An extremely popular topic in the last few years is Dropshipping. People who have figured out how this business model works have made millions of businesses around the world, and you may know some of them doing this too. Dropshippers have their online shops. They have no stock or ever touch the goods they sell – they are exclusively engaged in digital marketing. But still, let’s start from the beginning of the story.
What Is This Dropshipping Business Model?
In short, it is a type of business model in which you sell goods that you do not actually physically own and do not have in your warehouse. Therefore, the manufacturer will deliver the required product ordered through you to the customer directly. How do you make a profit from that? One by adding your margin to the final price of the product. This means that considering the price of the product with delivery – you will only add your percentage and form a new price that the potential buyer will pay.
What Does The Dropshipping Mechanism Look Like?
The scheme or mechanics of the dropshipping system looks like this:
- The buyer markets the product in retail format from a drop shipping seller (drop shipper).
- After that, the drop shipper orders retail goods from the manufacturer.
- The delivery person delivers the ordered goods.
Despite its growing popularity, the dropshipping business does not have any advantages or disadvantages that can be pointed out. These are some of the things you need to know if you are thinking of getting into the business of drop shipping.
Advantages And Disadvantages Of Dropshipping
Getting started is very easy. Unlike some jobs that require preparation and investment, starting a dropshipping business does not require any of it. The most basic equipment for starting such a job is a laptop computer and a stable internet connection. However, like any other business, dropshipping has some advantages and disadvantages. They should be well considered before embarking on this business. Here are some factors that can affect a successful dropshipping business:
Advantages
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Low risk
Investments are minimal, your only concern should be the competitiveness of the price – and the purchase price of the items you will sell.
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Small additional costs
Because you don’t have to worry about inventory and goods, storage, and delivery – you don’t have to worry about this. The costs and risks associated with them are minimal.
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Selling various things
As a drop shipper, you can sell different types of goods from one or more manufacturers. This gives you a lot of freedom when advertising and publicizing the offer.
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Flexibility
Since you do everything over the Internet and from a laptop – you can work wherever you want.
Disadvantages
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Fearless competition
There are a very large number of drop shippers and it will take a lot of effort and work to reach positions.
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Small profit
Since there are a lot of competitors and independent producers in the game – so expect a price war. This means that you will inevitably have to take care of every cent when it comes to the price you offer.
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Delivery problems
If you opt for a bad and unreliable supplier, you can have a serious problem at work. Bad suppliers can easily make your life miserable and bring your dropshipping business into disrepute.
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Goods inventory is difficult to keep track of
You will need to keep a record of the product status in the inventory so that you can have the correct product numbers available for delivery immediately.
Things To Do Before Starting A Dropshipping Business
So far, you have been introduced to the basics of dropshipping business. Now we go to the concrete steps needed to start dropshipping.
1. Create a dropshipping business idea
Before you appear on the market – you should define what type of goods you will sell. It would be quite naive to start a business without analyzing the best-selling goods on the market. To begin with, define who the potential buyers of services and goods are. Get acquainted with the problems of such a market and decide to sell products that you can serve with the least difficulty. If you take a look at websites such as GoTen, you’ll see that the products you are going to sell must have value in terms of demand. GoTen is one of the leading dropshipping platforms in the world with quick delivery and amazing prices. As for the value, it should be the same for both – the buyer and the seller. That is why it is wisest to research the market for each product you want to sell, to see how much it is in demand – and what the experiences of others are.
2. Buy A Domain
Just knowing which products you want to sell is not enough. Customers need to know about your offer. So, your future website or store must have a domain. It’s a good idea to choose a name that has something to do with the name or niche of the product you plan to sell. Also, make sure that the domain name is easy to remember – so that customers who have come to the site or have already ordered something, can remember the address. If the domain you want to lease is already taken – try another word combination and find a domain for yourself.
3. Create An Online Store
When you rent a domain and hosting, the next step is to create an online store. To run an online store, you also need a CMS or store management script. The offer of free open-source scripts is large, but we would advise you to do it all with the help of the WordPress platform. With us, you can even rent WordPress hosting packages that will allow your site and store to work flawlessly. After that, you need to install the WooCommerce or Shopify plugin, which will help you create an online store within your WordPress site.
4. Pay Attention To Details
Adding a product to an online store can sometimes be a bit daunting, as there are things you need to consider:
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Shipping costs
Pay attention to shipping costs. Namely, many customers make the decision to order based on shipping costs.
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Taxes
Please note that the state or other states may charge taxes for certain product groups. Our advice is to consult an accountant or tax administration to find out about any tax expenses.
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Payment methods
With payment methods, you need to offer the methods that your customers like the most – and that is the easiest for them to make a payment. Many online services can allow you to pay by card. If you plan to do your dropshipping business locally – you can introduce additional local payment options.
5. Advertise Your Online Store
As you have already reached this level, it means that the site is ready to work. The products have been entered, the domain and hosting are active – and everything is ready to work. It is advisable to pay attention to some things like SEO, PPC, and Email Marketing to make your online store work as well as possible and give good results.
