What is the Dropshipping service and how it works
If you have ever searched how to work in online business, you’ll surely have found the term “dropshipping.”
Nowadays, though, few people really understand how it works.
We know that to someone who is new in this field and is trying to understand how the online business world works, the dropshipping process can seem a little bit difficult.
That’s why we decided to share with you this definitive guide to understand and build your dropshipping business.
Here you’ll find:
- What is Dropshipping?
- Who is Dropshipping For?
- Benefits of dropshipping
- What is dropshipping
Ok, let’s imagine you want to open a fashion website, selling clothing and accessories.
What are the steps you should do?
Search for a warehouse, stock up on goods, photograph products, search for fast and convenient shipping service, create and know how to manage your site.
It sounds complicated, right? And also very expensive.
“Dropshipping is a business model that allows you to avoid all these steps and have to worry about just your site or upload products to an e-marketplace.”
The retailer partners up with a dropship supplier that manufactures and/or warehouses products, packages the products and ships them directly to the retailer’s customer, on the retailer’s behalf.
In simpler terms, this is how dropshipping works:
- The customer places an order for a product on the retailer’s online store.
- The retailer automatically or manually forwards the order and customer details to the dropship supplier.
- The dropship supplier packages and ships the order directly to the customer in the retailer’s name.
In other words, you will be able to sell without a warehouse and with no initial investment in goods.
2. Benefits of Dropshipping
Easy to Get Started – Running an eCommerce business is much easier when you don’t have to deal with physical products. With dropshipping, you don’t have to worry about:
- Managing or paying for a warehouse
- Packing and shipping your orders
- Tracking inventory for accounting reasons
- Handling returns and inbound shipments
- Continually ordering products and managing stock level
Less Capital Is Required – Probably the most significant advantage of dropshipping is that it’s possible to launch an eCommerce store without having to invest thousands of dollars in inventory up-front. Traditionally, retailers have had to tie up huge amounts of capital purchasing inventory.
With a dropshipping service, you don’t have to purchase products unless you already have been paid by your customer. Without significant up-front inventory investments, it’s possible to start a successful dropshipping business with very little money.
Flexible Location – You can run your dropshipping business from anywhere with an internet connection. As long as you can communicate easily with suppliers and customers, you can manage and manage your business.
Wide Selection of Products – Since you don’t have to pre-purchase the items you sell, you can offer a wide range of products to your potential customers. If suppliers have an item in stock, you can list it on your website at no additional cost.
3. Who is dropshipping for?
There are a few types of entrepreneurs that the dropshipping model will work well for. Let’s take a look at some of them:
Validating Entrepreneur: Dropshipping can be a great way to test new products, or even a new start-up, before investing heavily in an inventory that may not sell.
That’s why dropshipping is the perfect service for the entrepreneur who requires a high level of business and product validation before investing.
Budget Entrepreneur: Dropshipping is the least expensive method of selling online because you don’t have to purchase any inventory up-front. Because of this, dropshipping service works well for entrepreneurs who have a limited budget or would prefer to keep startup costs as low as possible.
First Time Entrepreneur: The dropshipping service is also a good business model for someone just starting out selling online. The fact is, selling online isn’t easy. Driving traffic and converting that traffic for the average marketer can take a long time to figure out and optimize.
Thanks to the low costs associated with starting a Dropshipping business, this service allows new entrepreneurs to learn the basics of setting up an online store, driving traffic, and optimizing conversion before investing thousands (or more) of Euros in inventory.
Walmart Entrepreneur: Dropshipping is also perfect for anyone who wants to sell a wide variety of products and models. If you want to sell hundreds or thousands of products at various price ranges, it’s almost impossible to acquire all that inventory without massive investment. In this case, dropshipping is the most appropriate model, because, even in this case, it is not necessary to buy the inventory in advance.