Dropshipping For Dummies
If you are planning to start your very own e-commerce online business, probably by now you have already come across the term “dropshipping” . What does dropshipping really means, what and when does the ship drop? Who and what else is involved? Plenty of such questions could be taking control of your mind by now. In today’s topic of Dropshipping for dummies, we will explore how drop shipping can help you grow your online business and other forces that you need to consider in order to achieve your success and much more. Dropshipping for dummies can be a long topic, but this will be an interesting topic. So, sit up and get ready as we explore “Dropshipping for dummies”.
What is dropshipping?
Dropshipping is the approach of shipping produces to the customer directly from a third-party supplier, vendor or a manufacturer without an intermediary step (like storing the inventory at the seller’s/ (your) location).
General business model without a dropshipper :
- Your business routinely orders products from a supplier to maintain a minimum quantity or it has to order above needs to meet Minimum Order Quantities (MOQs) to get a wholesale price.
- Your cash is stuck with the inventory until you manage to sell them.
- You are responsible for packaging and shipping of the products.
If a dropshipper is involved, the process looks a bit different:
- Customer orders products from you.
- You pass the order info to your supplier who is also your dropshipper.
- On receipt of payment from you( usually wholesale plus a dropshipping fee). Dropshipper sends the package directly to your customers.
In summary, dropshipping is the act of selling a product (usually) on your website without you actually handing the inventory, fulfillment and shipping. Basically you collect the money you’re your customer and in turn place the order with the dropshipper. This approach reduces the risk buying products that won’t sell.
This low barrier to entry allows has attracted every one to explore dropshipping. Does that mean the dropshipping model is the right fit for you? Well, it all depends on your goals, skill, your target and the demands. We shall now explore further about dropshipping benefits, in short dropshipping for dummies.
What are the benefits of dropshipping?
You do not need to hold inventory on hand and to me, this is one of the biggest advantage of dropshipping. Not holding inventory on hand actually free your business from time, labor and monetary costs of inventory management. This also means that don’t have to worry about overstock or shortages on your end. You are now less susceptible to the risk of shifting trends that cause certain products to suddenly fall in or out of favor.
Since your suppliers or dropshippers are not restricted by geographic boundaries, it now allows you to sell products that would normally be impossible due to your location’s limitations. For example, with minimal risk now you can sell extremely large or perishable goods and your items will still reach customers!
Since physically you are not holding any products, you have one less headache. Yes, instead of you, it is your dropshipper who takes care of the entire physical process of packaging and shipping the products.
Imagine, it is like now you have actually “outsourced” the logistical part of sales process to your dropshipper!
Through dropshipping, you are safer from damage of product during shipment. Shipments take a more direct route from the warehouse to the customer and also because the delivery arrangements has been undertaken by the dropshipper, you actually reduce losses from damaged products,
In addition to eliminating the need for the physical inventory storage, dropshipping can prevent logistical headaches. You don’t have to worry about overstock or shortages on your end, nor is your company as susceptible to the risk of shifting trends that cause certain products to suddenly fall in or out of favor.
Dropshipping allows you to cater to new market and expectations with wider product choices. There are in fact many dropshippers who have a wide variety of goods to offer. Let it be a niche product or a popular product in trend, there are some dropshippers who are ready to work with you from around the world. In fact, dropshipping promotes scalability.
In normal business model you buy the product and keep in the inventory. Now you are responsible to sell the product for a profit or clear the products at a loss. You have more risk with you since you have already spent your money on the inventory. But, in dropshipping, your money is much much safer because you the shop owner only buys the product when the customer buys (pays) from you on your internet online store. Dropshipping not only eliminates the risk of cash stuck in inventory or products becoming obsolute, it actually has reduced the up-front cost of the product to zero.
Do you know what is the cost of starting your dropshipping business? AT most it is Domain name + hosting + webpage + your time. Dropshipping is the best possible choice for lean cost business businesses or for start-up without a lot of capital.
Not sure which product will sell and which will fail? Actually, dropshipping is best for market testing of new products and you can do this without having to invest in pre-launch. If the product sells well, it is good for you and if the product does not sell, then If the product doesn’t sell, then simply witch strategies and focus on a another new product!