The Definition of Dropshipping: What is Dropshipping?
To begin your dropshipping journey, first let’s define what is dropshipping. Dropshipping is all about getting a manufacturer to ship their products directly to the customer after the customer has purchased the product on your website. Lets say you’re an online retailer and you want to sell clothes. The customer will purchase the clothes from your website and you’ll instantly, through automation, purchase the item from the supplier and have it shipped directly to the customer. As an online retailer, you will never have any physical possession of the item, the customer will not know who fulfilled the orders, and the name of your online company will be on the receipt.
If you’ve ever started a business or ever had hesitations to start, one of the biggest setbacks usually has to do with managing inventory and fulfilling orders.
A good friend of mine launched a clothing line and I witnessed firsthand how difficult it is to manage inventory. First, he had to create samples of the products and conducted market research to see if customers would be interested. Then once he gathered enough data and was confident he would make a return on investment he narrowed down his selection to the ones that seems to be in most demand, dropped thousands of dollars on printing and production and had to wait for orders to come in and then ship them out. If you create a shirt that no one wants then your money is tied up in inventory. Mess this up a few times and it can be very discouraging to continue to pursue.
Not only does droppshiping circumvent these frustrations, but there has been dropshipping retailers that have netted hundreds of thousands of dollars in their first year.
What Dropshipping Isn’t?
Before moving forward to all of the great benefits of droppshipping lets dispel any myths so we can understand any and all of the challenges before beginning. If you’re choosing dropshipping then you believe the challenges of dropshipping are more manageable then making or manufacturering products from scratch.
Profit Margins Aren’t The Highest
With droppshipping, you have to set your own price for a product, pay a percentage or fee to the dropshipping aggregator to automate the customer checkout process and pay for the product. If you don’t depend on many suppliers and create your inventory from raw materials, then yes, you can control these costs and ultimately have higher profit margins. Although manufacturing will have much higher startup costs, your profit margin on a product basis will be larger. For dropshipping, it still can be anywhere from 5% to 20% for big ticket items to 100% profit margins for accessories.
A Get Rich Quick Scheme
To be successful at dropshipping, you must treat it like a business. Theres low barriers to entry and costs to dropshipping and not every manufacturer offers dropshipping. With more competition, you’ll need to work hard on setting yourself apart. Its far from a get rich scheme.
What is the Benefits of Dropshipping?
Dropshipping is the cheapest way to get into e-commerce.
There’s lower risks and barriers to entry, so you have to learn to market your online business successfully which we will show you how throughout this website. One of the benefits of using dropshipping is that you don’t have to worry about buying your own products, inventory to sell, or a warehouse to store inventory. You don’t have to develop a product and hope people buy it. Your focus is on finding a product that is selling profitably and that you can obtain a high ranking in the search engines. Your goal with dropshipping is to out educate consumers about a product so they not only trust you but want to buy from you.
When a customer comes to your website and buys a product, you don’t have to ship the product. Dropshipping will make it easier to sell products in volume with no inventory management on your end. Sure there will be backorders but you don’t have to deal with stocking, packaging and shipping yourself. Once you find a product you’re comfortable with and want to sell, you have to search for a supplier with dropshipping capability.
Marketing Your Products
When you begin looking to find a product your comfortable selling lets say “sunglasses”, you need to look for a supplier or a dropshipping list for sunglasses that’s capable. Research or contact them so you can sell their product through marketplaces like eBay or Amazon. You may also choose to create your own website and market your product that way. After you’ve made a sale, the dropshipper will get those sunglasses over to the buyer directly. Sometimes they can expedite shipping or ship within 24 hours as well! To complete the transaction you will have to process the payment and your done! With logistics set aside it sounds simple. When you learn how it all works and as you gain experience, it will be simple!
Dealing with dropshippers can be complicated. Not knowing where to find the right dropshippers can lead you into making mistakes. There can be unreliable, fraudulent suppliers, or ones outside your country that are hard to communicate with. Luckily, theres verified supplier lists for every industry and you don’t have to worry about making mistakes. At Salehoo, they can help take the confusion away from selling online by showing you where to find the right suppliers.