Software Stack Editor

You have a clear idea for your dream store—everything from the visual aesthetics to your products. Your research is done, so you know who your customers would be and your value proposition establishes why they’d buy from you. Your marketing plan is in place so you can start to reach those customers.

But what you might not have is the initial budget to acquire, produce, or store the products you want to sell. You can still bring your vision to life, thanks to the branded dropshipping business model. Here’s what you need to know.

What is branded dropshipping?

Branded dropshipping involves customizing your dropshipped products with branded packaging, labels, and other collateral, like postcards or inserts. Unlike plain, unbranded shipments, this approach ensures your customers receive products with your store’s identity. Not all suppliers offer this option, so without it, products arrive in generic packaging that’s detached from your brand identity.

In general, dropshipping is a retail fulfillment method where you don’t keep the products you sell in stock. Instead, you partner with a supplier who manufactures or sources your products, stores your inventory until you make a sale, and then ships the products to your customers from its warehouse. This approach lets you start an online dropshipping business without the overhead costs of product development or inventory management, freeing you up to optimize your marketing and online store.

What is private label dropshipping?

Private label dropshipping is another term for branded dropshipping, or partnering with a supplier to create and develop branded products. Incorporating your own brand into your dropshipping business means you can develop a loyal customer base that’s interested in your curated selection, even if other dropshippers sell similar items. A cohesive online shopping experience and brand identity set you apart from the competition and may allow you to charge a premium for the same items. 

How to successfully start and run a branded dropshipping store

1. Identify a niche
2. Build your brand
3. Find a supplier
4. Choose products
5. Advertise your brand
6. Prioritize customer service
7. Refine with customer feedback

Experts forecast the dropshipping market to reach $372 billion by 2025. Here’s how to secure your piece of the dropshipping pie, from developing a unique brand presence to finding reliable suppliers:

1. Identify a niche 

The most effective way to launch a dropshipping business is to concentrate on a specific niche. Narrowing your focus—like specializing in skin care products instead of all beauty items—can make it easier to understand your target audience and position your brand as a go-to store in that category.

Choose a niche that resonates with you or addresses an underserved market. Common private-label product categories include home décor, clothing, novelty gifts, lifestyle products, and tech accessories. If you’re passionate about a particular area or see a gap in the market, invest time in market research to generate product ideas.

2. Build your brand

A cohesive brand presence is critical to a successful branded dropshipping business. Everything from your brand story and logo to the typography, brand voice, and visuals on your website help you stand out to potential customers and provide the foundation for a high-quality shopping experience.

Start by considering the products you want to sell or the overall shopping experience you want to create. Then, you should aim to:

• Establish your brand. Define your brand mission and values and develop a consistent brand voice and tone. Then, refine your brand identity—the visual aspects of your brand, like colors, fonts, and imagery. Use a website template with preset color schemes or customize your own.

• Create a store name and logo. Choose a memorable name for the store for your dropshipping business and create a logo. Design your own using tools like Canva or Photoshop, use a free logo maker, or hire a freelance designer for a custom look.

• Choose an ecommerce platform. Finally, set up your online store on an ecommerce platform like Shopify.

3. Find a supplier

Identify the best dropshipping suppliers for your niche by researching their specialties. For example, the coffee-focused supplier Dripshipper combines a roasting facility with a fulfillment center—a perfect fit if you’re looking to sell beans through your own branded dropshipping store.

Prioritize suppliers with expertise in custom branded packaging and mailers. Evaluate shipping timescales and minimum order quantities (MOQ). You can also read customer reviews on platforms like the supplier directory SaleHoo, the print-on-demand clothing supplier Apliiq, and Modalyst, which supplies products from big brands and indie merchants alike.

4. Choose products

Once you’ve settled on a dropshipping supplier, choose the products to market on your site and determine their branding using labels, custom packaging design, and tailored product descriptions.

Consider your brand’s long-term goals when choosing how many products to offer. Dropshipping fewer products may help you own a particular niche, but featuring just a few higher-end items may limit how often customers visit the store. On the other hand, too many products can confuse customers and dilute your brand identity.

Depending on what you offer, aim to start with between five and 20 products, highlighting a few at a time. This approach allows you to gauge what sells while giving customers room to browse. Then, adjust your inventory—or your storytelling approach—based on what shoppers are adding to their carts, and what they’re passing over.

5. Advertise your brand

Brand recognition starts with a strong identity, which helps customers connect with and remember your brand on a deeper level. Once core elements of your aesthetic are in place, stay consistent across your advertising efforts from paid social media ads to email marketing campaigns.

Reach your target audience through strategic partnerships with complementary brands that highlight the benefit of your offerings. A wellness brand, for example, might partner with a kid’s gear brand to target parents in need of a break. Press coverage in product-focused publications can also drive traffic to your site through positive reviews or feature articles. Even small design tweaks, like adding social share links to product pages, can encourage shoppers to spread the word.

6. Prioritize customer service

What makes branded dropshipping profitable is outsourcing inventory management, but this also means relinquishing control over the final stages of the customer experience—like product quality, packaging, and shipping. You rely on your supplier’s processes, so you need to have a plan in place in case something goes wrong.

You’d like to choose a reliable supplier with a strong track record, but the best way to offset the risk of error—in order details, packaging, or shipping delays—is to establish a seamless return policy and a customer service plan for damaged or unsatisfactory products. Be sure to ask your supplier about their procedures for handling mistakes or returns.

