Table of Contents
- 1 Dropshipping: What does it mean?
- 2 Dropshipping: How it works
- 3 Dropshipping: The pros and cons
- 4 Dropshipping: How can you make it work for your business?
- 5 Dropshipping FAQs
Whether you’re already active in the world of eCommerce or looking to dive in and start an online store, you’ve probably heard the term dropshipping. Dropshipping has been a hot topic in the industry for the past few years.
In this dropshipping 101, we’ll explain the ins and outs of dropshipping and everything you need to know to start dropshipping like a pro.
Dropshipping: What does it mean?
Dropshipping allows you to sell products online without having to store, ship or manage inventory. Instead, you connect with dropshipping suppliers and source products to sell online. After customers have checked out, you send the order information to the supplier and the supplier fulfills it.
Dropshipping is a different option to traditional online retail. The merchant does not have to fulfill customers’ orders. Dropshipping saves you the cost and time of manufacturing products, acquiring stock, storing inventory and shipping customers. Dropshipping simplifies the fulfillment process for merchants. Dropshipping can reduce initial overheads, which is crucial for entrepreneurs who want to start an eCommerce business.
However, to be successful, you’ll need to do your research and carefully choose your dropshipping suppliers and products. Our guide to the 20 best dropshipping products to sell online will help you to learn more about how to do your research and choose products for your dropshipping business.
You might wonder, dropshipper, what is your role as an owner of a business? There are still many things to do. It’s important to research the market and choose the right products. You also need to build your online store, calculate profit margins, manage targeted marketing campaigns, and provide excellent customer service. Wix eCommerce is an all-in-one platform that can help you manage these tasks.
Dropshipping: How it works
Wix and other all-in-one eCommerce platforms like Wix allow easy integration with a variety of dropshipping suppliers as well as print on demand companies like Modalyst and Printful. Here are the next steps after you have connected your app to your supplier.
Select products. Browse dropshipping marketplaces to find the right products for your business. You can narrow down your choices by using the filters and keyword search to find products that appeal to your target audience.
Import items to your online store, develop a dropshipping pricing strategy and set your prices. You are in complete control of your listings and profit margins.
Accept orders from customers. Your dropship products can be imported into your online store inventory. Make them available to your customers. Customers can now search for the products they are looking for, and check out and pay online.
Send customer orders to your supplier. Send your customer orders along with shipping details to the supplier. Next, make payment to the dropshipping provider on behalf of your customer.
The supplier will ship and fulfill your orders. Each order is shipped directly by your supplier to the addresses of your customers. The system will give you a tracking number so that you can keep track of your customers. You can also use your branding on packaging if the supplier offers white-label shipping.
It sounds so simple, right? It really is simple. Dropshipping success is possible, but there are key things you need to know. Dropshipping is a way to put your products supply, and possibly your reputation, in the hands a third-party supplier. It is crucial to find reliable suppliers and high-quality products. We’ve covered this in more detail in our blog post on the best dropshipping products to sell online.
Dropshipping: The pros and cons
You now have a basic understanding of dropshipping and you can decide if it is right for you. These are some things to keep in mind:
Start selling with less capital Dropshipping can make it easier to open an online store. Dropshipping is a great way to simplify the process of starting an online store. Usually, retailers need to pre-purchase stock and warehouse it. Dropshipping allows you to avoid the need to invest large sums of capital. Instead, you can have your suppliers take care of this cost. You can easily set up an online store, connect with a payment provider, and then integrate with a dropshipping company to choose the products you want.
Warehousing without worries There is no need to stock up on products. Your suppliers will take care of warehousing your products and shipping them. You will not only save money on storage, but your product range can be expanded as there is no limit to the physical space available or geographic boundaries. You can now focus your resources on marketing and customer services, since manufacturing and warehouse are already taken care of.
You can operate from anywhere Dropshipping is possible anywhere you have internet access. If you have any questions regarding an order, make sure you are able to quickly and easily reach out to your suppliers and customers.Develop your testing ground Dropshipping allows you to quickly test different products and adjust your inventory according to current trends. Dropshipping allows you to be more flexible by sourcing products directly from suppliers without any upfront costs. You can remove a product from your website if it isn’t selling. Dropshipping platforms allow you to quickly see what’s hot and add it to your product line.
This allows you to capitalize on lucrative trends much quicker than traditional retail models.Scale effectively You will need to do more work sourcing, packaging, shipping and handling large orders through traditional eCommerce. This entire process is your responsibility. You can grow your business with less logistical headaches, and more staff. The downside is that more sales means more work in some stages of the supply chain. This could be website maintenance or customer service.
Reasons to not dropship
Quality control is lacking Dropshipping requires you to be confident that the suppliers you choose are sending high-quality products to your customers. It’s difficult to monitor every shipment without checking it yourself. Shipping times are also something you can’t control. Shipping times and product quality can have a negative impact on customer satisfaction. To minimize the risk, ensure you only use reliable and vetted suppliers via a dropshipping platform like Modalyst, Spocket, or any other eCommerce platform. You should also order test samples to ensure that your products meet your expectations.
