Does the world of e-commerce interest you? Well, if it does, you can think of leaving your 9-5 job and think of starting a dropshipping business. It is actually one of the safest and easiest ways to do that. Dropshipping is a low-risk online business platform that can help you become 0 to hero with just a few hours of work per day. Moreover, it does not require you to make a big investment.
Sounds interesting, right? Well, there is much more to this dropshipping business. So if you are wondering what is dropshipping all about, let us enumerate the details here. Stay with us to learn more about this exciting way to make money in the thriving e-commerce world. Today, we will discuss dropshipping in detail; along with it, we will talk about its profitability.
At the same time, we will share with you its pros and cons so that you can decide for yourself if it is safe for you or not. At the end of the article, you will also have a clear idea about how this supply chain works and why it is so popular nowadays. Let us dig in!
Table of Contents
What is Dropshipping? Let’s Get an Overview
Since you are reading this blog, you are probably planning to start this unique business model. Well, you are at the right place as we will share all the significant aspects of dropshipping here. If we define dropshipping, we can say that it is an order fulfillment method where a store does not keep the products it sells in stock. Instead, we notice that the store purchases products from a third-party supplier. It is this supplier who ships the items directly to the customer.
However, can you guess the difference between dropshipping and the standard retail model? The significant difference between them is that the selling merchant does not stock or own inventory; rather, they just act as middlemen. In fact, the seller has to purchase inventory as they need from the third party. These third-party suppliers are usually wholesalers or manufacturers who fulfill the orders.
How did Dropshipping Became Popular?
Well, technically, dropshipping business goes back to the 60s when you could order things from a mail catalog. Here, you could choose a product you like, make a call, and deliver it directly to your house. However, since the internet came into our lives, online shopping sites like Amazon and eBay have made it possible for people to sell their products online. In fact, both these sites allow dropshipping.
Therefore, with the emergence of all these online sites and a few more popular ones, this business model became highly prevalent. Moreover, they have also allowed the merchants to make their lives easier to a great extent. So, if you are venturing into this business for the first time, you can indeed become a dropshipper without much worry.
How does Dropshipping Work?
Now that you have an idea about dropshipping let us share some details about how it works. So you must know that in dropshipping, a supply chain is the process of a product moving from a manufacturer to a customer.
Technically, you can say that this chain goes as far as the mining of the materials used. So to understand the dropshipping business model, you should focus on the key players like manufacturers, suppliers and wholesalers, and retailers.
The supply chain consists of the three major parties:
1. Manufacturer
In the dropshipping business, the manufacturers play a major role. In fact, they are the creator of the products you dropship. Their job is to sell those items to suppliers and wholesalers in large quantities. However, you can get all your products shipped directly from the manufacturers if you want. In fact, this will also lower the rates of your products since you eliminate the supplier in between. At the same time, you can also customize your branding a little too.
However, there is a catch. Manufacturers usually have a minimum order requirement. This means you will have to invest large sums of money, firstly, if you want to purchase the items directly from the manufacturers.
2. Supplier/Wholesaler
Suppliers or wholesalers buy products from manufacturers and then sell them to retailers or dropshippers. Yes, you guessed it right, they work as middlemen. Suppliers generally specialize in a particular niche. It makes it easy for you to find the items you want to sell. Even though their charge is a bit higher, it is pretty low than those set by manufacturers.
3. Retailers
We are all very well acquainted with this term, aren’t we? Once the product goes through the supply chain after being marked up several times, you have to ensure that your profit margins are high enough to earn money. However, it should not be too high so that your potential customers leave you and choose your rival instead.
Also read: 3 Reasons Why You Should Let Customers Track Their Packages
What are the Pros & Cons of a Dropshipping Business?
Are you an aspiring entrepreneur? Dropshipping offers pretty easy ways for aspirants like you to enter the e-commerce world. In fact, you don’t even need a fancy degree from a business school or large sums of money to enter the market. It is presently one of the most popular businesses in which the young generation is highly immersed. So here are some of the pros and cons of a dropshipping business.
Pros of Dropshipping Business
Here are some of the reasons why people nowadays choose this profession. Needless to say, it can be a highly profitable business if you can do it properly. Check out the following points:
1. Dropshipping Business is Pretty Easy to Start With
So once you find the quality products, you can launch your first dropshipping store soon enough. For instance, if you use Shopify, the process will be very straightforward. So you can keep improving your store once you see if your visitors like your products or not? Since you do not have to pre-purchase inventory, you can conveniently test your new ideas.