7. Refine with customer feedback

Loyal customers are the backbone of your dropshipping business, and one of the best ways to encourage brand loyalty is to engage new and existing customers in conversation.

If the store for your dropshipping business features a subscription model or gives customers frequent reasons to return, nurture that community with a customer loyalty or rewards program that issues discounts for repeat purchases or incentivizes referrals with points or merchandise. Customer loyalty programs also give you a direct line to your biggest supporters and provide the opportunity to get meaningful feedback on aspects of the shopping experience.

Asking for and implementing customer feedback is one way to encourage customer advocacy, an effective form of brand promotion in which satisfied customers feel motivated to recommend your brand to their peers. When customers feel heard and see that their input is taken seriously, they feel more invested in the brand’s success.

Customers abandon their online shopping carts for all kinds of reasons: The timing may be off, they may need more information, or they might get distracted. That’s why ecommerce brands rely on email retargeting to supply a little nudge to turn online window shoppers into paying customers.

Email retargeting helps you re-engage website visitors with personalized messages that are impossible to ignore. Here’s how it works and when to use it.

What is email retargeting?

Email retargeting is an ecommerce marketing tactic where brands send emails aimed to reengage individuals who interacted with your brand but didn’t follow through with the desired action, like making a purchase. The strategy allows you to communicate with customers whose contact information you’ve already gathered in subscriber lists and to create personalized campaigns using their behavior as triggers. This results in hyper-personalized remarketing tactics that convert.

How email retargeting works

Website behavior is commonly tracked through browser cookies (data stored on the customers’ devices), which track browsing history. For deeper insights, you can also supplement cookie data with third-party tools that monitor social media engagement or use tracking pixels, tiny invisible images used to track email opens and engagement. Email retargeting uses this customer data to create personalized email marketing campaigns.

Note that unlike retargeting in digital advertising, which targets anonymous visitors, email retargeting can only reach people already on your email lists. While it may have a smaller reach, email marketing gives you a direct line to customers who have already shown interest through subscribing, making it more effective at driving conversions with a 36:1 return on investment, on average.

When to use email retargeting

Successful email remarketing emails hit the right person with the right message at the right time. Here’s when to use email retargeting:

Cart abandonment

The internet is full of distractions. Email retargeting is your chance to remind shoppers about something they’ve shown interest in and direct them back to their abandoned carts.

There are different types of cart abandonment. Users may abandon their cart at checkout, the final step before purchase, or leave after browsing a product (browse abandonment). Each scenario warrants its own targeted email campaign.

When planning your abandoned cart email, consider why the user might have dropped off. For instance, do you have surprise shipping fees at checkout? You might offer them free shipping to mitigate sticker shock. Small perks like this can encourage people to come back and keep shopping.

Common reasons users stop browsing include indecision, distractions, or price concerns. A small nudge reminds users of their shopping session and can help motivate them to complete their purchases.

Post-purchase upsell

A major advantage of email retargeting is the ability to create audience segments based on their actions and use that data to cross-sell or upsell. For example, you can send follow-up emails offering complementary products with free shipping if purchased before the original order ships, or entice customers back with a discount for their next purchase.

Email retargeting is key in driving repeat purchases, positively affecting customer lifetime value (LTV) and retention. This is especially handy for infrequent purchasers. Businesses commonly use Meta’s ad platform for remarketing using a Meta pixel—a piece of code placed on a website to track purchasers and optimize advertising efforts on Meta platforms—but Meta has a limit of 180 days of data. This means if the purchase was over 180 days prior, email retargeting is your best option.

Lead nurture

Lead nurturing is the practice of developing and maintaining relationships with potential customers (known as leads) throughout their journey. When someone fills out a form but hasn’t made a purchase, email retargeting can help lead them through your sales funnel.

For example, in a business-to-business (B2B) setting, you might see that a prospect early in the buying process downloaded your white paper. You can retarget them with an email linking directly to the asset, then follow up with content relevant to their interests. This can strengthen their relationship with your brand and increase the likelihood of conversion when they’re ready to purchase.

How to use email retargeting

Email retargeting campaigns can help you recover lost sales and improve conversion rates. But it only works if you use customer data well. Here are some email retargeting best practices to help you run your retargeting campaigns:

Collect and match customer data

Every email address—and the consent to contact—is a chance to enrich your data and nurture leads through your funnel.

Track each email submission with a Meta pixel from your Meta Ads Manager and add it to your email database. Meta will provide a snippet of code that you can place in the section of your website so it loads on every page. Meta can then match the people in your email list with their social media profiles.

The sooner you start collecting email addresses, the faster you can gather historical data for remarketing to ensure you aren’t missing out on customer insights or advertising opportunities.

Send relevant, personalized email campaigns

Meet your customers where they are in their buying process. To do this, align your messaging strategy with the different stages of the customer journey, from first learning about your business to making a purchase.

For example, someone who just found your business might get a welcome email, while someone who adds products to their cart but doesn’t check out would get an abandoned cart email. Offers catered to the customer’s decision stage—such as discounts, online reviews, free gifts, and testimonials—can help bring them back to complete the deal.

Make your retargeting campaigns a positive experience

While many may not grasp the nuances of retargeting in marketing, most people today are aware that they’re being tracked online—and not everyone is comfortable with it.

