Dropshipping is a hot trend, and it’s rightly so. Online eCommerce businesses can be run by store owners with just a computer and internet access. This type of business model allows you to sell products worldwide without the need to rent or own a warehouse.
You can also have shipping taken care of by the manufacturers who ship your goods. You just need to choose a few products to list on your website and the money will flow in. Although it’s an easy way to start an eCommerce business, it’s not easy. Dropshipping is not for everyone. We will discuss these peculiarities in detail later. These Udemy courses will help you if you are interested in starting a dropshipping company.
Dropshipping for Dummies
Drop shipping may seem confusing. Drop shipping, in layman’s terms is simply listing products on your eCommerce website that will be shipped directly from the manufacturer to your customer.
The inventory is not yours, and you don’t store it or manage it. All that is taken care of by the supplier. The platform is all you have to do is provide it for customers to search for products.
It is necessary to list the products that you wish to sell on your eCommerce site. You could have your own website running on WooCommerce or Shopify, but you could also list the products on an eCommerce marketplace such as Amazon or Ebay. You can create a drop shipping business using WordPress. Orders should begin to come in once you have done the necessary trend analysis and optimized your marketing efforts.
As the retailer, you would then send incoming orders, including customer details, directly to drop shipping wholesalers located in China. You can relax and have this done automatically. The wholesalers will then pack the orders according to your instructions and send them off to you.
How can I start a dropshipping business?
You will first need to research dropshipping wholesalers. There are many dropshipping wholesalers, so it is difficult to find the right one. Aliexpress and Shopify are two of the most prominent drop shipping providers.
Aliexpress offers a wide range of products from apparel to electronics, toys, and beauty products. There are many more. There are many great products that you can sell on an eCommerce website. You will find that prices and quality for similar products vary widely across sites so make sure you do your research before you settle for the first product you see.
Drop shipping platforms are located in China and their suppliers are Chinese. Although most of the service staff speak English well, you can always use third-party services for help in negotiating prices and doing the talking.
Shopify is a platform that allows you to launch and create your own eCommerce store. Shopify provides all the tools you need to create your eCommerce website. They also connect it to many apps like order fulfillment providers and payment services.
Shopify partners with dropship suppliers so that you can also find manufacturers through them. Shopify is already fully integrated so you can enjoy convenience.
What will you sell? It is best to prepare your plan before you go to Aliexpress. It is important to know what is hot and popular in order to make your sale profitable. Do your market research before you start selling. It will make it less difficult to search for the right products when you have done this.
Dropshipping is profitable, however.
Margins are based on the difference in the price that the manufacturer sells the product for and the price at which you can resell it to consumers. Because there are no fixed costs, it can be very profitable. You would not have to pay for shipping or warehousing.
The pick and pack staff would not be paid salaries. However, this type of business model heavily relies on paid advertising such as Facebook Ads and Google Ads. To reduce your ad spend, you must do great SEO work and optimize your ads campaigns.
It all depends on the competition. This business model has a downside: many people could sell the same product at different prices.
We are now referring to the downsides…
Dropshipping can give you lemons
Fashion is dying
Drop shipping has its problems. How long can you keep your business profitable? This question is closely related to the concept of supply-demand. Drop shipping is simple, but it also means that entry to such a business can be easy.
Many eCommerce companies sell the exact same products from the same Chinese markets from the same suppliers or manufacturers. Demand may suddenly outstrip supply. The order volume may drop, which could lead to lower revenues.
You don’t have to sell anything if you don’t have any stock. However, it does not mean you aren’t earning any money.
Dropshippers are at risk of selling products that are out of style and no longer in demand. It is important to monitor the performance of your eCommerce business and to quickly adjust to keep it relevant.
Suppliers running out of stock
The inventory control that you have is another issue. Stock is not your responsibility. Multiple eCommerce businesses might rely on one supplier. The supplier manages their inventory and not you.
You may not be able ship goods to your customers if your competitors order a lot of goods from the same supplier. They wouldn’t have enough stock to meet your needs.
These delays can cause dissatisfaction among your customers, and eventually lead to negative reviews as well as word of mouth. This could spell doom for your dropshipping business.
