Dropshipping is an online business concept that has become very popular in the modern-day society. However, there are many individuals who are not-so-familiar with this concept. If you fall into that category, you may read this overview and get to know about it better.
What is dropshipping?
So what is dropshipping? In simplest terms, dropshipping is a business that fulfills the retail requirements of clients through an online store. Although it sounds like a very common business model, dropshipping is different from regular retail business models. The major difference between a regular online store and a dropshipping business is that the latter doesn’t require you to maintain a physical inventory. In other words, a dropshipping business doesn’t want you to maintain a stock of the items you sell. Instead, a third-party (the supplier) will maintain the stock and handle the shipping process as well. So, if you are the dropshipping business, you have to use a third-party service/services for product sourcing as well as for order fulfilling.
A simpler explanation
If you are still not clear about the concept, here’s a pretty simple explanation. Assume that you want to make money through an online business which is an exceptionally exciting idea. However;
- What if you don’t make any products to sell?
- What if you don’t have enough money to buy products from a wholesaler and sell through your online retail store?
- What if you don’t have enough space to maintain a warehouse?
- What if you just need to earn a passive income instead of involving in packing, delivering, stock maintaining etc.?
Well, the good news is that dropshipping is just for those who fit in the above criteria. That means, the concept of dropshipping has answers to all of the above-mentioned questions. Well, this concept might sound like a ‘reselling’ of products from another manufacturer. But, again, there are significant differences between these two models. As per the traditional concept, you should stock up all the products you sell and handle the shipping part as well. However, when it comes to dropshipping, you don’t have to worry about any of those. All you need is to make an online store and promote the products. The supplier will deliver the items to customer directly from their website and you will make a profit out of it. How cool is that for a passive income?
In general, traditional retail business models are associated with plenty of disadvantages.
- You should spend a significant amount of money to buy your product stock before starting your business.
- If the business fails after some time, you will have to struggle a lot to get rid of the stock. Even if you get rid of the stocks, you will lose a considerable amount of money.
- Establishing a conventional retail business will take a considerable amount of time. The manufacturer takes time to deliver the goods to your warehouse and then, you will have to work out a way to deliver the products to the customers. However, as per the dropshipping concept, the item will be directly delivered to the customer from manufacturer/supplier.
- Having a large space for warehouse facilities is a compulsory aspect for a conventional retail store. Depending on the size of the item and the quantity you store, the space required might vary. But, in general, the space requirement can be a burden for many individuals.
- If you run a conventional online store, you should handle the shipping process by yourself. Well, handling the shipping process is a very daunting task for many of the entrepreneurs. Also, if you handle the shipping part, the cost will be high.
Luckily, all the instances mentioned above can be addresses successfully with the concept of dropshipping.
A brief summary about dropshipping
The whole process of dropshipping is very simple. It involves the process of sourcing and delivering the products that are sold through your online store. With the assistance of dropshipping, you will be able to be free from various responsibilities such as;
- Manufacturing of products
- Maintaining a product stock
- Shipping the product to the end-user
In the concept of dropshipping, all those tasks will be handled by third-parties while you are sitting in front of your computer and selling stuff.
What do you have to do as a dropshipper?
The answer is pretty simple. All you have to do is to generate sales without worrying about anything. To do this, you can choose any platform like eBay, Amazon etc. If not, you can even start an online store by yourself. Whenever someone purchases an item sold by you, make sure to forward the same order request to your supplier. That’s your part in dropshipping.
What does a dropshipping supplier have to do?
After forwarding the order request to the respective dropshipping supplier, they will handle the tasks like packing and shipping. Eventually, the product will be delivered to the customer and you don’t even touch the product. Needless to say, that this process saves a substantial amount of time and money. More importantly, the whole process will be performed in an anonymous way so your customer thinks that he or she buys the product from your store.
Okay… is dropshipping a legal process?
Of course, dropshipping is a legal process. There is nothing wrong with this process called dropshipping. The customer places an order knowing the price he pays and eventually the item is delivered to his doorstep. That’s a very smooth process isn’t it?
However, some market places demand you to maintain a physical stock of products you intend to sell. They ask for such thing because they want to protect the customers. If you come across such situation, you should just provide the dropshipping contract. As long as you are with a reliable dropshipping supplier like Wonify, your request will be approved.
Making profits out of dropshipping is simple. To do that, you should keep a profit margin from each product you sell. The margin of profit should cover the cost of your efforts, skills, knowledge, creativity marketing and the time you spend. Thereafter, it all comes down to ‘sell more and earn more’.