Subtlety is your friend. Avoid directly stating that you’re targeting recipients because they’re on your list. Create a helpful experience rather than one that feels forced by the fact they gave their email.

For example, instead of saying, “We’re reaching out because you’re on our email list,” focus on providing value. If the customer was browsing tennis shoes, you could say, “Based on your recent interest, we wanted to share this special offer with you,” and provide a discount for the tennis shoe they were looking at.

Avoid overwhelming customers

When adding someone to your email retargeting campaign, exclude them from other marketing emails and prospecting activities so there’s no overlap. The messaging in your email retargeting strategy should be the most personal and relevant content. To prevent ad fatigue, implement frequency caps if you’re pairing emails with retargeted ads.

Isolate campaigns to measure performance

Isolate your retargeting campaigns from other campaigns to better understand their effectiveness. This way, you can focus on the specific actions users take—like abandoning carts or reviewing products—and ensure that your emails reach the right audience.

Key email marketing metrics to measure include:

• Open rate
• Click-to-open-rate (CTOR)
• Conversion rate
• Unsubscribe rate
• Spam complaint rate

The heart of every successful business is a good idea—but an idea alone isn’t enough. In order to translate your initial inspiration into a living, breathing business, you need to flesh it out with practical details. This is the process of turning a business idea into a business concept—and it’s the first step toward creating a business plan. A business concept allows you to articulate exactly how your product will connect with customers, and it helps you get support from early stakeholders.

What is a business concept?

A business concept is a short and clear document outlining your business venture’s essential elements. Think of it as a bridge between your initial idea and a fully developed business plan. Your business plan documents also examine the viability of your idea, highlighting its strengths and potential challenges.

The importance of a business concept lies in its ability to provide a well-defined, concise snapshot of your plan’s key elements—often the very factors investors scrutinize when considering funding your enterprise. A well-crafted concept with solid projections attracts funders and shows that you understand the value of your business and how to sustain and grow it.

Elements of a business concept

A business concept doesn’t necessarily come with a preset template or a list of boxes to check. What you ultimately include in your concept depends on your business, its offerings, and your potential investors. Here’s what most business concepts include:

Description of products

At a minimum, your business concept should clearly and concisely describe your company’s products, highlighting the characteristics that set you apart from competitors. Though brief, this section is important, painting a compelling picture that captures and holds readers’ interests.

Target market

Your target market is the group most likely to buy your product and refer friends. Use this section to showcase your ideal customer profile (ICP). Your ICP is defined by their affinities (e.g., gardening, healthy eating, fashion), age, social concerns, family status, income level, price sensitivity, shopping preferences (e.g., online vs. in-store), preferred marketing channels (e.g., social media, billboards, TV, streaming), and geography (from world market to country to specific neighborhood). Use this part of your business concept to explain how you will tailor your messaging to your target customers.

Unique value proposition

Your unique value proposition (UVP) is a succinct declaration that outlines how your customers can expect to benefit from your product. Is it of higher quality? Does it last longer? Can you do what your competitors do but for a lower cost? Your UVP emphasizes why your product or service is the best solution available.

For example, if you’re designing a sound-activated sleep apnea pillow that adjusts firmness to open airways, your UVP will explain the product’s unique value to consumers. This might include superior technology, materials, and overall benefits—like higher thread count, greater comfort, or eco-friendly fabrics—that make your product stand out.

Business model

Your business model is your organization’s plan for generating money. It breaks down your finances, including project expenses, pricing, and profitability projections. It can also cover how your business will source inputs, prepare the product for market (e.g., manufacturing, suppliers, etc.), and deliver it to customers. This section lays the foundation for future business development.

Competitive analysis

A persuasive business concept demonstrates your familiarity with your industry. It outlines what competitors offer and analyzes their delivery, marketing, and pricing strategies. The more facts and figures you include in your competitive analysis, the better. This can preempt questions from investors, loan officers, partners, and other stakeholders about your business’s viability and market share.

Market launch strategy

Entering a market can be the make-or-break moment for your new business, and early stage investors will likely have questions about how you’ll introduce your offering to the world. Your launch strategy outlines your plan to make a lasting, positive first impression.

For example, if you’re opening brick-and-mortar stores, soft launches or preview events can engage local customers. For an online business, you might use social media teasers, build email lists, offer previews to influencers, and provide launch-day deals, like BOGOs or 10% off for new signups.

Growth potential

Much of your business concept will focus on preliminary details, but investors and other stakeholders are chiefly concerned with return on investment and long-term goals. How will you ensure profitability and business sustainability?

A good business concept outlines exactly how you plan to grow your business once you’re up and running. Will you target a new customer type or geographic market? Will you develop additional product lines or service packages? Will you launch an ecommerce operation alongside your brick-and-mortar shop? This section of your business concept outlines these strategies and their anticipated effectiveness, and includes rough execution timelines.

An example of a business concept

Consider a company that’s launching a dog camera with pre-recorded voice responses. This company’s business concept would include the following core elements:

• Description of product. This section explains how the security camera is designed for pet owners to monitor their pets while at work or traveling. The company describes how its product responds to barks or other distress sounds by playing soothing recordings of the owner’s voice.

