What is Dropshipping

Dropshipping is a business practice where ecommerce business owners don’t own or stock the products. Whenever they receive an order, the product is bought from a third party seller and delivered directly to the customer. There’s no warehouse of the ecommerce site owner.

How Dropshipping Works

Dropshipping process works in a very peculiar and systematic way. An ecommerce website owners ties up with a dropshipping supplier and displays the relevant products on the catalog. Now:

1. A customer visits the ecommerce store, selects a product and places the order.

2. The order is sent to the dropshipping supplier along with customer details (address, email and phone number).
3. The ordered product is packaged under the ecommerce website’s name and is delivered directly to the customer.

As you can see, the customer doesn’t know if the order was fulfilled by the ecommerce store or there was someone else behind the scenes. That’s the best part, customers need their orders delivered, and dropshipping gets things done without the site owner having to own anything apart from the website. Sounds like a really good idea, right? Of course it does, or does it?

Let’s explore the pros and cons of dropshipping.

Advantages of Dropshipping

Dropshipping didn’t become popular because of no reason. This rather disruptive business model presents its own set of benefits:

Easy setup

Since you don’t need to keep stocks of everything you sell or plan to sell on your ecommerce store, you don’t need to invest in inventories and warehouses. You simply need to get an ecommerce site, which you can easily build using an ecommerce website builder. Next, just team up with suppliers who have the products that you plan to sell on your online store. And that’s it, you are ready to start selling.

Almost Zero Setup Cost

When you choose dropshipping, your expenses merely revolve around maintaining your website to ensure it’s up and running at all times. You don’t have to buy inventory, maintain stocks, or worry about buying or renting a warehouse. The setup cost of dropshipping business is just your website.

Low Risk

Don’t these two words sound like real charm! All you own is a website. You simply don’t need to worry about selling your inventory, you never had one to begin with. So, even if the business doesn’t work out as planned for any reason, you lose nothing. All you own is your website, and it’s yours.

Product Options

Dropshipping gives you the freedom to expand your product range. You can have as many categories as you want. You simply need to tie up with suppliers. You can choose to go niche specific, like an online furniture store, or you can launch a full fledged electronic store. The options are galore, you simply need to find the right supplier.

But it’s not always sunny in the town of dropshipping. Nothing is perfect in this world, and sadly, dropshipping is not an exception.

Disadvantages of Dropshipping

Let’s cut the chase and start with the dark side of dropshipping, shall we?

Low Profits

Let’s start with the biggest bummer. Since you won’t be owning anything apart from the website, the majority of the commission will go to the suppliers. And it makes sense, as they are the ones executing all the order deliveries and stuff, right? Moreover, low risks often lead to low rewards.

But it’s not all bad, because you still get to scale up higher and faster. Remember, you didn’t invest in inventory, suppliers did. Your ROI is quicker, easier and higher.

It’s Your Fault, Even If It’s Supplier’s Fault

Yes, the bad side of dropshipping really hits hard. Customers don’t know you are not responsible for the shipping and inventory management, and they don’t care. For them it’s your brand that didn’t deliver on the promise. You can talk about it with the supplier later, but dropshipping is like a ship: if anything goes down, it’s all captain’s fault.

Brutal Competition

Since dropshipping has proven its effectiveness as a practical business model, you will see an exponential rise in the number of marketplayers.

Miscommunication

Not owning the inventory also puts you at the mercy of the person who does. A slight miscommunication can lead to a failed order fulfillment.

Dropshipping Mistakes To Avoid

There are primarily three mistakes that every aspiring ecommerce entrepreneur should avoid:

Launching business according to your likes and dislikes

Probably the fastest business killer, you need to remember it’s not about you, but your customers. See what products are in demand, what your audience is looking for. Research, analyze and then finalize.

Selling First Copies

Just the way Google doesn’t like plagiarized content (and it shouldn’t), selling copies is illegal in the major part of the globe.

Launching A Makeshift Website

While you don’t have to be a coder to launch your ecommerce website, you need to ensure you put your best foot forward. The current technological world makes way for many viable options for business owners.

All you need to do is get the right ecommerce website builder. You can go for an easy to use online store builder, choose a shopify plan and start selling.

Conclusion

Now that you are equipped with the right set of knowledge of dropshipping, it’s pros and cons and mistakes to avoid, we are sure you are absolutely ready to become the next big brand. Just look for the right ecommerce website builder that suits your requirements and you are good to go.