What do you think when looking at the following statistics?
- The US ranks 11th among the countries with the highest caffeine consumption, with a rate of 200mg/ person/ day. (Caffeine Informer)
- More than 150 million Americans drink around 400 million cups of coffee each day and more than 140 million cups each year. (The Motley Fool)
- In 2019, 64% of Americans from 18 years old drank coffee every day. (NCA)
With huge consumption each year, coffee has become an indispensable part of our social lives. Consumers see it as a necessity - and there is always considerable demand for this delicious beverage.
That may get you thinking about selling coffee right away!
However, many people that dream of starting a coffee business find it challenging to manage substantial startup costs. Renting a building, buying equipment, and hiring employees can quickly add up. This huge investment means opening a brick-and-mortar coffee store is a fairly large risk.
If you have always desired to join the many successful coffee store owners, but don’t want to break the bank, consider starting a coffee dropshipping business.
In this ultimate guide, we’ll walk you through the process and share tips for everything with coffee dropshipping. You can use the table of contents to jump into any section you love! Let’s get started!
I. What is dropshipping?
Before we talk about coffee dropshipping, let’s first define dropshipping.
As an order fulfillment method, dropshipping doesn’t require a business to keep products in stock. Instead, online merchants or resellers (that’s you!) buy items from a third-party supplier who fulfills orders for them.
You don’t have to cope with the hassle of storing or handling any inventory. Your supplier maintains coffee products for you and then ships the orders to your final customers.
Besides, you don’t need to worry about hiring a space to store coffee products or risk your capital to front-load inventory. You’re able to start this business with almost no cash upfront. You’ll focus your time and resources on marketing or customer support to attract the right customers to your website.
In short, dropshipping has a lot of benefits, including:
- No dealing with inventory or warehousing
- No shipping or handling
- Little to no startup costs
As a dropshipper, it’s vital to create a high-converting store, develop your marketing strategy, and of course, find a trustworthy supplier. How can you implement these tasks effectively? The answers will be mentioned in our next sections!
II. Setting up your store
This section is a step-by-step checklist of what you need to do to get your store up and running.
Step 1. Picking your platform
The first and foremost thing is deciding which E-commerce platform you will sell products to coffee lovers. It can be Shopify, eBay, WooCommerce, Amazon, etc.
We recommend you open a Shopify coffee store as it is one of the most well-known subscription-based E-commerce platforms, thanks to its ease of use, simplicity and creativity.
With Shopify, you can build a sleek, professional-looking online store without prior web design experience. Besides, it is super secure, so your customers can rest easy giving their personal information.
You can check Shopify’s free trial first. The platform offers a 14-day trial; you just need to click here to set up your account as well as claim your free trial.
Step 2. Choosing your business’s name
Choosing a name for your business might seem like a pretty simple task, but trust us, it is not always easy. Actually, it can take days to come up with a name for your business.
However, to come up with an interesting and suitable business name, you should first consider what excites and interests you. Not many people know this, but actually you can (and should) infuse your values and passions into your business.
In addition, you should follow the tips below when picking a business name:
- Make sure your business name is unique. Firstly, do some searching online to see if a similar company is using the same name as your store. Next, visit your county clerk’s office to see if anyone locally is using the same name. Lastly, if you’d like to be completely certain that you aren’t infringing on someone else’s name, you should consult with a patent and copyright attorney.
- Choose a name that is easy to pronounce. Spelling is sometimes hard, people! So, make your business name SOUND like it’s spelled, and make it easy to pronounce. Otherwise, visitors might go to the wrong site.
- Choose a name with some significance. If it is related to coffee dropshipping, it becomes easier for people to “get” your business. For instance, I’m obsessed with dogs, so I’ll try to use “Dogstreet Roasting Company.” If I decided to go with it, I’d partner with an animal shelter and donate $1 from every bag of coffee sold. This would appeal to other dog lovers who drink coffee!
- Don’t choose a lengthy name. Your business name actually should be 1-3 words, MAX! We would strongly advise sticking to one or two words. Again, the easier a name is to type and pronounce, the more people will remember it.
If you’re stuck, here are some resources to help you generate a business name:
- Shopify’s business name generator
- Namelix AI powered business name generator
- “How to Choose the Best Name for Your Business” (Inc.)
Step 3. Creating your logo
While you don’t need to spend five years and a billion dollars to design a logo, putting in the effort is essential because:
- It makes a great first impression. A bad logo makes visitors think that you don’t produce good quality coffee. While a well-designed logo won’t convince people to buy your coffee, a bad logo will definitely drive away prospective customers.