• Target market. About half of American workers would rather bring their pets to the office than leave them home all day, but it’s not always an option. The business concept notes that with pet owners increasingly unwilling to leave their dogs unattended, there’s a growing demand for in-home camera systems. These systems, often linked to consumers’ smartphones, offer visual checks and live audio interactions. However, owners are not always free to tune in to their camera networks and soothe a pet’s distress in real time.

• UVP. The concept notes that its product provides peace of mind for pet owners. This type of smart dog camera not only allows for visual monitoring but delivers immediate comfort through personalized voice recordings.

• Business model. This section makes clear that the product will be available through brick-and-mortar pet shops, big-box pet retailers, and online via major internet shopping platforms. Pricing will ensure a 15% profit margin.

Getting everything you need for a birthday party is relatively easy. You can grab a cake and snacks from the grocery store, decorations from the party supply store, and beverages from the wholesale liquor store. But a bunch of supplies a party does not make. You need to strike the right tone with the music, bring out the cake at the right time, and ensure everyone’s drinks are flowing all night. Anyone can host one great event, but hosting birthday parties that friends look forward to every year? That’s a skill.

Regularly shipping fantastic products to your customers can be a lot like hosting incredible parties. Sure, it’s never been easier to source whatever you need—be it raw materials, parts, or finished wholesale goods—but putting it all together (over and over again) is the real challenge. Luckily, supply chain mapping can help you get a grip on all the moving parts.

What is supply chain mapping?

Supply chain mapping is the process of gathering, organizing, and understanding the intricate business ecosystem of suppliers, your suppliers’ suppliers, and the many logistical mechanisms that need to function for products to reach your customers.

The supply chain map is a visual representation of all this information. Relevant data might include where suppliers are located, where their suppliers are located, and how long it takes for critical materials and components to reach their intended destinations. It can also include the costs associated with the many subparts of the sourcing process and the supply chain issues that can affect or delay the flow of goods.

“To me, supply chain mapping is about visually understanding each part of the process, from the moment the raw materials are sourced to the final delivery to customers,” says Steve Schwartz, the founder and master tea blender at Art of Tea, a subscription retailer of fine teas from all over the world. “It helps break down every step, so you can track how goods, information, and finances move through your system.”

Why is supply chain mapping important?

There’s value in any small business owner having a bird’s-eye view of their company’s supply chain operations. Being up to date on your supply chain map can help your ecommerce business in the following ways:

Operational efficiency

Supply chain mapping gives you a clear view of your entire supply network, helping you determine both efficiencies and bottlenecks in the process and quickly make adjustments. For example, by researching where your suppliers’ suppliers are located and the estimated time it takes for essential materials to travel from one place to the next, you can better estimate manufacturing and delivery times. With a clear picture, you can see where your supply chain might falter if one supplier experiences delays.

“The mapping process gives us insight into key areas like inventory levels, supplier performance, and potential delays,” Steve says. “It helps us spot challenges early, like delays in sourcing, so we can make adjustments and maintain a steady supply chain.”

Cost reduction

By identifying inefficiencies and opportunities for improvement, businesses can use supply chain mapping to save money. For instance, supply chain mapping can significantly reduce costs involved with inventory management and warehousing. By understanding how fast products move through your system, you can better forecast storage needs and avoid spending on excess space.

Risk management

Having a detailed map of your entire supply chain helps you anticipate potential risks to the flow of goods—things like natural disasters, changes in customer demand, political instability, or labor shortages. For example, if your map shows that you rely exclusively on one supplier for a critical component in one of your manufactured products and that supplier is located in a state frequently hit by hurricanes in the late summer and fall months, you can explore diversifying your sourcing for August through October.

Compliance

Buyers, sellers, importers, exporters, and manufacturers of goods are subject to a combination of complex laws and regulations at the local, state, and federal levels. Supply chain mapping is important for understanding how your sourcing may already comply with such rules, and what changes you may need to make to ensure compliance. This can help you avoid both costly fees and legal penalties that can grind business operations to a halt.

Transparency

Aside from regulatory concerns, there are ethical and environmental concerns to sourcing that—while not legally compulsory—can be important to your brand image. A lot of customers place a premium on sustainable and ethical supply chain practices. They also value knowing exactly where the products they’re buying came from. Understanding all the nooks and crannies of your supply chain map allows you to fully and honestly communicate your sourcing practices to your customers. Over time, this can substantially improve customer satisfaction.

“At Art of Tea, we focus on ensuring traceability and quality from the source,” Steve says. “We map out everything, from where our ingredients come from to how they’re processed, stored, and shipped. We document the whole journey to maintain transparency.”

How to map your supply chain

1. Identify key stakeholders
2. Understand stakeholder relationships
3. Break out costs and timelines
4. Visualize the supply chain
5. Leverage technology

Your line of business, geographic scope of your sourcing, and customer delivery expectations all affect the complexity of your supply chain map. Although these variables differ from business to business, these guidelines offer a starting point for mapping your supply chain:

1. Identify key stakeholders

Know who you’re dealing with. Document all of your suppliers, wholesalers, distributors, and other companies that touch your production, storage, and distribution processes. Consider documenting their suppliers, sub-wholesalers, and sub-distributors if you’re able to obtain that information as well.

No need to connect all the dots just yet. “Keep things simple at the beginning,” Steve advises. “Just having a clear visual or spreadsheet of your key suppliers and timelines can be a game changer.”

