Over a period of time dropshipping becomes a successful online/ecommerce business model.
Here, we are going to have an easy quick guide on dropshipping.
It will be helpful for the people who are thinking of entering the dropshipping business.
In this guide we are going to see
- What is dropshipping?
- Benefits of dropshipping
- Guide on running successful dropshipping business
- Pitfall of dropshipping
Without further delay let�s dive into the topic�
What is dropshipping?
Dropshipping is the concept of fulfilling the retail business where the seller accepts customer orders but doesn�t keep the stocks. It transfers the order to the supplier but the supplier sends the products to the customer directly.
Well there are even more definitions found in the web. If you are coming across dropshipping for the first time here is the simple real time example for you.
Consider yourself, you own a traditional store across the street and you have a website for the store as well.
So you have two selling points. The one is your store where the customer comes directly and buys products you have. Another form is your website where your customer orders online and then you ship the ordered products through mail or parcel services.
In both cases you have to keep stocks physically ready in your store to sell when the customer wants to buy.
This the traditional way that everyone knows, right?. On the other hand in the dropshipping model you own a website alone which acts as your store and you don’t have to keep inventories physically.
So, when the customer comes to your dropshipping store(your site) and orders an item, you will transfer or forward the order to the supplier and the supplier will send the product to the customer directly.
The supplier might be either the manufacturer, a wholesaler, another retailer, or a fulfillment house. It�s like you own an online store for someone else’s business.
Benefits of dropshipping model:
You don�t need to produce/manufacture a product – The dropshipping store owner doesn’t need to produce product to sell since the store owner going to sends the order to a supplier
You don�t need a place to store products – Since you are an online retailer you don’t need to have a warehouse or a commercial place to store the inventories.
Additional expenses relief – Since dropshipping model completely make you free from producing a product and having a place to store which in result eliminates the traditional stores expenses such as
- Production cost and maintenance expenses
- Rent/mortgage of the traditional store expenses
- Labour salary/wage expenses
- Logistic and delivery expenses
Low Investment – The initial investment to start dropshipping business is considerably low.
Location free and flexibility – You can operate from anywhere in the world, location will not be constrained and the model is flexible to do this business as side income.
Guide on running successful dropshipping business:
Premade dropshipping stores are available in high volume in the market before you get started with dropshipping websites, go through with the below guide for dropshipping.
Always target the big fish. Select your dropshipping supplier/dropshipper on the basis of their manufacturing volume.
The reason behind this is they have huge business deals on a daily basis and they may have negotiated delivery rates which will result in an increase in your profit margin.
Make Automatic. Once you start a dropshipping store, make the process of forwarding the order details to the supplier as an automatic process.
This will be really handy when you are doing dropshipping as for side income. You don�t have to check often for the new orders. Even Though there is a notification alert you still might miss it, so make it automatic.
Don’t run behind trends. One of the frequent questions asked in dropshipping business is, which is the most profitable niche? It is not wrong to select a niche which is trending in the market. But i suggest to select a niche which you have knowledge on or at least have interest in.
Good relationship with dropshipping suppliers. When you are selling hundreds of products and all of them come from different suppliers it is important to have a good relationship with your network of dropshippers.
No matter how big or small your dropshipper network is- Just must have to maintain a clear and prior agreement with your dropshipper and this will prevent you and your supplier from loss. Make sure the supplier accepts the return of the product.
Get optimized for search engines. After setup; it is important to make your dropshipping store to find your customer. Hire SEO experts to do the job for you else there are optimized dropshipping stores available in the market, you can buy them directly.
Market research and offer announcements. To be ahead of your competitor it is important to be in track with the latest trends of your niche. Have communication with your suppliers often, so that when the new products arrive you can showcase them in your dropshipping store.
During festival holidays giving offers will help in attracting customers. Giving reasonable offers on bulk orders will produce happy regular customers and you still don�t have to lose any money.
Customer satisfaction matters. It is easy to get your customer unhappy at any point of the purchase. So, it is your responsibility to make sure everything is fine. Check the design, check the user experience of the store, check the payment window, make sure the product is not out of stock, track shipping and have communicating with customers and get their review after purchase.
Pitfalls of dropshipping:
Just like any other eCommerce business the risk involved with dropshipping business can be negligible if done with caution. But it is good to be alarmed before we get our hand into something we never touched before. Below I drafted some pitfalls that need to be taken into consideration.
Competition: The flexibility and scalability of the dropshipping makes it easier. But That�s what makes dropshipping competitive. You might find the number of dropshipping stores with the same niche you are targets to sell. That’s the first drawback, High competition.
Low control over shipment: The low control on shipment seems to be an advantage but it is a huge drawback at same time. Since the product is directly sent by the supplier the quality of the product is a big question mark.
Returning product: If the customer changes their mind after purchase or if the product is defective during shipment and customer wants to return the product that’s where the dropshipping model seems getting trickier. Getting back with the supplier for return and replacement of the product takes lots of time and effort.
There is no generic return policy for all the suppliers, it differs from one supplier to another. Some suppliers might not be okay with returns and some apply fee while returning, these have to convey with customers which in return reduce the conversion.
Lesser margin of profit: The profit margin on the dropshipping solely depends on the difference of actual price of the product and the maximum retail price. So profit for single product orders has less margin of profit.
Spam supplier: It is crucial to select the right supplier for your niche. There are who call themselves dropshippers might be the middleman between supplier and you. This makes the entire process slow and unpleasant. So, beware of them.
Payment Challenges: Paying upfront depends on customer trust over you. If a customer wants to pay only after the product gets in their hand and your supplier doesn’t accept cash on delivery, then you have to spend initially. Unless the product price is low it is okay for you to spend upfront but imagine a product that is worth thousands of dollars.
Do the negative points above make you step back? Don’t be demotivated, those points are whistleblowers and want you to not fall on those holes. Despite all the risks involved, the dropshipping business is a profitable and low risk model which is preferred by highly motivated people. To get rid of all the cons, choose a right vendor for building your dropshipping store.
Author: Robert Williams
Email: [email protected]
Whatsapp: (+1) 480 637 7566