The process of dropshipping is simple. In a traditional retail store, the retailer has a physical location and a vast inventory of products and needs to be invested in renting his physical location and business. If a customer likes their product, the retailer will deliver it to the customer.
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 in starting a business.
Retailers must pick items they want to sell 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 models to make profits.
All consumers need is a working internet connection to 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 high-speed 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.
What Are The Pros And Cons?
What better way to understand how a business model works than by exploring 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 must only find the supplier, set up his website, and start selling goods.
There is no cost for setting up a dropshipping business. Most 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 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, or any employees; basically, no hassle. With no commitment to physical space, the retailer only needs a laptop and the internet.
- There are a variety of products that a retailer can sell. He can rely on one great product, sell several products or mix it up. There is no bond or restriction to anything for the retailer.
- With a traditional retail model, if a businessman wants more profit, he must 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.
- Dropshipping has fewer risks since there are a few shipment steps when moving items.
- 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 essential 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. However, 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 shows that there might be more and more retailers out there with their segment and niche, which could introduce them to a very competitive environment.
How is e-commerce different from Dropshipping?
E-commerce and Dropshipping generally work on different business models. In Ecommerce, an online business runs through the sellers' involvement. They usually handle sales and package the products themselves. On the other hand, Dropshipping allows you to sell products without worrying about a website or physical location. A third party handles this.
What are the benefits of using Dropshipping?
Dropshipping can help to effectively cut costs of establishing a storage location and restocking inventory. Dropshipping also doesn’t need sellers to invest capital or spend time hiring any staff to maintain their storehouses. Additionally, Dropshipping is also easy to start as well as use. It also allows sellers to offer a wide range of products without worrying about the leftover stock.
Is Amazon an example of Dropshipping?
Amazon cannot be considered as an example of Dropshipping. This is because Amazon does not offer drop shipping services. It merely provides a platform for sellers to sell their products. However, These sellers can choose to use Dropshipping to sell their products. Amazon permits the use of Dropshipping. However, there are strict guidelines that sellers need to follow.
What is the biggest challenge in Dropshipping?
The biggest challenge in Dropshipping is generally seen to be finding the right provider. It can take much time for sellers to find providers who make exactly what you want to sell. Additionally, you need to ensure that the standard and quality of your brand is maintained, as any discrepancies or unhappy customers can harm the brand's reputation.
Can I start Dropshipping with no money?
Yes, you can start Dropshipping with no monetary investment. Dropshipping does not require capital investment. In Dropshipping, you do not require to store any stock. Thus, it needs no initial investment. Additionally, some sites allow you to try out a site for free to see how it works for you and may then charge a rate per item sold.
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, and rather, retailers 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 most remarkable thing about the dropshipping business model is that retailers can learn through trial and error, and there would be no profound loss for them. If it doesn’t work out for him, he can 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.