Dropshipping vs NFT Comparison and Differences

What is Dropshipping?

Dropshipping is not the best way to make quick cash. Dropshipping is a good option if you have the money and time to invest. It can also be a great way to start a side business.

Dropshipping allows online businesses to ship and hold the products they sell. Instead, they contact the manufacturer or wholesaler of the product they are selling when they make a sale online. The supplier then ships the order directly to the customer.

What is Shopify Dropshipping?

Shopify Dropshipping allows you to sell products and fulfill orders from your Shopify store. Shopify App Store sellers can create a shop and link it to the dropshipping app. Your supplier will automatically be notified when a new sale is made.

Before opening an online store, make sure you read the best Shopify dropshipping applications.

Is Amazon Dropshipping Profitable

Dropshipping on Amazon is profitable if you have a profit margin that exceeds Amazon’s seller fees. This includes a percentage of every sale, usually around 15% plus shipping. You will also be charged a $0.99 per item fee and a $39.99/month subscription fee depending on which Amazon seller plan you select.

Based on the product, percentage fees can range from 6% to 45 percent.

Dropshipping with Amazon is different to the Fulfillment by Amazon (FBA). Amazon FBA allows you to store your products in Amazon fulfillment warehouses. Products are then shipped using the fastest delivery network worldwide.

Dropshipping allows you to sell products directly from the seller to the buyer with Amazon. You should be aware that Amazon dropshipping has some shipping restrictions.

  • Related: Not sure if you should choose Shopify or Amazon to dropship your products? Check out our Shopify VS Amazon Comparison to determine which eCommerce option is best for you.

Dropshipping on Facebook Marketplace

Dropshipping on Facebook Marketplace can be a great option as seller fees are very low ($0.40 for items below $8 and 5% for items above $8), and there’s a built-in audience. You can increase your reach by posting items to relevant Facebook groups. This marketplace isn’t as saturated than Amazon.

Be aware that Facebook Marketplace sets initial geographical boundaries for user search results. This means local offerings will appear more often than dropshipping.

1. Dropshipping is not easy

It’s not easy to run an online business, regardless of whether you ship your own products. Your main responsibility is to process payments, handle customer service issues, maintain your website, and get people to notice your product offerings.

This can be difficult and time-consuming, especially if your knowledge is not in SEO or web design. Before you start, make sure you are familiar with customer service, business, and eCommerce technology.

You might be interested in an easy-to use eCommerce solution with dropshipping capabilities.

2. Dropshipping offers minimal profit margins

Dropshipping is a convenient and efficient way to fulfill orders but it’s not the most profitable.

You will purchase products from wholesalers. You won’t be purchasing products in bulk but instead one-by-one from your customers. This will ensure that your online store receives the best rates.

You will also have to pay additional fees to the wholesaler to to pick, pack and ship each order. Your profit margin will be affected accordingly.

Dropshippers typically make between 10% and 15% profit. Dropshippers typically make the least profit on high-ticket items, while accessory products with lower margins are more profitable.

3. Dropshipping is a competitive business model

There is a very low barrier to entry so you will face a lot of competition even within your niche. Many of your competitors will be taking the lowest-price-possible approach to selling, which can also impact your profit margins.

You will need to identify a niche in dropshipping that isn’t too saturated and create product listings with high-quality descriptions. Shopify’s comprehensive guide will help you dropship competitively. It is a great guide, in fact. Shopify offers a good webinar about starting a dropshipping company.

4. You lose quality control

Dropshipping allows you to outsource fulfillment and warehousing, so your products can be shipped directly to your customers.

This is great for convenience but not for quality control.

It won’t be possible to inspect the products in order to ensure that they meet your customer’s expectations.

You won’t be responsible for shipping. Your supplier will deliver your products on time. However, your customers will be responsible for any delayed or faulty products. Dropshipping means that you are also responsible.

Alternative Dropshipping Ideas

You might think that I have a negative view of dropshipping. Dropshipping is a very unsuccessful scheme to get rich quick.

But all aspects of dropshipping are acceptable to me. Partially dropshipping and outsourcing fulfillment may work well for some merchants. Here’s how:

Dropshipping is an Add-On to Your Base

Dropshipping is best when it’s paired with traditional selling.

Let’s say, for example, you sell high-quality dog treats online and keep them in your garage or warehouse. Now you want to expand your business into selling dog toys. Dropshipping is a great way to add these products to your online store.

Dropshipping a few products can help keep your site’s dependence on your supplier at bay. You still get the simplicity of the model and the potential for increased sales without having to rely on it.