2. Understand stakeholder relationships

Once you’ve organized the key players into a single spreadsheet, code them according to function, their relationship to your business, and their relationship to each other. For example, a direct-to-consumer (DTC) clothing company might organize its stakeholders into the following categories, with numbers to represent their position in the production process:

• Raw cotton suppliers (1)
• Fabric manufacturers (2)
• Garment makers (3)
• Distribution centers (4)
• Transportation nodes (5)
• Shipping companies (6)

3. Break out costs and timelines

Once you’ve populated your data platform with all of your stakeholders and detailed their relationships within the supply chain, you can start drilling down into the data. For example, document how long it takes for Supplier A to ship Component X to Manufacturer B, and how much money your business must front to keep that process going. These critical data points will inform how you visualize your supply chain.

4. Visualize the supply chain

Create a visual representation of your supply chain, either on paper or with computer graphics. It might look like a linear timeline or maybe a cycle. It could even be a literal map of all the locations where your materials and components are sourced, annotated with timelines, delivery routes, costs, and contingency plans to mitigate risks.

Given the complexity of this task, you might consider hiring an infographic designer or data visualization expert to help you effectively organize all of the data and present it in a readable, visually appealing manner.

5. Leverage technology

A variety of tools can help you digitize your supply chain maps. Digital software tools like Sourcemap and ecommerce apps like 8Data are interactive and adaptable, and they often offer a variety of features that permit real-time data collection, tracking, and analysis. “Today, we use technology to track everything in real time,” Steve says, “which helps us manage a larger and more dynamic supply chain.”

Steve notes there are likely to be major strides in supply chain mapping innovation as new technologies emerge and existing technologies are refined. “Technology, like AI and blockchain, will play a big role in the future of supply chains,” he says, “especially for improving transparency and real-time tracking.”

Common challenges of supply chain mapping

Building a workable supply chain map is possible for any ecommerce business owner. As noted above, you’ll need to put in some time and effort to collect, organize, and visualize the relevant data. However, many business owners face challenges when mapping their supply chains. Here are a few to keep in mind, as well as some solutions for getting around them:

Scattered supply chain management systems

Supply chains are complicated and involve a lot of different parties. Businesses sometimes have to rely on these different parties to accurately (and even manually) input the necessary supply chain data so it can be centralized and adequately assessed. Human error or delays in reporting can cause big problems here, but supply chain automation tools offer a solution. These tools automatically collect and record the necessary data from points on the entire chain, such as fulfillment data and shipping times.

Lack of transparency throughout the chain

Some of your suppliers may be unable or unwilling to share their own supplier data—an essential part of any comprehensive supply chain map. A lack of transparency in your suppliers’ supply chains might be a red flag that those suppliers are not sourcing raw materials or components ethically or sustainably. If a partner is consistently unable to provide the data you need to fully map out your supply chain, it may be time to seek out another supplier who can meet your data needs.

Poor communication within the chain

Supply chain visibility is only possible when all stakeholders are communicating with each other effectively. If a supplier consistently fails to provide timelines or doesn’t identify inefficiencies in the system, it can result in profit-killing supply chain disruptions and delays.

To avoid breakdowns or outdated data, regularly check in with your suppliers, distributors, and other supply chain partners to ask questions and seek feedback to identify areas for improvement. “Build strong relationships with your suppliers; this can give you flexibility when things don’t go as planned,” Steve says. “Human relationships and trust have helped us in our 20 years of business in the tea space and will for the next 20-plus years to come.”

Building brand goodwill can take years of delivering products consistently, thoughtful customer service, and genuine community nurturing. Yet, your carefully cultivated trust can vanish in an instant. An organic skin care brand’s reputation might shatter when customers find its “clean beauty” products contain harmful synthetics. Or a luxury retailer’s image could crumble after warehouse workers expose dangerous working conditions. The reputation of your business is its most precious—and precarious—asset.

In an era of viral headlines and instant customer feedback, every business decision carries the weight of potential public scrutiny. Learn about various types of reputational risk, their potential impact on your business, and proven strategies to protect (and repair) your brand reputation.

What is reputational risk?

Reputational risk is the potential for damage to a brand’s credibility, public image, or market value due to negative public perception. Whether based on facts or mere impressions, these threats manifest in various forms—from scathing online reviews and social media backlash to product controversies, ethical missteps, and data breaches that erode trust.

Managing reputational risk is important for a business’s survival; even one public misstep can destroy years of built brand trust, leading to an exodus of customers.

Types of reputational risk

From data breaches and employee misconduct to supplier scandals and regulatory violations, threats to your organization’s reputation can come in many forms. Prioritize your mitigation efforts by recognizing that these risks belong to three distinct categories:

Direct

Direct reputational risks arise due to the decisions (or lack thereof) of a company’s business leaders. Mismanagement of data, poor working conditions, and eroding product or service quality are direct forms of reputational risk. These outcomes can damage public perception, weaken brand loyalty, and lead to public outrage that causes plummeting sales, organized boycotts, and customer flight.

For example, gas and oil companies face direct reputational damage when their corporate decisions to cut safety protocols lead to preventable environmental disasters.

Indirect

Indirect reputational risks emerge from the actions of individuals within the organization that cast a shadow over the company’s reputation. These incidents—while not stemming from official policy—can still adversely affect the entire brand’s credibility.

In the financial services industry, for example, a bank’s reputation might evaporate if individual employees engage in unauthorized trading activities despite the bank’s strong compliance policies.

