Ecommerce is a now bigger than ever and it is still growing. Nowadays, it’s not uncommon to buy products online using your smartphone. This trend is not just good for retail companies, but also for individuals who are looking to make money via ecommerce, either as a full-time job or side gig. Dropshipping 101 is a common yet widely discussed topic all over the net. Here’s the scoop.
Many entrepreneurs nowadays use a product fulfilment method known as “dropshipping” which allows them to sell items online without having to invest in inventory. Because of this, dropshipping can be an excellent approach for ecommerce merchants who want to minimize their costs.
What is Dropshipping?
As stated above, dropshipping is a fulfillment method for online selling. With this method, the seller basically acts as a middleman between the supplier/manufacturer and the customer. The seller doesn’t hold any inventory and because there is no need to spend money on inventory, a seller can run their business from anywhere. Not to mention the startup costs are also fairly low.
How it Works
With dropshipping, when an order is received, information like product number, order date, delivery address, etc. are sent by the dropshipper to a third-party to fulfill the order on theirbehalf. There are essentially five main steps of the dropshipping process:1. A buyer places an order with a seller who is using dropshipping fulfillment method.2. The seller or dropshipper processes the order and forwards all the associated key details to the wholesaler/manufacturer.3. The wholesaler receives the order information from the dropshipper.4. The wholesaler ships the product.5. The buyer receives the product.
The primary difference between traditional retail fulfillment and dropshipping is that with dropshipping, the seller neither maintains the inventory or the related physical infrastructure. Furthermore, dropshipping essentially changes the dynamic between dropshippers and suppliers. Instead of purchasing items from suppliers and then selling them to their customers, dropshippers forward the orders they receive to suppliers for fulfillment. Since there is no physical inventory involved, dropshipping works only for online merchants.
There are some significant benefits of using this fulfillment method. These include (but not limited to) the following:• Lower Startup Costs: Dropshippers don’t have to invest capital in buying inventory or establishing a physical location to store it. They also don’t have to hire staff to fulfill orders or spend time organizing the inventory.• Scalability: Since order fulfillment is not dependent on the number of workers required to ship out an order or the size of a physical location, the dropshipper can scale very quickly.• Extensive Product Offerings: Dropshipping opens up more product opportunities. A dropshipper can offer a wide variety of products, which would otherwise be impossible without extensive storage and staff.• Flexibility: Dropshipping is flexible as it allows you to operate from anywhere, offer a wide range of products, and change your offerings easily in case market preferences change.
The Bottom Line
With so many advantages, it’s not surprising that dropshipping has become a popular fulfillment method among online merchants. Launching a successful dropshipping website hinges on selecting the right platform. Be sure to choose one that offers lots of features, e.g. catalog management, a system for tax calculation, reporting and analytics, and more. Apart from this, finding the right products to sell is also a key to successful dropshipping. You are free to experiment with a wide range of products to determine what sells and what doesn’t.
I hope this helped shed some light on what is commonly talked about and practiced. However, the downfall that many gurus fail to discuss is that it is a highly saturated market the requires the necessary research, marketing and niche product to succeed. Till next time!–The Black Sheep