facilitate a dropshipper's workflow. For instance, Admitad Cashback has a tool called Link Checker—a program that helps check the validity of affiliate links provided by a partner. Another tool, Deeplink Generator, is designed to generate deep links that are a must for dropshippers placing orders manually.
Cashback services may offer bonuses for specific actions. It may be a registration bonus or boosted cashback for products from specific suppliers.
Though the majority of services offer standard cashback payout terms, always check if your favorite method is available. If there is no information about payment methods on the website, ask a support agent about it. Besides payment methods, check out the withdrawal period and fees. A service may set a high cashback rate but compensate them with hefty fees. And such a hidden rock can make it less preferable compared to other services. Be sure to learn everything about how long you need to wait for your withdrawal and how much you pay for getting your money, beforehand.
Availability Of Affiliate Programs
This is a frequent case when the most active and prosperous dropshippers share their experience with beginners. They create paid courses or just tell stories on social media. A pleasant bonus for them would be a cashback service's affiliate program that could let them earn on referrals—i.e., dropshippers who started using the service on their recommendation. Today, when cashback services for dropshippers are not so popular, tips on using cashback services grow more and demand. This helps those who were first to learn about dropshipping services capitalize on future users.
Cashback For Additional Services
A platform may offer cashback not only for ordering products but also for paying for the services the dropshipper may need. For instance, there is cashback for online store creation services or product description composition. Such services are rendered by freelancers that one can find on freelance marketplaces offering cashback.
Not very long after a dropshipper starts using a cashback service, they will see how quickly the platform operates: how long the connection took, how long it takes support agents to answer, and so forth. Apparently, it's critical for a dropshipper to promote their store by means of advertising so that all services run smoothly: advertising can only be effective if all the components operate continuously. This is why a dropshipper must be sure that any problems that may occur on a third-party service's side will be sorted out as soon as possible.
These are the cornerstone parameters to keep in mind when choosing a cashback service. Remember that using a cashback service is another tool that can help dropshipper grow their business. This is truly a helping hand to those trying to survive in the ever-tensing dropshipping market. Dropshippers who use cashback services can offer lower prices and thus, win a customer.
About The Author
Alina Kryvoborodia is the Head of Admitad Cashback - a B2B cashback platform that connects different businesses in one place. Alina is responsible for the revenue generation, business development, and relationship management of potential and existing clients.