You Can Still Sell Your Shipment

This is a great option for merchants who are unable to store their merchandise in their garages and don’t have enough time or personnel to pack their orders.

Fulfillrite and Shipwire offer the same freedom as dropshipping but at a lower risk.

A fulfillment partner is responsible for shipping your items on time and you can be certain of the quality of your products.

Shopify allows you to have in-house fulfillment if your online store is built using the platform. To get an idea of the benefits this fulfillment option can bring to your business, read Shopify Fulfillment.

The only problem? Fees. Fulfillment services are often quite costly. To determine if the convenience (and a smaller staff size) are worth the cost, you’ll need to calculate the numbers.

Buy Traditionally: Pick & Pack for Yourself

You might be just starting your online business and don’t have enough products or sales to justify renting a warehouse. If that is the case, you can fulfill orders yourself. Dropshipping is cheaper and you can control the process to make sure everything goes exactly as you want. Dropshipping can be a great way to increase your customer base and maximize your profit margins.

Even if you opt for the traditional route, shipping tools can still be used to speed up order fulfillment. Shipping software can be used to calculate shipping costs, print packing slips and shipping labels, and even save money.

Learn more about the best shipping tool that can be integrated with your eCommerce platform and then create a simplified product delivery strategy.

What is NFT?

Non-fungible tokens digital assets are tradable and contain information that basically says “the person in charge of this cryptocurrency wallet address, is the owner of a file stored in this location.”

As we have discussed, a computer file can be any type of file: an image, a GIF, or an audio clip.

NFTs are unique because even though you make 1,000 copies of the exact same file or image and mint the same amount of NFTs to signify ownership, each copy will be uniquely identified from the other 99 pieces based upon the metadata (or metadata).

This means that even though 1,000 investors may have the same image in their wallets they can each say “I personally own copy #.”

It is a limited edition of 1,000 cards, with each card having its own serial number. The card with serial number #1 would be most desirable and sell for more than the other copies.

To further enhance the scarcity and value of their pieces, these NFT collection creators incorporate different traits that are rare to expand on this idea.

A creator might decide that 10 pieces will have a different background, while only one will have a pattern background. This will allow some buyers to invest in the collection and will want to purchase the most rare pieces, in the hopes that their value will increase over time.

What is the working principle of NFTs?

As we’ve seen, in order to prove ownership of digital assets, you need a transparent, immutable ledger. This will keep a record of all NFTs and who they belong to, as well as where the files that point to them are kept.

This is where blockchain technology shines. Blockchain technology allows all NFTs to be transparently stored, making it possible for anyone to verify their authenticity at any time.

Every time an NFT transfer or creation is made, it is recorded on the blockchain. The action can be traced back to its origin. This is very useful if you need to verify that your cartoon ape or virtual cat are genuine.

Why do NFTs matter?

Because of their ability to revolutionize the gaming and collectibles industry, non-fungible tokens have been hugely popular among crypto users and businesses. There have been 25 billion spent on non-fungible tokens since June 2017, with another $21 billion in secondary sale.

NFTs offer collectors and gamers the opportunity to be immutable owners in-game assets and create and monetize structures such as casinos and theme parks within virtual worlds.

You can also sell digital items that you have earned during gameplay, such as avatars, costumes and in-game currency, on a secondary marketplace.

Artists can sell their artwork digitally to a worldwide audience of buyers directly without the need for an auction house or gallery. This allows them to retain a much larger portion of the sales proceeds.

Digital artwork can also include royalty programming so that the creator is paid a portion of the sale proceeds each time it is sold.

William Shatner, the Captain Kirk of “Star Trek”, ventured into digital collectibles and issued 90,000.0 digital cards on WAX blockchain in 2020. The cards featured various images of Shatner. Each card sold initially for $1. Shatner now receives passive royalties income each time the card is resold.

What is the value of NFTs?

Supply and demand, like all assets are key market drivers that determine the price. People are willing to spend a lot to get NFTs due to their rarity and high demand from collectors, investors and gamers.

NFTs can also make their owners lots of money. One gamer from the Decentraland virtual world platform purchased 64 lots to combine into one estate. It was dubbed ” Secrets of Satoshi’s Tea Garden” and sold for $80,000 due to its attractive location and easy access.

A second investor paid $222,000 to buy a section of the digital Monaco racing track within the F1 Delta Time gaming. The NFT, which represents the digital track, allows the owner to receive 5% dividends for all races taking place on it. This includes entry ticket fees.