2. No Need of Big Investments
If you are starting this business, you do not have to dig deeper into your savings to launch your online store. In other words, you won’t need a big investment. This is because the business model does not require you to purchase products upfront. Also, you do not need to invest in inventory or rent a place to store your products. Therefore, this dropshipping model eliminates many of the usual costs that traditional retailers undergo. In fact, you can launch your first store with as little as $290 in your pocket.
3. Someone Else Takes Care of The Shipping for You
One of the reasons people prefer dropshipping business is that you do not have to worry about storing and shipping your inventory. In fact, you can even be in a retail business without ever touching the items you are selling. This is because your third-party supplier takes care of the order when any customer purchases your product.
However, you still need to check the quality of each product that you are planning to sell or while ordering product samples. With all the free time in your hands, you can focus on other things like keeping your store clean and bringing in new customers.
4. You Can Sell Your Items Anywhere You Like
Well, once you start your e-commerce business, you can sell your products anywhere you like. The location won’t be a limit for you. In fact, as a dropshipper you can sell your products at any place in the world as long as the shipping costs don’t bother you. In fact, if you want, you can also set up an international store and learn how to be a global seller.
5. Delegate Most of Your Work to The Apps
One of the reasons that can help you reduce your costs in this business is that you do not have to appoint a team of marketing professionals to start your dropshipping business. Well, you can delegate all your work to the apps. They will help you automate your marketing process.
For instance, you can run Facebook ads on autopilot instead of spending days trying to figure out the best practices of dynamic Facebook advertising. Your apps can do all the work and manage the important matters of your dropshipping business.
6. Be Your Own Boss
If you do not like working under someone, this dropshipping business is a great option for you. Well, you can be your own boss in this business. You can access it from anywhere, and you can complete freedom to conduct the business in your own way. Nothing happens in a day or two. So if you are serious enough for this business, you have to invest some time and wait to become successful.
Needless to say, your online store can be a side-hustle, or you can also turn it into a full-blown business. You can indeed turn it into a profitable business if you work diligently and tactfully.
7. You Can Easily Scale Your Dropshipping Business
Since it is a hands-off business, you do not have to worry about having more work to do once you start selling more and more. This is because you do not have to pack or ship the products. So when your business starts expanding, you may want to invest more into marketing to get even more sales. However, this won’t change the nature of your daily tasks in general.
Cons of Dropshipping Business
Like every business model has some pros and cons, the dropshipping business has some minor disadvantages. Let us now have a look at some of them:
1. Shipping Can Become a Bit Complicated
One of the problems you might face in this business is if you are sourcing your products from one supplier to another. In such cases, the calculation of the shipping costs can be a bit difficult. In such a case, you might make mistakes while calculating the shipping costs when a single order contains items with different shipping charges. So be careful in such situations.
2. Limited Control Over Branding
Since you are dropshipping your products, you cannot customize them much. Therefore, you can arrange a high-quality photo shoot of your products if you want to go the extra mile with branding. However, you cannot do much about the packaging or the instructions that come along with the products you sell.
3. Customer Support Can Be a Hassle
At times, you might have to deal with an angry customer if, by chance, your suppliers fail with your orders. So at that time, you have to carefully manage the customers and solve the issue so that they can understand the reason behind the failure.
Needless to say, there are very few disadvantages in comparison to the benefits. Moreover, these are not pretty serious ones. You can deal with them tactfully and take your business to higher levels.
Is Dropshipping Business Profitable?
Many of our readers are probably wondering if this business model is at all profitable or not. Therefore, we will share some of the significant details regarding it. As per the expert analysis, dropshipping is a legit business model. Once you get the hang of it, you can earn around $10k within two months or more. In fact, their success rates are so high that more than 33% of the online stores use it to fulfill their product demand.
Moreover, analysts have predicted that by 2027, it can become a $591.77 billion industry. For instance, you have a particular product in your store. Now you can buy that product on an online site for a pretty low price. However, you sell that same product at a higher cost than the one you bought. But keep in mind, you also need to include the shipping costs within that price as often customers expect to get the products without any shipping costs. Needless to say, you can make great profits.
Also, you can target potential customers from all over the world. If you have the right advertising tactics, you can make thousands of dollars per month while sitting at your home.
Ending Note
So are you excited to start your dropshipping business? Well, this business model can indeed be pretty profitable if you can manage it tactfully. So make sure you pick the suitable suppliers, find the best products, and do the other tasks well. The above article will help you get a complete idea about how you can begin with this business and take it ahead.
Also read: 10 Passive Income Ideas to Help You Build Real Wealth