Peripheral

Peripheral reputational risks are ones a company faces due to the actions of its partners, suppliers, and other players outside the organization’s direct control. The missteps of external connections—from payment processors experiencing data breaches to raw material suppliers using child labor—can tarnish a company’s reputation through guilt by association.

For instance, a coffee brand might face backlash if its primary supplier is exposed for using unethical labor practices.

What is reputational risk management?

Reputational risk management is how organizations protect and maintain their name, image, and competitive standing through preventive policies, diligent monitoring, and quick response. Companies that take measures to protect their reputation can maintain customer trust, preserve revenue streams, and safeguard their market position during challenging times.

Risk management programs typically include employee training, preventive guidelines, customer feedback systems, social listening, and crisis response plans to address issues before they escalate. Most importantly, risk management involves making ethical choices in the first place and aligning yourself with thoroughly vetted partners who have similar values.

Methods for reputational risk management

Managing reputation risk can be tricky when vulnerabilities can emerge across your business operations—from production quality failures to executive missteps. While you can’t prevent every threat to your reputation, these tactics can help you protect your brand before damage occurs and respond effectively if it does:

Vet your partners

The most important preemptive measure you can take is to make decisions you stand behind. These decisions can relate to product quality, working conditions, data security, privacy, and customer service. Choose partnerships you can trust to uphold the same values you do. No company is an island and your manufacturers, suppliers, warehousing, and logistics partners—even the advertising and public relations firms you employ—matter when it comes to reputation management.

Do thorough research before signing partnerships. Read customer reviews, interview past clients, lean on referrals, and ask potential partners for as much information as you need before you agree to collaborate.

Train employees on ethics and standards

Employee training is a significant strategy to mitigate reputational risk. By ensuring every team member understands your company’s ethical, privacy, and human resource policies, and their role in protecting your organization’s image, you’re setting up a first line of defense against mismanagement.

Incorporate training into your company’s employee onboarding and continue with annual refresher courses that keep reputation protection top of mind. These sessions should cover practical workplace ethics, including handling confidential information, maintaining professional conduct, and adhering to compliance standards.

As part of training, include common reputational risk scenarios, from handling sensitive customer information to addressing potential conflicts of interest. Along with workplace conduct guidelines, establish social media policies around discussing company information, communicating with customers online, and representing the brand on personal accounts to reinforce employees’ roles as brand guardians.

Monitor brand mentions 

Brand mentions (any time someone discusses your company or products online) surface across customer reviews, social media posts, Reddit threads, and industry forums. Monitoring these conversations helps identify potential reputation threats early, allowing your team to address concerns before they escalate into larger issues. Quick and thoughtful responses to negative feedback demonstrate commitment to customer satisfaction and can transform critics into advocates.

For instance, if a customer posts about receiving a defective product on TikTok, sending a free replacement with a handwritten apology note might resolve the issue. It could also prompt them to update their review and share their positive experience with others.

Here are a few tools to track your brand mentions across the web and social media:

Develop a proactive public relations strategy

Having others sing your brand’s praises carries more weight than self-promotion, which is why strategic public relations (PR) can do wonders for your brand. Just as negative press can damage reputation, positive media coverage can shape public perception and create powerful first impressions, driving sales and building credibility. Beyond reaching out to journalists at mainstream press outlets, consider building relationships with newsletter authors, podcast hosts, and industry influencers who maintain deep connections with their dedicated audiences.

Pluto Pillow, a custom sleep pillow brand, pitched journalists directly rather than hiring expensive PR firms, building brand legitimacy and driving organic growth. Its founder spent three hours daily crafting personalized emails to journalists who covered sleep products and direct-to-consumer brands, leading to features in Business Insider and the Today show that generated thousands of sales.

Measure brand sentiment

Regular customer surveys provide direct insight into how your target audience perceives your brand, revealing potential reputation issues before they surface on public channels. By gathering feedback systematically, you can identify patterns in customer sentiment, spot emerging concerns, and make proactive improvements to your products or services. These check-ins with your customer base help quantify brand perception while providing actionable data to guide reputation management decisions.

For example, if your brand sentiment analysis reveals frustration with shipping speed, you can adjust carrier partnerships or add expedited options before customers take their complaints to social media.

Here are key questions to include in your brand sentiment surveys:

• How likely are you to recommend our brand to friends or colleagues?
• What five words would you use to describe our brand?
• What could we do better to improve your experience with our brand?

Seek brand-aligned causes

Partnering with meaningful causes helps build authentic connections with customers while demonstrating that your brand’s values extend beyond profit. When selecting causes to support, focus on initiatives that naturally align with your company’s mission and resonate with your customer base—as Patagonia did with environmental activism. However, these partnerships must feel genuine and long-term rather than opportunistic, as consumers can quickly identify and criticize surface-level PR plays.

Our Place, a premium kitchenware company, centers its brand around the cultural power of home cooking and connecting people with their heritage. Through partnerships with influential voices like Selena Gomez and commitments to sustainability and mental health initiatives, Our Place has aligned with meaningful causes to strengthen its brand reputation while creating positive social impact.

Establish clear escalation procedures

Most public complaints on social media come from customers who feel ignored or frustrated by standard support channels. Your initial customer service response is crucial for protecting your reputation. A clear escalation process allows your team to quickly identify high-risk issues and provide personalized solutions that bypass standard policies.

