Before proceeding, it is important to have an answer to the following question: What is Dropshipping? Dropshipping is a retail online model. Instead of stocking products in a store, the retailer buys the products from a third party who ships them directly to the consumer. For the store, this is mostly a manual process. The merchant does not need to sort inventory or process orders in any way. Instead, the third part takes care of the product itself.
Dropshipping is ideal for entrepreneurs because it is not as demanding as the traditional marketing model. You do not have to open a physical store, pay, and keep the stocks. Instead, create an online store and buy in bulk from suppliers who already have the products and the storage space.
In dropshipping, the distributor is primarily responsible for customer acquisition and order processing and thus acts as a kind of middleman. Still, he makes most of his profit from branding the items he sells. It’s a simple business model that can be very rewarding.
Millions of entrepreneurs are flocking to dropshipping because it takes less effort and money to get started. That’s probably why you’re interested! And the best news of all? Dropshipping allows you to build a long-term, sustainable business right from your laptop.
Of course, there are numerous pros and cons and it is important that we discuss them before starting your own dropshipping eCommerce business. Breeze
Benefits of Dropshipping
Dropshipping is easy to get started. You don’t have to be a business guru to get started. In fact, you do not even need commercial experience! If you take some time to learn the basics, you can get started quickly, and learn the rest as you go.
Dropshipping is so easy because it requires so little from you. You don’t need a warehouse to store products or a team to help you. You do not have to worry about storage or shipping. As you grow, your business model doesn’t need to change much.
One of the benefits of dropshipping is that costs don’t skyrocket as you scale. For this reason, it’s easy to continue growing at a fast speed. You don’t have to hire a large team either. Unless you decide to start a small team at some point, you can do almost everything yourself.
Dropshipping does not require a lot of capital. Since starting a dropshipping business requires very little, you can start with minimal funds. You can build an entire business right from your laptop and don’t need to make any high-end investments. Even as your business grows, your costs will be quite low, especially when compared to traditional business expenses.
Dropshipping is flexible. This is one of the biggest advantages. You can be your own boss and set your own rules. It’s by far one of the most flexible careers that anyone can pursue. You can work from home with little more than a laptop, and you can work at the times that are most convenient for you. This is ideal for entrepreneurs who want a business that works for them. You won’t have to bend over backward to get things done.
Dropshipping is also flexible in that it gives you a lot of room to make decisions that work for you. You can easily list new products whenever you want, and you can adjust your strategies on the fly. When you go on vacation, you can automate everything to work while you’re away. You guessed: The possibilities are limitless.
Dropshipping is easy to manage. With no commitments, you can manage everything seamlessly. As I said, you can do everything yourself if you want. Once you have found suppliers and set everything up, you are primarily responsible for your online store
Disadvantages of Dropshipping
Dropshipping has low margins. One of the downsides of dropshipping is that you have to deal with low margins, to begin with. That’s not to say it can’t be profitable, but you should be aware that product margins can be low in some niches.
This problem is especially problematic if you are dropshipping in a highly competitive niche. If you’re fighting for customers’ attention, you can’t afford to make the profit you want. niche, you will see larger margins. In niches with lower competition, they have better margins, but in general, it will only be so good. Each of your suppliers may use a different shipping solution, which is a problem for both you and your customers. Costs can be high and shipping multiple products can be problematic.
Dropshipping can complicate the order management. Costs can increase and shipping multiple products can be problematic. Different providers also have different processing and billing structures. Since you have to manage supplier interactions, this can be difficult.
When it comes to storing products, fulfilling orders, and shipping, things are completely out of your hands. One of the disadvantages of dropshipping is that you don’t have much control over certain aspects of the dropshipping process. You have to trust that your suppliers are doing everything right and functioning smoothly.
Dropshipping makes customer service more challenging. This is another problem that occurs when orders go wrong or suppliers fail. Because you’re just the storefront, it can be difficult to sort orders. As I mentioned before, you don’t have much control and that can create difficulties when it comes to the customer support side.
Dropshipping as a side hustle
You don’t have to spend a lot of time and energy on dropshipping, which means you can probably do it without any hassles. be! You can spend just a few hours a day on your business and still be successful.
However, it is important to know your limitations. If you regularly work overtime in your work and fight to find time for important daily responsibilities, you may not be a dropshipping business, the attention you need. Dropshipping does not need much, but you need to make a serious job.
Dropshipping as a full-time eCommerce business
You can make your business as big or small as you like. The full-time dropshipping retailer, that can be you! It’s easy to scale your business with dropshipping, which means you can grow your business fairly quickly while keeping costs low.
Once you reach customers and make enough sales, you can move from part-time to full-time dropshipping. The best thing is that you can do this at any time. Of course, this requires more work, but the reward is worth it.
Once you figure out how to do dropshipping effectively, you don’t have to worry anymore, on uncertain income. An established dropshipping eCommerce business runs like clockwork and can even appear to be generating passive income.
The sky is the limit. You may be rolling your eyes at the thought of becoming a full-time dropshipper right now, but there are thousands of success stories out there of entrepreneurs who started exactly where you are today.
The dropshipping process
I briefly covered what dropshipping is, but you may not know exactly how it works.
The supply chain can be broken down into 3 basic steps The manufacturer manufactures the products and sells them in bulk to suppliers and wholesalers. Let’s say Manufacturer A produces bottled water. Once the bottles leave the production line, they are sold in bulk to suppliers and wholesalers who reverse the bottles and resell them to retailers.
A retailer like you is looking for a supplier for a specific type of product. A word of advice here: Although you can buy directly from the product manufacturers, it is often much easier to buy from suppliers. Most manufacturers have minimum purchase requirements, which can be quite high, and you must also stock, store, and ship the products.
So it might seem easier to buy direct from the manufacturer, but you get more benefit from buying from suppliers (and dealing with the small premium). Vendors are also handy because many of them specialize in a specific niche, making it easy for you to find the type of products you need. This also means that you can start selling very quickly.
Suppliers and wholesalers are not sold directly to the public; It’s a simple but crucial concept in business. You may have noticed that I am not referring to any specific party as a dropshipper.
Dropshipping is a retail fulfillment method in which a store does not stock the products it sells. Instead, when a store sells a product, it buys it from a third party and ships it directly to the customer.
The biggest difference between dropship and the standard retail model is that the selling retailer does not have or hold any inventory. Instead, the retailer buys inventory as needed from a third party, usually a wholesaler or manufacturer, to fill orders. As we initially warned, dropshipping is not a perfect, hassle-free way to build a successful business. The model has some definite advantages, but it comes with a number of built-in complexities and issues that you need to address.
The good news is that most of these problems can be solved with careful planning and thought and shouldn’t stop you from building a thriving and profitable dropshipping business.
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Erzsebet Frey (Eli Frey) is an ecologist and online entrepreneur with a Master of Science in Ecology from the University of Belgrade. Originally from Serbia, she has lived in Sri Lanka since 2017. Eli has worked internationally in countries like Oman, Brazil, Germany, and Sri Lanka. In 2018, she expanded into SEO and blogging, completing courses from UC Davis and Edinburgh. Besides Litepreneur, Eli has founded multiple websites focused on biology, ecology, environmental science, sustainable and simple living, and outdoor activities. She enjoys creating nature and simple living videos on YouTube and participates in speleology, diving, and hiking.