- It builds recognition and loyalty. Once you start an awareness campaign to get the word out, people will see your brand logo. The more they look at it, the more they may recognize it and give it attention. A well-designed logo helps you stand out and get recognized in the crowd of online advertisements cluttering your audience’s feeds.
- It separates you from the competition. Dare to be different with your brand logo, because it tells customers why your business is unique. Let’s say, there are 50 other coffee brands in your city, but yours is the only one that is fully committed to sustainability, and your green brand logo drives that message home. In other words, your logo is the forum to convey your values and show customers why you are not like other competitors - you are better.
If you are not a seasoned graphic designer, you have two options: hire someone to design for you or buy an existing design.
Below are our top 3 options for you:
This is our favorite option because you can see what you’re buying before paying for it. Brandcrowd is super fast and is created by professional designers. You just need to visit the website, insert some keywords such as “coffee,” “coffee bean,” or “coffee cup,” and pick the best one for you.
Once it’s done, choose the design that you love and edit it to your satisfaction. Next, buy the logo and download it for later use.
There is an option to pay around $150 to “buy out” the logo so that no one else uses it. However, we believe that will be unnecessary - at least for now.
Pricing: $15 - $165
If you’re new to the world of logo design, then Designhill’s AI-powered platform makes it simple to create a logo within minutes.
With a wide range of options as a free logo maker, the platform lets you quickly make logos in only three steps. You can pick a logo template, tweak it as your preferences, and generate free designs.
In addition, Designhill has a community of designers and artists, allowing you to hire someone to create a professional logo for your business. This prompts you to add as many details as possible about the logo you want. The more information you add, the more professional and refined your logo will be.
You can also run a contest for professional logo designs. As a result, you’ll get many different logo design concepts in response to your design contest.
Pricing: $20 - $150
3. Upwork/ Fiverr
These platforms let you hire a freelancer to design a logo for you. They will give you the best quality, but take the most time and cost you the most money.
Upwork often costs at least $45 - $125/ hour and at least a week for turnaround. It is not uncommon to see logo designs on Upwork costing more than $600. Meanwhile, it usually costs between $15 and $150 on Fiverr.
Step 4. Designing your store
Now you are well on your way to selling coffee online. Just a few more things to do, and then you’ll have your store up and running!
1. Sign up for a Shopify account
If you haven’t already, navigate to the Shopify website, enter your email address, and create a password. Once you have an account, you will get to enter the business’s name you defined earlier.
2. Pick a theme
Once you’ve set up your store, it’s time to pick your theme and design the store.
You have 3 available options for your theme:
- Free themes. Basic templates provided by Shopify.
- Paid themes. Predefined themes created by professionals. We recommend going this route if you can afford to, as it’ll convert more traffic into sales once you go live.
- Custom themes. A good custom-developed theme will likely cost you thousands of dollars, but certainly isn’t necessary to succeed. Therefore, save this for when you’re bringing in sales and can budget for it.
3. Add images to the home page
It’s vital to make your website your own, starting with your graphics. You have lots of options and just need to pick what is best for you:
- Illustrations. You can infuse some personality and color into your site.
- Real-world user contributions. You can add social proof (i.e., happy customers taking pictures with your product), and create an air of community.
- Explainer videos. Add animations describing your product, recipes, or your production processes to create interest.
- Personal videos. Talk about the product, tours of your store, or personal greetings - reinforce that there is a real, trustworthy person behind the brand.
- 360-degree videos. These can be taken by you or a professional to showcase the product and highlight anything you want your customers to know.
Finding the right images can take some time, but it is vital. Try not to pick generic and common pictures. Look for good-quality ones that highlight your unique value proposition, and match the overall aesthetic you are aiming for.
4. Add your unique value proposition
A value proposition is typically a clear statement that describes the benefit of your product/ service, how you solve your customer’s needs, as well as what distinguishes you from the competition.
For example, Dripshipper makes sure that customers get the freshest possible coffee by shipping the product on the same day it is roasted. It is fresher and all-round better tasting than all store-bought coffee.
Your unique value proposition can be your coffee origin (Ethiopian Coffee), the mission you tied the business into (supporting a cause or donating to charity), or anything else you believe would resonate with your customers.
5. Add standard pages
Aside from the usual home and product pages, there is some essential information all new website visitors will want to see:
- Shipping information. This lets customers know how long it will take to receive their orders.
- Return policy. First-time customers are taking a risk when they purchase your product. They want to know how to get their money back if something goes wrong or if they aren't satisfied with your product.