Empower your support team to make immediate decisions—from sending replacement products in response to quality issues to refunding shipping after delays to offering store credit for inconveniences.

Prepare a crisis communication strategy

Despite your best efforts, your business may face a situation that requires you to directly confront a misstep. Whether you’ve discovered a quality control issue or are facing a major website breach, you’ll need to issue a public statement through appropriate channels. This might be through customer emails, an Instagram update, or a formal press release.

Here are some tips to approach a crisis communication strategy:

• Act swiftly but thoughtfully. Respond quickly to prevent speculation, but ensure your message is accurate and comprehensive.

• Take full accountability. Avoid deflecting blame or making excuses; customers respect brands that own their mistakes.

• Outline specific solutions. Detail exactly how you’re addressing the issue and what steps you’re taking to prevent future occurrences.

• Consider consulting outside expertise. Guidance from PR professionals or crisis management experts can help you avoid tone-deaf responses that could worsen the situation.

People often use the terms “tactics” and “strategy” interchangeably. In fact, most thesauruses list them as synonyms. It makes sense: Both words describe approaches people use to achieve their goals, and they’re intimately related. In the military, for instance, a strategy is a big-picture plan, while tactics involve on-the-ground maneuvers. There’s a similar distinction in business.

Here’s a look at how tactics and strategy differ and relate, and how you can use both to realize goals for your small business.

Tactics vs. strategy: What’s the difference?

Strategies outline your overarching objectives, whereas tactics focus on small, actionable steps. In other words, your strategy refers to the plan your business follows to achieve its long-term vision, like growth. Tactics are the specific components that make up your strategy—the concrete, short-term actions you take to reach your broader strategic goals.

For example, you might have a broad customer engagement strategy, within which your tactics might include partnering with social media influencers or launching a customer loyalty program.

Strategic plans tend to be more rigid, developed with specific long-term objectives in mind, while tactical plans are more flexible and can adapt to changing strategic goals or conditions. If your social media partnerships don’t increase sales, for example, you might pivot to tactics like video content or email marketing—all within your broader strategy to increase engagement.

Ultimately, the right strategy composed of the right tactics will help you achieve your business goals.

What makes a good strategy?

Good strategies share certain characteristics. Keep the following in mind as you craft yours:

Alignment with values

Aligning your strategic and tactical planning with your business’s core values can guide your decision-making processes and ensure your team are all on the same page—especially if you change tactics on the fly.

For example, if you’re co-branding an initiative, identify a strategic partner that’s aligned with your business’s core values. This can lead to a stronger, more authentic partnership that amplifies both brands and prevents miscommunication or conflicts that hamper your strategy.

Clear vision and well-defined goals

Strategies are first and foremost about reaching articulable organizational goals. For a well-defined strategy, develop a clear understanding of your objectives, set realistic timelines for achieving these strategic goals, and establish methods to measure progress.

Say you sell compression socks, and your goal is to sell 5,000 pairs during Q4. To achieve this, you might develop a strategy to release one new print or pattern each week of the quarter. To prepare, you set a six-month timeline for creating, approving, and producing around a dozen different designs. By clearly defining your objective and timeline, you make it easier to measure progress.

Contingency planning

Strategies are about long-term objectives, but the longer your strategy execution period, the more likely something is to disrupt your plans and necessitate adaptation. Envision a contingency plan—or multiple—for every business strategy.

For example, at the start of the year, you might set a sales goal for Product A. But, by April, a supply chain issue—like an uncontrollable weather event or international political disruption—arises, affecting a critical input. With a strong contingency plan in place, you can make up lost sales revenue. For instance, you might pivot your marketing strategy for Product B, for which you have plenty of inventory and materials.

What makes a good tactic?

The tactics you can employ are nearly endless, and it’s unlikely that any two of your strategies will use the same combination. Here are a few characteristics of good tactics:

Alignment with strategy

Just as your core values drive strategic decisions, your strategies should guide tactical decision-making. Ensure that all of your tactics actively contribute to your strategic objectives since excess or ineffective tactical actions can waste precious time and resources.

Say your shirt brand’s overarching strategy is to increase online sales by 20% within six months by targeting eco-conscious consumers. As a tactic, you launch a digital ad campaign featuring new products. Focusing the campaign solely on your new line of sustainable, organic cotton t-shirts—instead of introducing shirts made from various materials—ensures your tactics are closely aligned with your big-picture strategy.

Adaptability

A strategy can’t adapt to changes in the business environment if its underlying tactics aren’t adjustable and adaptable. Choose tactics that are flexible enough for you to respond to feedback and unexpected external factors in real time.

Suppose your company wants to increase sales by 15% within the fiscal year by being more responsive to changes in product demand. It implements a semi-automated pricing system that analyzes and responds to fluctuations in demand based on website purchases. This dynamic pricing system lets you be more responsive to changes, while a manual override function lets you disable automation if your pricing strategies need adjustment.

Iterative applicability

Adaptability is a key feature of any good tactic, but it’s just as important to be able to reapply your tactics if they’re successful. You may see a substantial increase in sales after one of your social media campaigns goes viral, but you can’t expect the same results with every campaign. Instead, choose tactics that you can replicate consistently with reliable results.

