The process of dropshipping is simple. In a traditional retail store, the retailer has a physical location, huge inventory of products, and needs to invest in renting his physical location and business. If a customer likes their product, the retailer will have it delivered to the customer end. This is also possible in e-commerce. But drop shipping comes without any physical location, renting it, and having an inventory. For real.
Dropshipping doesn’t need much investment towards starting a business. Retailers need to pick items that they have interest in selling to their target audience. Put them up on the website and their business is ready. With this rising demand for e-commerce or online shopping, more and more retailers are switching to dropshipping business model to make profits.
All consumers need is a working internet connection so they can navigate through the retailer’s website for the desired product. Retailers also need an internet connection to manage their online presence. The best internet option for them would be Xfinity. Since online shopping or e-commerce doesn’t need a very fast internet connection. Consumers or retailers can sign up for the basic Xfinity internet packages. On a side note, there is also Xfinity double play deals, where internet users can enjoy two services for a reasonable price.
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What Are The Pros And Cons?
What better way to understand how a business model works than by exploring what are its benefits and drawbacks? Let’s look into that.
- It is very easy to set up and doesn’t require a lot of people or investment. The potential retailer only needs to find the supplier, set up his website, and then start selling goods.
There is no cost for setting up a dropshipping business. The majority of costs will be spent on setting up and running the retail operations, like purchasing inventory. The rest of the costs will be in running the website or social media online presence.
- The retailer doesn’t need to have an inventory hence there is also no cost of renting or buying warehouse or office space.
- If the dropshipping business doesn’t kick off at first, the retailer doesn’t really lose anything since there is no pressure about having to sell inventory.
- The dropshipping business can run from anywhere. It doesn’t need an office, a warehouse, any employees, basically no hassle. With no commitment to any physical space, all the retailer need is a laptop and the internet.
- There are a variety of products that can be sold by a retailer. He can rely on one great product, sell several products or mix it up. There is no bound or restriction to anything for the retailer.
- With a traditional retail model, if a businessman wants more profit, he will have to do more work, and invest more of his resources. But with dropshipping, all the retailer needs to do is send orders to the supplier and let them handle everything while the retailer earns the profit.
- In dropshipping, there are also fewer risks since there are a few shipment steps when moving items.
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- When the customer purchases something from the retailer’s website, and if the supplier messes up, it is all the retailer’s fault as the website is the face of that retailer. Hence, this is why it is important to have the right supplier.
- Customer satisfaction includes personalized packaging and branding of the product, or any freebies and notes accompanying the order. But the retailer has little to no control over how the brand is presented during the delivery since the supplier is the one who ships the products. Though some suppliers are willing to go the extra mile.
- The retailer will be charged by the supplier or vendor based on the niche, location, or requirements, which doesn’t add to the profit margin.
- The popularity of dropshipping business model goes to show that there might be more and more retailers out there with their own segment and niche, and this could introduce them to a very competitive environment.
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Dropshipping doesn’t include any inventory control and having to spend money on warehouses or any physical location. Which is how dropshipping is setting up new goals for e-commerce businesses. It also doesn’t even require any significant investment, rather retailers just need to decide on the items they wish to sell, put them up on their websites, and then have consumers receive their items, all the while enjoying the profits.
The coolest thing about the dropshipping business model is that retailers can learn through trial and error and there would be no serious loss for him. If it doesn’t work out for him, he can simply stop. The dropshipping business model is a safe space to experiment and explore what works without experiencing any major losses. This is a confidence boost for business owners to try out their products that are at the testing stage.
Max Parker is the Deputy Editor for FreeAccountsOnline. He also directly manages FreeAccountsOnline’s Internet, and Social sections. Max joined FreeAccountsOnline as a features writer in 2017.