- Contact page. This page will make it much easier for visitors and customers to contact us in case they have any questions.
Pro tip: You should always offer a 100% hassle-free guarantee. If customers don’t like your product, they get their money back - no question asked. The money you will make in additional sales will always offset any losses to refunds.
6. Buy a custom domain
A custom domain name is necessary. While Shopify automatically assigns a free [brandname].myshopify.com address, this looks incredibly unprofessional.
Instead of directing prospects to [brandname].myshopify.com, invest in a custom domain such as [brandname].com directly from Shopify, or from a third-party vendor such as NameCheap.
Shopify also makes it easy to buy a domain right from the Admin section of your store. Just navigate to Online Store > Domains > Buy new domain and follow their instructions. A normal domain costs about $14/ year.
III. Your marketing strategy
Marketing is integral to any good business.
It helps you better reach and connect with your target customers and ultimately is how you’ll grow your business in the long run.
Marketing is vital because, without it, your business simply won’t go anywhere because it will not be seen.
But it is one thing to market your business without any direction, and it is another thing to market it with a clear plan.
The results are quite different.
That is where a marketing strategy comes into play.
This section will walk through some necessary things for your marketing strategy. Read it if you want to build a solid marketing strategy for your coffee business.
Aside from the normal costs associated with starting a business, such as registration fees, taxes, etc., here are some important figures:
1.1. Monthly fees
Your Shopify store costs $29/ month once the trial expires. And if you choose to work with a coffee fulfillment app - like Dripshipper - it will cost $30/ month.
Plan for at least 6 months at $59/ month, and that’s $354.
1.2. Advertising fees
You’ll be dropshipping your products rather than investing in inventory. All the money you save can now be reallocated to customer acquisition.
With advertising fees, the rule is simple: Start small.
It’s fine to start with just $5-$10/day. This way, you can see what works, make a few mistakes, as well as learn what works best before pouring more in once you have a solid ROI.
Set aside a budget for 6 months to figure out how to succeed and break even. So, this is a budget of $900 - $1,800 for 6 months.
Let’s look at the budget breakup below. This structure gives you at least 3 months of runway for your marketing budget to start generating some sales.
- Ads: $5/day => $150/month
- Giveaways & discounts: Offer first purchase for $1 => costs ~$150/month
With this budget, we’ll spend ~$359/month to get started. To cover expenses for 6 months, you will need $2,154.
1.3. Fixed fees
We’ll talk more about this further down, but plan on spending a total of around $100 on custom labels for your flagship products - the ones you really want to lead with and promote.
You should also plan on spending an additional $150 on photo editing to make your products look attractive.
2. How many products should you start with?
Many people think that it’s better to throw every product onto your site.
Only list items that are similar and relevant.
Focus on 3-5 products to use as flagships, which you’ll advertise, attach promotions to, and feature often. For example, for Dogstreet Roasting Company, we’ll create sample packs and attach promos to them so customers can try various products for the first time.
Then, we’ll follow up later to see what they like best, and offer their favorites at a discount.
3. Upsell items
When someone purchases, give them the option to buy something complimentary during the checkout process.
You can explore Dropified, another Shopify plugin, to quickly add some coffee accessories from AliExpress to your Shopify store.
4. Who is your target audience?
It’s essential to identify and understand your target audience.
By exploring more about what makes these people tick, you’re able to laser-focus your marketing strategy and product offerings to exactly meet their needs. That is how you build a fanbase and get repeat customers!
If you’re selling coffee, targeting people who have previously expressed interest in coffee may be a good start.
For instance, we’re targeting dog lovers who drink coffee. Thus, our goal will be to find people who have these interests on places like Facebook and Instagram, and then reach them through ads or partnerships with influencers.
5. Creating a conversion funnel
Most people just run ads directing traffic to their homepage, and try to sell them something there.
However, only 4% of the traffic that visits your website is actually ready to purchase something. If you try selling to “cold” traffic, you will automatically be turning away 96% of your potential market.
Instead of wasting your own time and resources trying to convert 4% of your traffic into customers, focus on starting a relationship with 100% of your traffic.
Build trust, educate them about your value, and capture their information with lead magnets they cannot resist so you can invite them back.
We’ll run a Facebook ad at $10/day directing visitors to our homepage.
In exchange for their email address, we’ll give them a promo code to try one of our sample packs for just $1. This promo code will be emailed to them with a link that drives them straight to the checkout page for any of the 3 sample packs we’ll be offering.