Customer service challenges It may be more challenging to provide customer service. If you don’t have extensive knowledge about the products you sell you may be unable to answer questions. You will need to be able to communicate with suppliers directly in order to solve these problems. You will also need to manage exchanges and returns. You may also need to manage the refund process yourself, depending on how your supplier handles it.Low margins Dropshipping is highly competitive.
Dropshipping is attractive because of its low entry barriers, low overheads, and easy setup. Dropshippers often source products from the same large and independent marketplaces. You’ll likely notice other dropshippers selling similar products to yours at a lower price. This is a great way to get customers and establish a market presence. However, it will not help you to lower your profit margins. Do your research on your competitors before you begin dropshipping. Also, make sure to calculate the profit margins for which products. There might be a niche that offers greater profit potential.
Shipping considerations Shipping costs vary depending on where your supplier and customer live. Shipping costs will increase if your customers live far away from the warehouse where your products are stored. If you connect to dropshipping platforms, and a customer purchases items from different suppliers (e.g. a Printify t-shirt and Modalyst leggings), you will incur separate shipping charges. These costs can be borne by your business or passed on to your customers.
Limitless customization Dropshipping is limited in terms of customization. Dropshipping products from third-party suppliers means you have no control over the product’s appearance or branding. It will be difficult to differentiate your product offerings in a saturated market without customization. Dropshipping suppliers that offer white-labeling can help you fulfill your orders and ship your products with custom branding. Printful and Printify are two examples of print-on-demand suppliers that allow you to create unique designs that cannot be found anywhere else.
Dropshipping: How can you make it work for your business?
Dropshipping can be used in many ways to grow or improve your eCommerce business. You can:
Only dropship items. The number of Wix shops selling only dropshipped items grew 84% in the first half 2021. Top selling merchant BWSS Fit uses a direct-to-consumer (D2C) model to sell high quality fitness equipment to shoppers looking to keep fit and recreate a gym style workout from the comfort of their homes.
BWSS stocks similar products to other websites, but they have made a strong stand in a highly competitive market. The website is easy to navigate and features strong imagery, useful fitness content, and honest customer reviews. Their transparency about their D2C business model and international suppliers, as well as shipping estimates, appeals to shoppers who want to trade faster for greater value.
Dropshipping can be used to increase your store’s stock. Dropshipping espresso cups can be used by coffee roasters to increase their online sales. A clothing shop selling custom t-shirts made by a print on request company. This route is perfect for merchants who realize that they could gain additional products but don’t have enough time or money to purchase them.
Sweet Mana is a skincare and lifestyle company with a wide range of products. The company’s philosophy is all about relaxation, mindfulness, and healing the spirit. Their main product is handcrafted botanical skincare, but they also use dropshipping to expand their offerings to other avenues like travel photography prints.
Print on demand merchandise can increase your eCommerce business’s revenue. You can diversify your offerings even if your eCommerce website doesn’t serve as an online shop.
Little Tail Farms in Dunlap, Tennessee, is an animal farm, or so-called brick and mortar business, that uses dropshipping as an additional revenue stream. Visitors to this website might want to book a farmstay, or farm tour. They can also visit the farm’s online shop, where they can buy a variety of merchandise from phone covers to hoodies as a souvenir of their stay.
Is dropshipping legal?
Dropshipping is legal. Dropshipping is legal if you have the permission of the suppliers. Make sure to run honest marketing campaigns and comply with online sales tax laws.
How do dropshippers make a profit?
Dropshippers must balance their revenue and costs. Consider the wholesale price of the products that you source and your marketing efforts. Price your products carefully to ensure you are making more money than you spend on dropshipping.
How can you make smart dropshipping profits? Keep your prices competitive. You want to be able to pay your expenses and still make a profit. You should research the prices of your competitors to find a range that is reasonable. Then, choose a profit margin that will win you customers.
How much does dropshipping cost?
When starting an online dropshipping business, there are three main costs:
- Your eCommerce platform plan: $17-$35 per month with Wix.
- Your website domain: $5-$20, depending on your domain name. Your domain will be free the first year you upgrade to Wix’s Business or eCommerce Premium plans.
- Your marketing: This depends on your strategy. Every Wix Business plan and eCommerce Premium plan includes professional marketing tools. Additional costs, like targeted Facebook Ads, can add around $79 per month.
Dropshipping: Is it worth it in 2021
It’s your choice. Make sure you do your research before choosing the right dropshipping products. You should also make the most of your marketing efforts to learn more about the benefits and drawbacks of dropshipping.
Dropshippers are at minimal risk. Dropshipping is a low-risk investment that allows you to explore new markets and doesn’t require any commitment to minimum orders. Best case scenario, you start a successful online business.