What is Dropshipping And How Does it Work?

BusinessBlogsStarting an online business has become a lot easier – especially in the world of drop shipping. With just a few clicks and hours of research, you could be up and running with your first venture.

If you are interested in venturing into e-commerce but, don’t have the capital to maintain an inventory in the traditional sense then, drop shipping might just be the perfect online store product management model you need.

Now, you may be wondering, what’s this drop-shipping?

Dropshipping is an eCommerce order fulfillment model in which a shop (online) owner doesn’t keep an inventory of the products they sell. For example, if you decides to venture into the fashion niche – you would need a wholesale clothes dealer to drop ship your orders.

The business owner usually signs up with these drop shippers – this could be manufacturers or wholesalers and list their products on his/her store. Then once an order is received, they replicate same order with their drop shipper who then handles the order fulfillment.

This is how dropshipping works:

  • A customer visits an online store and purchases a product
  • The store owner receives the request and forwards same to their drop shipper.
  • The dropshipping supplier packages the product and ships to the customer.

If you’ve taken notice, you’d see that the drop shipper plays a very crucial role in this model. Hence, it is important as you set about creating your dropshipping business to research deeply including reading about others experiences with drop shippers before signing up with any –because the fact is, they can either break or make you.

So, having explained that, the next is what requirements do you need to set up your business?

In starting a drop shipping business, there are three basic things you must put in place – they’re like foundation on which your business is built on. The first is:

  • Choosing a product to sell: With a product idea, it’s easier to set up the other two. In selecting a product to sell on your store, it is important to choose ones that have a ready market and which allows you to make a reasonable profit.
  • Choosing drop shippers: The products you’ve decided to sell will guide you in researching and selecting drop shippers. Some ways to research suppliers include either using the good old Googling or purchase a list of drop-shippers off vendors.

If you decide to go the list route, remember, to read up on other peoples’ experiences about the companies on the list – this will save you from future headaches.

  • Building a website: Though there are many ways to drop ship – you could sell using social media or a third party platform, or both. But, it is recommended to have your online storefront where you have 100 percent control over branding and also where you can direct the traffic you generate.

In setting up your website, there are certain things to consider which include:

o    The platform to use: Choosing a suitable platform for your site is crucial as it determines the automating software you can integrate with your store.

In this regards, Shopify is the most widely used e-commerce site builder- due to its flexibility, helpful features and compatibility with third-party plugins. So you may consider using it too for your store.

o    The initial cost of using a platform: Some e-commerce management systems such as Shopify offer a free plan for the first month which makes it easy when starting out.

Is dropshipping worth all the efforts?

Drop shipping offers an excellent entry point into the world of online business. It has a little startup cost and yes; you can make a decent living from drop shipping.

However, just as with any business venture, it has its challenges – you’d be dealing with stiffer competition, since you don’t control product delivery quality you may have to deal with a lot of customer complaints, etc.

Final thoughts

Drop shipping offers you an opportunity of a lifetime, to live your entrepreneurial dreams. It is location independent – it doesn’t matter where you live, as long as, you have internet access and can communicate with both your customers and suppliers then you’re set to go.

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