If you’re starting an eCommerce store and need an order fulfillment method, you may think of dropshipping. Thanks to the internet, dropshipping is a pretty popular way to make money online. It has taken eCommerce by storm and has empowered thousands of entrepreneurs to run profitable businesses with almost no upfront costs to get started. If you want to start a new business but are on a tight budget, dropshipping may be for you. It’s an easy way to enter the e-commerce marketplace with little expense and no hassle.
What is dropshipping?
Dropshipping is a business in which the store owner doesn’t have to keep the stock of products. Instead, they need to buy inventory from a wholesaler based on customer order requirements. The main difference between dropshipping and the standard retail model is that the seller does not have or own stock. Instead, the seller acquires inventory from a third party — typically a wholesaler or manufacturer — as needed to fulfill orders.
Is dropshipping worth it?
Dropshipping can be extremely profitable for those who take the timer to do their research and prepare for success. It’s not a get-rich-quick scheme, but with dedication and hard work, dropshipping can definitely make you rich!
You don’t even have to deal with returns or customer complaints because they go straight to the manufacturer or distributor. And if you find yourself unhappy with one supplier, it’s simple enough to switch over to another.
But in reality, it’s not always that easy. The competition is fierce on some Shopify dropshipping sites and many customers expect free shipping and returns, which can quickly eat up any profits you make.
Pros of Dropshipping
Easy to start
Because of low overhead, all you need is a website and a payment processor, and you can start selling. You don’t need to worry about many things like managing warehouse, package, and shipping, inventory tracking, inbound shipments, managing stock level, etc.
Low barrier to entry
With dropshipping, you don’t have to worry about warehouse management or payments. You also don’t have to purchase inventory in bulk, which takes up valuable cash and can leave you with unsold stock.
You don’t have to purchase the inventory. This makes it very easy for a small business to start selling products online without having to invest thousands in inventory upfront.
Dropshipping gives you the ability to test new product ideas without making a large investment upfront or adding additional workload. You can also quickly adapt to changes in customer demand by adding or removing items from your product line as needed.
Dropshipping allows you to scale your business almost without limit since there is no direct relation between inventory and sales volume. This makes it easier to forecast sales and profits since you will know all of your fixed costs up front.
Cons of Dropshipping
Low profit margins
Due to the numerous middlemen involved in the dropshipping process, product costs tend to be higher than if you were to order wholesale from the manufacturer or distributor. You must account for your costs when setting retail prices, which can negatively affect your profit margins.
You may have to compete with other sellers. Because dropshipping is so easy to start, there are a lot of people doing it. If there are not, in some cases that might not get any issues, For example, if you are selling a very niche product but it can be an issue if you are selling popular items. In this case, there are likely many people dropshipping the same products as you. As a result, pricing may be competitive, and you may have to fight for your share of customers.
No control over shipping
The biggest problem with dropshipping is that the supplier is doing the fulfillment for you, and that can lead to major problems. Since you don’t have direct communication with the supplier you won’t be able to gauge shipping times and quality. This can cause customer service problems if items arrive late or in poor condition.
Less control over the customer experience
When you don’t fulfill orders yourself, you lose some control over the customer experience. It could be packing materials and shipping speed. The best way to deal with this is by choosing suppliers that offer fast delivery times and high-quality products and packaging so that, even if something goes wrong, customers won’t blame you for it.
How do I start a dropshipping business?
- Starting a dropshipping business isn’t difficult. But there are several steps you’ll need to follow to get started.
- Find a product or niche that interests you so you can become an expert in your chosen industry.
- Identify potential suppliers and find out whether they dropship. If not, ask whether they can recommend someone who does.
- Choose the supplier from which you’ll buy your products.
- Build an eCommerce website or create your store on an eCommerce platform such as Shopify, Amazon, Etsy, or eBay.
How to find a dropship supplier?
- Search on Internet
- Talk to your current suppliers.
- Search B2B marketplaces.
- Ask around in Facebook groups.
- Attend trade shows.
- Check out directories of drop shippers.
If you’re looking to get into dropshipping, this guide will help you understand the basics and make your way through some of the common pitfalls that new dropshippers face. I hope this guide has given you a good overview of the potential benefits and challenges of dropshipping, so that you can then decide whether or not you’ll want to pursue this business model. If so, I wish you good luck! To anyone just starting out, always remember this—if you can stay motivated, supported, and focused on doing what it takes to succeed, then you will pull through to become a successful entrepreneur one day.