Let’s say you want to raise brand awareness by boosting newsletter signups by 30% over the next year. A good iterative tactic would be to offer discounts to customers who provide their email at checkout. You might apply the same basic tactic in other strategic and tactical planning situations. For example, you could reward customers who attend live events or potential customers who provide their cellphone numbers during specific marketing campaigns.

How to track the success of your business strategy and tactics

Tracking progress provides valuable data you can use to later replicate successful strategies and tactics and avoid ineffective ones. Here’s how to devise a tactic tracking system:

Set KPIs

An effective strategy defines your key performance indicators (KPIs)—specific, measurable metrics that reflect your business goals. These might be financial benchmarks, growth percentages, concrete milestones (like a product launch or website redesign), or any other factors to quantifiably measure strategy.

Build a dashboard

Numerous project management tools offer dashboards for tracking the progress of individual tactics and your overall strategy. Whether you choose a robust online platform or a basic spreadsheet, keep your team organized and all necessary information reviewable at a glance.

Monitor in real time

Monitor your strategic and tactical outcomes in real time to get ahead of any problems. Maybe engagement is lower than you hoped for the first of several social media posts you publish. Regularly monitoring data gives you time to refine your content before publishing your next posts.

Establish feedback loops

Create feedback loops to help team members and stakeholders identify poor strategies and weak tactics before they cause too much damage. Real-time feedback mechanisms, like weekly check-in meetings, reporting requirements, or a customer feedback system can go a long way.

Reassess regularly

Schedule periodic strategy and tactic reviews after implementation. Did you and your team achieve your strategic goals within the finite timeline? Could you have been more efficient? Take everyone’s opinions into account and determine how you’ll proceed with the next phase of strategic planning.

Document and share progress

Archive your tracking reports somewhere easily accessible—like a shared drive—so stakeholders can reference them in the future. Making these materials available to your entire team fosters transparency, keeps everyone on the same page, and invites collaboration in developing strategies.

When you’re new to retail, you want to give your business room to grow. Traditional retail restricts you to local foot traffic, involves hefty real estate costs, and requires staff presence during business hours—all of which can hinder growth. Shifting to a virtual merchant model could free you from these barriers and increase customer satisfaction.

Take businesses like Allbirds and Glossier, which grew from small startups into retail giants by adopting a virtual merchant approach, enabling them to reach customers everywhere. But running a virtual merchant business requires a few upfront considerations, in particular keeping customers’ data safe when handling online transactions.

What is a virtual merchant?

A virtual merchant is someone who sells products or services through an online store, giving customers a secure way to pay over the internet. Virtual merchant services connect your business with a secure payment processor so you can accept credit cards and handle transactions through your website.

To operate as a virtual merchant, partner with virtual merchant providers to set up a merchant account—a business account for payment and credit card processing. This enables you to accept payments through a secure payment gateway. Your merchant services provider automatically handles all payment processing, taking a small percentage—typically 2% to 3%—of each transaction, similar to how physical stores process credit card payments.

This approach is increasingly popular among business owners looking to reach customers beyond their local area. It offers the flexibility to sell products 24/7, without the overhead and limited hours of a physical storefront.

How do merchant accounts work?

A merchant account is a specialized bank account that lets you accept and process electronic payments from customers. When a customer makes a purchase, their payment information travels through a secure gateway to verify funds. The virtual merchant provider then processes the transaction and temporarily holds the funds in your merchant account before automatically transferring them to your business bank account. This typically happens within one to two business days, minus any processing fees.

To obtain a merchant account, you need to apply through a payment processor or bank, which evaluates your business type, sales volume, and credit history before approval. Many businesses choose all-in-one platforms like Shopify, which bundle the merchant account, payment gateway, and online store tools.

Here are the key elements that enable online businesses to process payments:

• Payment gateway. The secure system that encrypts and transmits transaction data between merchants and card issuers.

• Virtual terminal. A web-based tool that lets merchants manually process payments for phone orders.

• Payment processor. The service that handles the movement of funds between customer and merchant accounts.

• Point of sale (POS). The physical hardware or software that processes payments at in-person locations, working alongside online systems for unified sales tracking.

Virtual merchant security

With online stores, security isn’t just a feature—it’s an essential. When you’re processing payments and handling sensitive customer information, a single data breach could devastate your business and destroy customer trust.

That’s why modern virtual terminals employ multiple security measures to protect every transaction, from the moment a customer starts online ordering until the payment clears.

Here are a few key security measures virtual merchants use:

• Multiple firewalls. These digital barriers create layers of protection around your payment systems, blocking unauthorized access attempts before they reach sensitive data.

• Data encryption. Software scrambles every piece of payment information into unreadable code during transmission, making it useless to potential thieves.

• Tokenization. Instead of storing actual card numbers, systems use unique tokens to represent payment data, adding an extra layer of protection.

• SSL certificates. These digital certificates create secure connections between customers’ browsers and your payment system, verifying your site’s legitimacy.

• Fraud detection software. Smart algorithms constantly monitor transactions for suspicious patterns, flagging potential threats in real time. For example, Shopify’s Fraud Control app monitors risk levels, tracks chargebacks, and analyzes order patterns to help merchants block suspicious transactions.

• Payment Card Industry (PCI) compliance standards. These industry-wide security rules set the baseline for how businesses must protect card data. All Shopify stores come with built-in Level 1 PCI DSS compliance, which meets the highest security standards for protecting payment data across key PCI categories, like securing network systems and implementing strong access controls.