Are you new to dropshipping? Are you a so-called “dropshipping beginner”?
Cool! I got you covered with the most amazing guide you have ever read about dropshipping.
I will explain everything to you from how dropshipping works, and why people do it, the pros and cons of dropshipping, to what you need to know to start your own dropshipping store!
By the end of this article, you will know everything about the dropshipping business model and will be ready to kickstart your own online store.
So, are you ready to get started with dropshipping? Or maybe you have already started, but you’re looking to get some inspiration?
Well, let’s begin.
What is Dropshipping? And Why Do People Do It?
This is what Wikipedia has to say about Dropshipping:
“Dropshipping is a supply chain management method in which the retailer does not keep goods in stock but instead transfers its customer’s orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.”
Let me explain the same to you with these 4 simple steps:
1.You create an online store and sell your products, but you don’t have any of these products in your storage or in any warehouse.
2.When a customer places an order from your Dropshipping store, you then go and place the same order with your Dropshipping supplier. Don’t worry, you need not do it manually. There are a lot of apps out there that help you automate these tasks.
3.Your Dropshipping supplier will do all the work on your behalf. From packaging to delivering the product to your customer’s doorstep.
4.Now your customer will receive the product straight from your supplier, and you never touched the product in between!
So, you might be wondering,won’t my customer know that the package didn’t come from me?
The answer is NO.
You just need to make sure that your supplier accepts dropshipping and you are good to go.
If you are shipping products from the Aliexpress store, you can send a custom note to the supplier saying “We’re dropshipping.No promotions and invoices, please!”.
And that’s all, it’s as simple as that.
This way, your customers will only receive the product and will have no idea that you’re dropshipping!
Now, the question is where can you find a dropshipping supplier?
Usually, most of the drop shippers prefer selecting suppliers from Aliexpress. You can find suppliers from China and the USA here. If you are doing US Dropshipping, I suggest you go with any US supplier because it will help you reduce the shipping time. Shipping time can be crucial for an eCommerce store.
Did you know? 87% of online shoppers find shipping times a key factor in deciding whether or not to shop with an e-commerce brand again.
If you want to know more about selecting the right supplier for your store. Stay tuned! There is an article coming just for you.
Okay, that’s enough of the supplier details.
Why are people interested in dropshipping?
I can say most of the people who want to start dropshipping or who are already into the dropshipping business do it for one or more of these reasons:
1.Laptop Lifestyle- A dropshipping store can be run from just about anywhere with an internet connection and a laptop. As long as you can connect with your customers and suppliers easily, you can manage your business independent of any location and time.
2.Earn More Money– Dropshipping if done right, can get you a lot of money. There are so many successful drop shippers out there who have opted to dropship as their full source of income.
3.Being Their Own Boss-The coolest thing about running a dropshipping business is, you need not work under anyone. You can be your own boss and earn money.
How does the dropshipping business model work?
Let’s consider an example and make it more clear to you:
They say “a picture is worth a thousand words”, right?
Well, take a look at this easy to understand diagram:
1.Consider Jack is your friend and he visits your online store and places an order worth $150.
2.You being the drop shipper forwards the order placed by Jack to your supplier at a cost of $100. [ This process can be automated ]
3.Your supplier then ships the product directly to Jack without letting him know that you are dropshipping.
In the above example, you made a profit of $50.This is how dropshipping model works.
Why is it easy to start dropshipping?
Well, it is easy to start a dropshipping business because you can get started with an online store within a few hours and start selling on the same day!
But, why is it considered as easy?
If you are planning to build an “offline” retail store, comparatively the investment you need to get started is much higher than an online store.
Your investment may begin from purchasing land to build your retail store to managing a warehouse for all your products.
Apart from that, you need to have an inventory of your product even if you aren’t sure whether the customer is going to buy it or not.
With drop shipping, you only pay for products when someone places an order in your store!
And not only the investment in money is different.
For the time, it’s the same.
You can literally kickstart your online store within an hour, and start driving traffic to your store and generate sales with the help of ads.