There is no way to know what goes in the box
Another problem is that you don’t have control over the pick-and-pack stage. You wouldn’t be able to control what the supplier put in the box or how the box looks. The customer would also have no control over what they unbox in front of their Youtube audience.
Although you may make arrangements with suppliers, ultimately it is beyond your control. This could lead to customers not receiving the goods they ordered, damaged goods, or missing parts. The customer would not be able to control the final quality of the goods they receive.
A successful business requires that you not only manage the pre-sales stage but also handle what happens after customers place orders and pay their money. A certain level of customer service is essential. Customers would want to be able to communicate with someone if they are unhappy with their products or need help finding a solution.
Although you may have staff who can answer the phone and resolve complaints, communication with drop shipping suppliers could prove difficult due to the fact that they are mainly based in China and don’t speak English very well.
This can lead to frustrations and situations that are not ideal for you or your customers. Do you remember the part about getting negative reviews? This is also what could happen.
Beyond Drop Shipping
Drop shipping can give you lemons. You might look for ways to make it lemonade. Turn problems into opportunities. It may be that you are ready to take the next step in your entrepreneurial career. Drop shipping isn’t the only option if you want to have an efficient eCommerce business.
What is eCommerce Order Fulfillment (or eCommerce Order Fulfillment)?
eCommerce fulfillment refers to the entire process of delivering a package to a customer. It starts with the order leaving your shopping cart and being paid. It is the entire process.
- Each SKU you sell is purchased at the fulfillment center.
- Picking and packing incoming orders.
- Labeling the correct delivery addresses on the box
- The worldwide cross-border shipping via third party logistics partners, also known as 3PL’s. These are often the order fulfillment providers that have price agreements and work with them.
Large quantities of orders are shipped by order fulfillment providers, which allows them to offer shipping rates that are more competitive than if they were handling their own shipping.
You may find a fulfillment company located in Hong Kong or mainland China because the majority of global products are made in China. This will help reduce shipping and transfer times and is also better for the environment as the shipping route is shorter.
You can see that order fulfillment is a good idea. Let’s explore the differences.
The Difference between the Two Business Models
Products that are not branded and common
Drop shippers sell mainly unbranded products as they are widely available on both Chinese drop shipping platforms and on international eCommerce sites.
Many online shops offer the exact same products made by the same Chinese manufacturer. Drop shippers may not have the same product offerings as drop shippers, and can be subject to price wars.
If you want to sell your products developed by your company and branded with your brand, eCommerce order fulfillment is the best way.
Your fulfillment provider would
- Your unique items can be stored in the warehouse.
- Their software could be integrated with your eCommerce platform.
- When orders are received, they will be picked & packed by provider.
- Send out via logistics partners with which your fulfillment provider has agreements.
This will allow you to keep your costs low just like drop shipping but still sell unique goods at higher margins than the same goods everyone else is selling.
Selling brand-named products
E-Commerce companies that use order fulfillment services often sell their own products. They create, prototype, and produce their own products anywhere in the world, including China. Quality control is also a key part of their business. They ship the goods once they are manufactured to the fulfillment provider, who places them on shelves in warehouses that are owned or managed directly by the fulfillment provider.
Drop shipped goods are not always of the highest quality. Drop shipped products often have branded components that add value by having quality control measures. Drop shipping is a way to rely solely on the quality control of the manufacturer from which you purchase your goods. It can be difficult to ensure your customers receive the highest quality products. To ‘fix’ issues that result from a lack of quality control before shipping, you will need more customer service staff. Do you remember those language barriers? You would face those language barriers because you would need to communicate with the manufacturer, and they might not always care.
Software and Integrations
Drop shipping shops or Amazon stores that are based on a drop-shipping business model can integrate with manufacturers or supplier marketplaces such as Aliexpress. This is basically all there is to it.
It is e. The supplier receives a signal when an order arrives. The supplier would then ship it, usually in the most economical packaging and using the cheapest shipping method.
Software used to fulfill product orders was often developed by the business. These API’s can be integrated with many eCommerce platforms such as WooCommerce and Shopify. You can track individual orders and manage returns, among other features.