People who use the promo code will be taken to the checkout page with the product. We’ll track conversions on this page, and test different options to see what works best.
3 days after delivery confirmation, we’ll send an email asking them how they like the coffee and which one is their favorite.
If they respond with a favorite, we’ll send a promo code to start a monthly subscription with that coffee. This way, instead of selling just one pack, we’ll be getting a guaranteed sale every month.
In case they don’t convert, we’ll follow up with a second promo code to purchase their favorite coffee with a one-time purchase promo.
To manage this conversion funnel, we track how many people move to each step of the funnel. We’re aiming for 20-40% of our website traffic to give us their email for the promo code. If we can get to that conversion rate, we’ll know our lead magnet did a good job, and can move on to optimizing the conversion from lead magnet to sale. Then from sale to nurturing the existing customer.
6. Facebook ads
To run Facebook ads, you first need to create your own Facebook Pixel. This lets Facebook track your conversions and customer activities on your website, optimize your ads, and retarget people who have visited your store.
You can read this easy guide from Shopify to get started.
Once that’s up and running, you can use Facebook’s Audience features. Below are a few cool things you can do:
- If you have an email list, upload it to Facebook’s Ad Manager, and you can directly send ads to members of this list. If you are just starting out, you won’t have one yet. Don’t worry, there are many other alternatives, but don’t buy lists from others.
- Retargeting. Once you have been running ads for a while, you can send special adverts to people who responded in various ways.
- Lookalike audience. Use the email addresses of your existing customers to generate an audience of people who match their demographics, interests, and more.
- Fans of influencers and competitors. Use Facebook’s audience insights to find any business in a similar niche. It doesn’t need to offer the same product, just be targeting the same audience. Then, start advertising to their followers.
- Custom user attributes. If you cannot find the data to create the right Facebook Audience, look through all the attributes available inside Facebook Ads Manager and start guessing. Retarget all the people that do not opt into your conversion funnel later on but still interact with your website.
As a yardstick, below are some metrics you should be aiming for:
- CPC (Cost per click) of under $0.50
- Cost per email/ conversion under a couple of dollars
- 20-40% conversion rate from traffic to your funnel
You’ll likely need to test different audiences and lead magnets to get to these types of numbers. Therefore, run split tests regularly, and keep looking at the metrics.
IV. Your supplier
Choosing the right coffee supplier is important to the success of your business. Your supplier directly determines how your coffee tastes and significantly impacts the quality of service you can provide your customers.
Below are several important things to look for when choosing your coffee supplier.
Dropshipping automation vs. doing it yourself
Benefits of Dripshipper vs. others
Dripshipper is a Shopify store app that lets you immediately start your own online coffee business. The platform helps you create your coffee products, labels, and automatically sync orders with suppliers for fulfillment.
Dripshipper is the best option in the market for this operation for the following reasons:
- Dripshipper roasts and ships coffee on the same day. Aside from being a fantastic value proposition, this delights your customers with on-time delivery of fresh, high-quality coffee products.
- Dripshipper does all the hard work selecting and negotiating with high-quality suppliers, so you don’t have to.
- Dripshipper automatically syncs your store with the supplier. Therefore, all the labor normally involved - submitting invoices, tracking orders, creating reports - is all handled automatically.
Sign up for Dripshipper and connect to your store
Here’s how to start with Dripshipper:
1. Install & subscribe
Head to dripshipper.io and sign up for a 14-day free trial of Dripshipper.
Once you have done that, you can connect your store to Dripshipper and place manual orders as well.
2. Upload your logo
Click on the “Select Free Label” button at the top or the “Upload Logo” button in the “How to get started” section.
Click on “Upload Logo,” and choose the logo file you purchased earlier. Also, ensure to pick a label template for the free labels that come with all the coffee bags with your logo on it.
3. Import products
We’ll use the three Sample Packs as our flagship products for the time being, so we’ll add all the other coffee products except for those three. If someone buys them, they’ll be fulfilled with the label we chose in the previous step. The label will still have our logo and branding on it, so no worries there.
Navigate to the “Add Products” section by clicking on the button in the top menu. For pricing, you should look around the Internet for comparable products.
Note: Keep in mind, you are not selling off-the-shelf coffee that is lower quality and roasted weeks or months ago. You’re selling a high-quality coffee product, so ensure that you compare your prices to those of high-end coffee brands in the market and maximize your profits.
4. Choose flagship products for custom label
Pick your flagship products and click the “Color Labels” button in the top menu. Upload a fully custom and fully FDA-compliant label. They have a guide to help you, so don’t worry!
