Are you looking for an e-commerce business that is easy, without capital, and with minimal risk? If so, then the dropshipping business is the answer.
Dropship business is considered as an interesting way to make money in the fast-growing e-commerce world as it is now.
Even though it is classified as a beginner-friendly business, you need to know about the ins and outs of this business so that it can grow and develop faster.
So, for those of you who are interested in starting a dropshipping business, it’s a good idea to read this article all the way through.
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In this article, you will be told many things about the dropship business, starting from understanding, how it works, tips, to the advantages and disadvantages.
Definition of Dropshipping
For those of you who are still new to it, dropshipping is a minimal risk online business model that can help you start your own business and doesn’t need big capital.
Dropshipping is a method of order fulfillment where you don’t have to keep the products it sells in stock.
Instead, you buy goods from third-party suppliers and ship them to customers when they place orders.
You are also not required to handle the product directly because the packing and shipping process is carried out by the supplier on your behalf.
The biggest difference between dropshipping and resellers is in the presence or absence of inventory.
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How Does Dropshipping Work?
Now that you know what dropshipping is, let’s talk about how a business works in a little more detail.
Overall, there are several parties involved in how the e-commerce dropshipping business works, namely you, consumers, and suppliers or producers.
When you work with a dropshipping supplier, you pay them to fulfill the product when the customer orders it.
In general, how dropshipping works is as follows:
- Your dropshipping supplier source makes the product.
- You make a deal with a dropshipping supplier.
- Your dropship supplier keeps inventory (product stock).
- You create and build an online store.
- A customer places an order.
- You process the payment.
- You forward the order to the dropshipping service.
- Dropship services prepare orders, then package and ship products to customers.
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Dropshipping Business Benefits
Here are some of the main reasons why a dropshipper is the right business choice for you:
1. The process of getting started is very easy
Once you’ve decided on the types of products you want to sell, you can create your first dropshipping shop in relatively short time and easily.
You can open your own online store on marketplaces such as Shopee, Tokopedia, Lazada, and so on, then start registering and uploading the products you sell.
In addition, you also don’t need to pre-purchase product inventory and simply sell products from third-party suppliers with higher prices.
2. Does not require large capital
With dropshipping, you don’t have to dig deep into your pocket to start opening your online store.
That’s because you are not required to purchase and stock products in advance or rent a warehouse to stock your products.
However, if this still overwhelms you, then an inventory application can help .
With a dropshipping system, you can cut a lot of costs that traditional retailers usually have to bear.
3. No need to pack and send goods
One of the main advantages of dropshipping is that you don’t have to worry about storing and shipping your order.
Your third-party supplier handles orders when customers order and buy products from you.
Even so, make sure to keep checking the quality of each product you are going to sell and order product samples.
Not only do you not need to pack and ship orders, you also don’t have to handle purchase and sales returns .
That way, you can focus on upgrading your shop and growing your business.
4. Easy to Scale Your Dropshipping Business
Another advantage of dropshipping is that you don’t have to worry about having more work to do if you start selling more.
As your business grows, you may want to optimize your marketing to increase sales profits, but the nature of your daily tasks will not change much.
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5. You Can Sell Anywhere
Once you start your e-commerce business, your location will not limit your sales process.
As a dropshipper, you can sell your products anywhere as long as the shipping costs are reasonable.
With an internet network, you can reach a very wide market share, even to foreign countries.
6. You Are Your Own Business Boss
Most importantly, dropshipping can give you the freedom to manage your business.
Besides being accessible from anywhere, you can also determine for yourself what strategy to do.
So, the success or failure of the dropship business is all up to you. If you are consistent and work hard, then your business will grow quickly, and vice versa.
Your online store can be a side business or you can turn it into a big business.
Dropship Business Weaknesses
Like all business models, there are some drawbacks to the dropshipping business model. Here’s an explanation:
1. The Shipping Process Can Be Complicated
If you are looking for products from a single supplier, calculating shipping costs is easy.
However, dropshippers usually have more than one supplier for different products.
This is what makes the dropship system a little more complicated, especially in calculating shipping costs when one order contains items with different shipping costs.
In addition, some suppliers may have different billing systems.
The solution, start with one supplier when you start this business, and if your business has grown, then look for other suppliers.
2. Not Free to Control Branding
When you start a dropshipping business, you cannot freely adjust your business branding to your liking.
Sure, you can have a nicely laid out website with quality product descriptions.
You can even do your own high quality product photos for your business.
However, you cannot custom the packaging or instructions that come with the products you sell.
Well, the solution is that you can dropship products from the Alibaba site. This is a website that allows you to send products directly from the manufacturer.
This way, you can make some changes to the product.
For example, some manufacturers give permission to add your brand name or customize product packaging according to your brand image.
3. Your Profit Margins Can Be Very Low
Another downside of this business is that you will likely face a lot of competitors.
As a result, you may need to keep the prices of your products low enough to survive the competition from businesses selling the same products and brands.
If you want to win your potential customers, then maximize your marketing strategy.
After getting customers, don’t forget to maintain relationships with these customers, one way is to use a CRM application
Make your shop look more attractive and professional. That way, consumers will trust your store more even if they buy at a slightly higher price.
So, that’s information regarding dropshipping as a quite profitable business. Starting from understanding, how to work, to the advantages and disadvantages.
Are you interested in starting this business? If so, then immediately start your business and live it with high consistency and effort. Good luck!