API’s enable fulfillment companies to receive orders directly as they arrive, pick up the order within 24 hours, and then ship it through many logistics partners with their own pros, cons, prices, and features.
Floship automates this whole process. No manual synchronization is required. Although this may seem obvious, the vast majority of order fulfillment companies still need manual syncing to send or upload CSV files to upload orders into the fulfillment provider’s system.
This is an annoying task so we made it easy by automating it. The only task that you will have to do at Floship is uploading your SKUs through a CSV file. The rest of the process is automated. No daily syncing required.
Additional shipping options
eCommerce websites no longer serve just their local market but also the entire world. Therefore, parcels must be sent cross-border to all countries. Every country has its own tax, tariff, and policy. Some countries may have a poorer logistics infrastructure, and packages could be lost if they are sent via ordinary land mail.
Drop shipping companies have limited shipping options. Chinese manufacturers will likely send packages using the slowest, most expensive option. Shipping can take up 3 weeks or longer. Each country would have the same shipping options. Three weeks is a long time in an age when people expect their orders to arrive within a few hours of placing them.
Fulfillment providers can offer flexibility for each country or region, as they work with different 3PLs. Some are cheaper than others. Some are faster than others. Some are experts in shipping liquids and batteries, while others don’t have the ability to ship these goods because of regulations. Floship’s fulfillment system gives each parcel its own shipping options.
Additional Packaging Options
Many eCommerce companies that work with order fulfillment companies often require branded packaging. Drop shippers don’t usually offer this or have the resources to provide it. This is the way to take your business to the next level.
Marketing inlays may be included, such as catalogs or leaflets. Fulfillment companies can be more flexible about how they package orders, and what value they can add.
Shipping damages are reduced because you can control how your items are packed. Floship is passionate about helping the environment, even though shipping isn’t exactly an eco-friendly industry. We use smart algorithms to minimize packaging and reduce waste.
Scaling up your business
Drop shipping is when you sell the same product over and over again. You rely on your ads for the majority of your visitors to your site. It is likely that you will be competing with other sites sooner or later. Even if your niche is well-known and you offer unique products, there will be someone else offering them. The entry barrier to e-commerce is low. It would be difficult to scale up your business so quickly.
However, order fulfillment companies allow you to ship your unique, branded goods in the manner you strategically plan to ship them. This gives customers the best brand experience possible.
Floship has dedicated account managers who are available to help you with best practices for entering specific countries. You get the best price while still ensuring quality and reliability. For a free consultation, please contact us. There are no strings attached. We are happy to help you scale your business.
You can win some and lose some. Drop shipping companies store your goods and don’t charge for it, while order fulfillment companies store them but charge for the shelf space.
You may find that your costs are higher when you have a drop shipping company. It is a good idea to do a cost calculation to determine which option is best for your business.
Working with a fulfillment company is advantageous because you can see exactly what storage is being done. If you’d like to visit our facilities, we welcome you to do so. Simply fill out this form to let us know and we will mention it in our first talk.
What are the advantages of Order Fulfillment?
- Shipping options and custom shipping solutions for each country or region.
- Packaging with branding and marketing inlays.
- Unique products are more profitable than the unbranded goods that many of your competitors sell.
- Transparency per order, track & trace options
- Services for returns
- Fulfillment companies are experts in cross-border shipping and can provide advice on taxes, tariffs, and other details.
All in all, your brand must have the experience to be globalized, succeed and grow to new heights.
Floship Order Fulfillment Services
Order Fulfillment Services could be the best option for you if you’re ready to take your eCommerce business global. You can provide your customers with the best shipping experience and keep costs down while still being able to offer the best service.
Floship is Asia’s largest order fulfillment provider. We see ourselves as more of a partner than a vendor. We listen to your needs and offer advice. Each client is assigned an account manager who will ensure that you know who to contact and don’t have to switch between multiple parties.
All of our proprietary software is developed in-house by Floship. This allows us to quickly develop new features and create custom-made API connections for eCommerce platforms beyond the 65 that we offer.