- Choose your color bag
- Choose the coffee type you’re using and do it one at a time. In our case, it is the sample packs, and we’re doing the Best Sellers Sample Pack first. Then, pick the grind and the size. The sample packs only come in one size and ground, so we’ll select ground and 1LB
- Next, check out the requirements for the custom label you will design and upload. We have a detailed guide named How to Create a Custom Label, so have a look at it!
- Once you’re ready with your requirements, design the custom label either by yourself, or with a professional on Upwork or Fiverr.
- Once the label has been created, click on the “Upload Label” button and follow the onscreen instructions to finish the process of creating your flagship product.
- Then, the label will be sent for FDA approval. Once approved, you can import the product and then you’re ready to start selling!
- Don’t forget to add the $1 promo code to your store. As you can see, this is a STEAL for your initial customers: $30 off their first order of premium coffee from a selection of the 6 best-selling coffees.
5. How fulfillment works with Dripshipper
Orders are automatically sent to the supplier for fulfillment. The supplier charges your card, which is on file with the Dripshipper subscription, for the wholesale cost of the order and starts making it.
6. Lead time
Expect 3-5 business days at most for the coffee to be produced and shipped out to the customer, though it typically takes only 1-2 business days. Account for 1-5 business days to ship to the customer if they’re in the USA.
7. Tracking information
Tracking information is automatically added to your orders once the products ship, and your Shopify store is already set up to notify your customers. This is all automatic, so nothing for you to do here.
V. Leveraging customers to increase sales
It’s fun to make sales, but repeat business is where the real money lies.
By retargeting and encouraging repeat business, you’re able to grow your bottom line without significantly increasing marketing and advertising expenses.
There are hundreds of ways to get repeat business, but if you are looking for simple, quick, and effective, the following strategies will serve you well.
1. Offer personalized customer service
Most times, it is just a matter of caring. While most businesses think that the sale is the end of the transaction, we email our best customers regularly to check up on them, ask for their feedback, and respond to their questions. Our customer retention figures speak for themselves.
2. Start a loyalty program
One of the classic methods to encourage repeat business is to start a loyalty program. You can get as complicated as you want, but simple is usually the most effective.
All you need to do is collect customers’ information, give them a special account number or card, and start rewarding them when they make a second purchase or reach a specific dollar limit.
Loyalty programs not only encourage repeat business behavior, but also tend to boost the average transaction size.
Below are some tips for an effective loyalty program:
- Ensure to have special offers exclusively for members of your loyalty program
- Offer special rewards for people who refer customers to your business
- Make sure your loyalty members are given top priority
- Make use of a bonus point campaign
3. Give out future-use coupons
Many customers come to a store looking for one item. If they find that item, they buy it and then don’t have much of a reason to return. You should capture these people and nurture repeat business by offering them future-use coupons.
For instance, for every $100 purchase in your store, you could offer a coupon for 15% off that can be applied to their future purchase. This will give them a reason to return when they otherwise might not have had one.
VI. BONUS: Subscriptions to increase revenue
Subscriptions will set you apart from other small E-commerce businesses, and add a lot of extra revenue to your business by allowing customers to become repeat customers easily.
Work hard to find out the FAVORITE coffees for each and every one of your customers, and get them on a subscription. It can be the difference between earning $5 per customer to $60 per customer. It may not seem like a big deal, but spread across thousands of customers, you will realize how much of a difference it makes.
We recommend using PayWhirl to set up your subscription. It integrates well with Shopify and all its apps. The company is also working on a guide specifically for Dripshipper users.
Now, you know how to make your first sale. Here is a quick recap of what you’ve learned:
1. Set up your store
2. Create a marketing strategy
3. Create a conversion funnel to capture your potential customers
4. Load your store with products
5. Pick your flagship products to focus on
6. Set up everything with professional images for your flagship products to make them as attractive as possible
7. Set up Facebook ads, target your audience, and start sending them through the conversion funnel
8. Optimize and test your conversion funnel to maximize results
9. Make your first sale and let Dripshipper handle all the operations and fulfillment for you
10. Turn your customers into ambassadors that promote your products
11. Turn your customers into repeat customers by signing them up for subscriptions
12. Keep growing, keep adding more conversion funnels, and constantly test and optimize
We hope that this 2022 Ultimate Guide to Coffee Dropshipping has helped you a lot. Contact us now if you have any questions or concerns about this topic. We’re always glad to hear from you! Thanks for reading!