Check out this article for a Complete Shopify Tutorial to create an online store in under an hour.
It is always better to take your time in building your dropshipping store. Right from product research to the way you present it to your customers, everything plays a major role.
There are a lot of ways you can do product research from. You can browse Facebook feeds and note down what is trending and what’s not. There is also a lot of paid software that keeps you updated with the hot trending products as well.
So now you know how dropshipping works and why it’s easy to start, but what are the pros and cons of dropshipping? Let’s figure that out:
Pros And Cons Of Dropshipping
1.No Inventory Management:
As mentioned earlier, there is no headache of maintaining an inventory when it comes to dropshipping. Whereas in a traditional way, retailers are supposed to pay upfront production costs, wait for delivery, and then stock the products to the warehouse.
There’s also a significant financial risk involved when you consider the traditional way because you might purchase or manufacture large volumes of inventory which in return ends up with no sales.
Businesses that drop ship, on the other hand, remove those risks. A third party handles inventory, and products are available to the customer on demand.
2.Low Barrier To Entry:
You can get started with dropshipping with low investment. If you opt to go with Shopify, you are provided with a 14-day free trial, where you can build your online store and have it up and running.
Dropshipping has a much lower barrier to entry because you don’t have to worry about manufacturing new products or purchasing and storing inventory.
3.Sell and Test More Products with Less Risk:
As you are not manufacturing your own product, you can experiment and sell more products to see if it reaches the market needs.
When you are dropshipping, it is easy to switch from one product to another. You are not committed to a single product and it gives you the freedom to test out different products from different niches. You only pay for what you sell.
And the most important benefit of this is if you know a product is doing well for another retailer or reseller, you can immediately offer it to your customers without waiting for it to arrive in your warehouse.
With dropshipping, you can earn money while you are asleep. It’s very possible for you to be working on other aspects of your business while orders are placed and fulfilled automatically.
But with a traditional retail model, products couldn’t go out without your involvement. It requires a lot of manual work to keep your business running.
As you have known the pros of dropshipping, that is the reason which makes dropshipping attractive and creates heavy competition. Everybody who owns a dropshipping store tends to choose the trending products for their store, which in return results in every dropshipping store selling similar products but with different suppliers.
You’ll have to find other ways to stand out in order to compete.
If you are selling a physical product the profit margins can be pretty low. But let’s say you are selling a digital product, then the profit percentage can be higher than the physical product because you need not cover the packaging and shipping cost. The customer gets the end product soon after he places the order.
A low-profit margin can be a problem as it’s hard enough to cover your expenses for marketing/advertising, maintaining your site, managing sales orders, and covering your office hours.
3.Poor Customer Service:
As you are not the one shipping and delivering the product to your customer’s doorstep. If your supplier delivers products late, damages them, delivers the wrong items, or otherwise screws up your customer’s order, the customer will take it out on you.
When you face such scenarios, you need to deal with all your customer queries yourself and convince them in the best way possible.
You won’t be able to quickly solve customer issues without overseeing the inventory yourself – you’ll have to deal with your suppliers to solve problems for your customers.
4.Not knowing all of the product information can be problematic
The quality of the product plays a major role when you run an online store. As you never actually handle the products that you are selling, you have no real idea of what they are like and how well is their quality.
As far as you know the product description as described by your Dropshipping supplier, you can’t answer general customer inquiries about the products’ dimensions, weight, ease of use, and so on.
Lack of information and real knowledge about the product may mean you can provide less useful and unique content on the website which will also harm your conversion rate and SEO.
So, there you have it! The complete guide to Dropshipping.
I hope this article has met your expectations and you were able to take away some key points on Dropshipping.
If you are all set to start your Dropshipping online store, don’t forget to sign up for the 14 days free trial by Shopify.
You can also refer to the Step-By-Step Tutorial on how to build your Shopify store in less than an hour:
If you got any suggestions for this article or if you have any questions regarding dropshipping, then let me know by commenting below or contacting me directly by pressing the “Get In Touch” tab at the top!
Good luck with your Shopify dropshipping store 🙂