Imagine you’re running an ecommerce business.
There are many orders coming in from all over the globe.
These products are shipped directly to the customers and you get paid immediately after each fulfilment.
The best part? You don’t even need a warehouse!
Dropshipping is a method of selling e-commerce products without having to own inventory. We’ll be explaining drop shipping in this article.
Dropshipping: What does it mean?
Dropshipping is one of the most popular shipping models in modern times. Dropshipping allows a company to operate without its inventory and does not require a warehouse.
Dropshipping does not require that products be shipped to customers.
Who then does all that?
Its retail partners or drop-ship suppliers manage the supply chain. The supplier would distribute or manufacture the products, maintain inventory, and ship it to you on your behalf.
Dropshipping is where a store owner sells a product, but doesn’t keep it in the store.
The vendor purchases the product from him and then asks for the shipping address. The store owner does not see the product he sells.
He simply passes on the orders to vendors as he gets them.
Dropshipping: How does it work?
Dropshipping is a simple process. The process consists of three simple steps:
- The owner of the store publishes products that he wants to sell through his online store. The customer views the product and orders the product on the website.
- The retailer receives information about the order and sends it to the dropship provider manually or automatically.
- The supplier packages the products and then ships them directly to the customer, with the store owner branding.
This business model is attractive because it eliminates the store owner’s warehousing costs. Drop shipping allows you to simply redirect orders to the right supplier without having to purchase inventory. You don’t even need a physical location.
Dropshipping has many benefits
Dropshipping is a great business model.
- Dropshipping is easy if you follow these three steps: You will need to find a supplier, set up a website, and then sell the goods. It’s simple to set up and manage, with minimal investment.
- Traditional businesses require a large investment to set up. You will need to purchase products and a shop. Drop shipping removes all of the hassle and extra costs. Only you will need to pay for the costs of maintaining and running your website.
- There are no hidden costs like renting or purchasing an office, electricity or stationery. Ecommerce businesses should only focus on the fixed costs of hosting and managing the website.
- Online businesses have no disadvantages because there are no investments or physical inventory. The store owner is not under any pressure to sell inventory.
- Dropshipping is a business that does not require any commercial space. Dropshipping is not a commitment and you can work anywhere you like. All you need is an internet connection and a smartphone or laptop.
- Drop shipper suppliers can sell any item they like. The supplier does not have to be bonded with you, so you can pick any niche.
More time and resources:
Traditional business models require you to work harder to make more money. Drop shipping is different. You just need to send more orders and your dropship supplier will take care of it. The time you have can be used to increase your profit and grow your online business.
The supplier ships the product directly to the customer. This reduces the shipping steps and lowers the chance of damage during transport.
Are you a dropshipper?
Dropshipping is not for all businesses, but it’s a great option for those entrepreneurs who are able to work with dropshipping.
Let’s look at the types of entrepreneurs to get a better understanding.
Dropshipping allows entrepreneurs to try new products before investing in stocking and inventory.
Dropshipping is a great business model for entrepreneurs who want to reduce risk and validate their products before purchasing new products.
Dropshipping allows you to sell on online marketplaces at a fraction of the cost. Dropshipping is a great option for entrepreneurs with a low budget or startups that want to keep costs down.
This is the best model for those who are just beginning to sell online. E-commerce can be difficult and you need to have a basic understanding of digital marketing. Drop shipping is a good option until your website is optimized.
This business model is best suited for those who want to sell large quantities of products. You will need huge funding to keep all your inventory stocked if you plan to sell thousands of products.
Dropshipping’s disadvantages
Dropshipping as fulfillment process has its own drawbacks, just like every other thing in the world. These are the main cons of this shipping model:
Margins of profit are lower
Drop shipping may be more expensive if you don’t buy in bulk. Drop shipping is not an option for most manufacturers and wholesalers. This would make it more expensive to buy from retailers. This can reduce your profit margins.
Total liability for all losses
If the supplier makes a mistake, the customer will be charged extra.
Lower control
Drop-shipping is a model where the seller does not have control over how his brand is presented to the customer.
Because the supplier handles packaging and shipping aspects of order fulfillment,
Shipping issues:
It can be problematic to transport if you have multiple vendors who are supplying a single order for your customer. Different suppliers have different shipping rates depending on where they are located and the product being shipped. The seller would pay separate shipping charges to each supplier, while the customer would only have to pay one shipping cost.
There is a lot of competition
Drop shipping and ecommerce are gaining popularity, which means that there is more competition.
It can be difficult to manage inventory.
It can be difficult to keep track the inventory levels at your supplier. This can cause miscommunications, cancellations of orders, and back-ordering by your customers. This can negatively impact your brand image as well as the customer experience.
Dropshipping: How do you get started?
These steps will help you get started with drop shipping
Choose a niche and target market:
Market research is essential to help you choose the products that you want to sell. Start building your website by choosing a domain name based on keyword research. Do your market research and get to know your competitors. Find out how they market their products and what their profit margins are.
Select the right place to source your products
Once you have identified the products that you wish to sell, you can start looking for suppliers to source them.
Once you have found suppliers and created your eCommerce website, you will need to market it and fulfill orders in order to make a profit.
Dropshipping suppliers: Where can I find them?
Dropshipping depends heavily on the supplier. Therefore, you need to choose the right supplier for success. Google is your friend when it comes finding local suppliers who would support drop shipping.
Websites dedicated to ecommerce and incubators can provide complete directory of suppliers along with contact information. After you have compiled a list of potential suppliers, you can email them your business plan.
Responding promptly means they are more likely to sell and provide customer service.
Consider these things when choosing a supplier
- Select a drop shipper who has experience and can help you.
- Look for one that offers high-quality, top-quality products.
- Look for drop shippers with technological skills.
- Pick a supplier that is reliable and punctual.
- Before you make a decision on a supplier, be sure to ask questions.
Salehoo can help you locate and add high-profitable products to your Shopify store.
Common questions
Online business fulfilment involves handling returns, refunds and replacements. If the customer requests a refund, ask the supplier for a return merchandise number to authorize.
After the supplier has received the product, your money will be credited to your account. The store owner may also be charged a restocking fee.
What happens to defective items?
Depending on your agreement with him, you or the supplier will bear any loss resulting from defective products. Some suppliers will offer to replace the product at no cost. For proof of written proof, it is best to communicate by email.
What to do if dropshipping products are out of stock?
A back order can be created for the customer from the supplier’s stock. Once the order is placed, you must notify the customer. If the customer doesn’t want to wait, they can get a full refund.
Last Thoughts
Drop shipping is a great way to get started with online sales and test the waters. Drop shipping is a great way for you to get your business off the ground, even though margins can be low.
Drop shipping is easy to start and requires little investment. Entrepreneurs can continue with drop shipping until they build their brand. Ecommerce platforms like Amazon, Shopify and Alibaba, as well as social media such Instagram, Facebook and Reddit, offer a wide range of customers and valuable content marketing experience. This platform allows novices to learn how to set up an online shop, convert optimization, drive traffic, and other fundamentals of e-commerce.
A good inventory management software is essential for dropshipping success.
ProfitBooks offers a free inventory control system for those who sell online. You can create an account in just a few minutes.
Dropshipping: Do you have questions? Dropshipping questions? Let us know in the comments below.
