Nowadays, purchasing and selling have been getting easier. The customer doesn’t buy the product directly from the producer, and the seller doesn’t have to deal with the product directly. Instead, the product is shipped directly from the supplier to the customers through a third party. And this is what we call Dropshipping.
What does dropshipping mean?
Simply, the broker chooses a product from a store such as AliExpress and offers it for sale in other places such as eBay, Amazon, or even his store. The good thing is that you are not going to have the burden of the expenses of stocking, shipping, or packaging since the product is going to be shipped directly from the supplier.
Dropshipping is an excellent model to start with as an entrepreneur. It allows you to test several business ideas with few disadvantages. This will enable you to learn how to choose the products in-demand. Some advantages of dropshipping are:
1. You don’t need a massive amount of capital to start!
You don’t need to invest thousands of dollars in inventory. Since you are going to purchase the product from the supplier after you have already made the sale and got the money from the customer. Also, you will not have to keep any stock. Therefore, it will cost you less money.
However, you should take into consideration that you will have to spend some expenses on launching the store and marketing it. Check this article to know more about How Much Does it Cost to Launch a Dropshipping Store?
2. It’s easy and fast!
Dropshipping has made eCommerce easier because:
- You don’t have to deal with physical products.
- You don’t need to worry about managing your warehouse, ordering products continually, packing and shipping them, or tracking inventory.
- It allows you to list and sell products before having to buy a huge amount of inventory.
- It is a useful way to test the customers’ appetite for product categories or new products.
- It is easier to scale.
Related articles: How to Scale: Growing Their Dropshipping Business to $500,000 per Month
3. You can work on a flexible location
One more good thing about dropshipping is that you don’t need to be in a specific location. As mentioned before, you can run this business from anywhere as long as you have an internet connection. You can manage your store as long as you can communicate with your customers.
4. You can sell a wide variety of products
You don’t have to buy the products and store them; therefore, you can offer a variety of products to your potential customers. When a supplier adds an item, you can list it on your store at no cost.
Disadvantages of dropshipping
On the other hand, dropshipping has its downsides, like any other approach. Flexibility and ease of use have a price. What is it?
1.You will operate in a highly competitive environment
For the ease and low cost of entering the dropshipping world, many businesses and entrepreneurs open a dropshipping store. Therefore, you will be faced with tough competition.
Many of your competitors will work by the lowest-price-possible approach, and this will for sure affect your profit margins.
Related articles: 7 Approached for pricing.
To overcome the competition, you will have to find a dropshipping niche without too many competitors and build a high-quality product’s descriptions.
2. Suppliers’ errors
One more disadvantage of dropshipping is, sometimes, you will have to take responsibility for mistakes made by some suppliers.
You will probably work with different suppliers, so you will get your products shipped from different sources, which will complicate the shipping cost and operation. Some problems you might go through because of the supplier’s errors are:
- Missing items
- Botched shipments
- low-quality packing
Remember: If any mistake was made, your reputation will be damaged. Be careful.
How does dropshipping work?
You need to know how to choose your products carefully based on the season and market needs. However, you don’t need to have your store to start using dropshipping. Many marketers use the well-known online stores as an alternative platform to sell products.
After searching for the required products, you will contact the supplier and tell him that you sell products using the dropshipping model and you liked certain products. Then, you will buy the product with the lowest price possible, and ask about the shipping and payment methods. We will suppose that he/she agreed and gave you the product with $5.
Check out our tips for selecting the best e-commerce dropshipping products.
After that, you will post a description and pictures of the product in your store as if you are the producer. The final price might be $10. This way, you will have a five-dollar profit. Therefore, you should add real products and you should have suppliers who are going to provide the goods- usually wholesalers or manufacturers.
You might choose a product on Amazon for $50 and put it on eBay or your store for $55. When a customer orders it, pays for it, and adds his address, you are going to buy the product and add the address of the customer on Amazon. The product then is shipped directly from Amazon to the address of the customer.
You might use eBay to display products from AliExpress. When a customer visits eBay and views your product and places his/her order, you will order it from AliExpress to be shipped to the address of the buyer. Also, you might use social media platforms to display your products.
The dropshipping journey will be a tough one. You will make many mistakes, and that’s ok. Pick yourself and keep going. You can watch some educational videos on Youtube or Udemy, or read this detailed guide from Oberlo.