Dropshipping is a retail fulfilment method where a business doesn’t keep the products it sells in stock.
Instead of a store stocking products, it purchases the products from a third party supplier.
The products are then shipped directly to the customer.
As a result, the dropshipping business never sees or handles the product.
The dropshipping model has a number of benefits and disadvantages:
Easy To Get Started
You don’t need to have any prior business experience to start dropshipping.
You will need to take the time to learn the basics, and that’s why we have created this guide.
Flexible Work Schedule
This is one of its biggest benefits. You get to be your own boss and set your own rules.
As a dropshipping business can be run from just about anywhere with an internet connection.
You can work from anywhere, and work at the times that are most convenient for you.
Less Capital Is Required
With dropshipping you can launch an ecommerce store without having to invest thousands of dollars in inventory up front.
As you don’t have to purchase a product unless you already made the sale and have been paid by the customer, it makes it possible to start a successful dropshipping business with minimal funds.
Easy To Expand
As you expand, your business model doesn’t have to change very much at all.
You’ll have to put more work into sales and marketing as you grow, but your day-to-day will stay more or less the same.
Wide Selection of Products
As you don’t have to pre-purchase the items you sell.
You can offer a wide selection of products to your potential customers.
Low profit margins
One of the disadvantages of dropshipping is that you should expect low margins initially.
That’s not to say it can’t be profitable, but you should be aware that the product margin in some niches might be small.
Inventory Issues
When you’re sourcing from multiple warehouses, which are also fulfilling orders for other merchants, inventory changes on a daily basis.
While there are ways you can better sync your store’s inventory with your suppliers’, these solutions don’t always work seamlessly, and suppliers don’t always support the technology required.
Customer Service
One of the most unfortunate disadvantages of dropshipping is that you have to take the blame when your customers complain.
You could be doing everything right and still run into problems if your suppliers are having issues.
Shipping
Most drop shippers work with multiple suppliers.
This can complicate your shipping costs.
Say you have a customer place and order for 2 items which you source from two separate suppliers.
You’ll be paying out for two lots of shipping.
Value
You need to focus on value.
A dropshipping business is just like any other business.
So it makes sense that you should approach dropshipping the way you’d approach another kind of business.
Everything you do should add value to your audience in some way.
To make value your priority ask yourself these questions.:
Who are you trying to help?
What type of people do you want to reach, and what do they want?
What niche(s) could you add value to
What kinds of products do customers in my niche want?
How can I put my customers first?
Guide to keeping value a priority has great benefits for your dropshipping business it will help you:
Acquire and retain customers
Grow a loyal customer base
Stand out from your competitors
Make your business unique and trustworthy
Guide To Niches
One of the most common reason dropshipping retailers fail is because they chose the wrong niche.
The dropshipping niche you choose is a huge determining factor for value.
If you choose a less popular niche, there’s a good possibility you can step in and fill a need in that niche.
But if you choose a niche that’s super crowded, it’s going to be almost impossible to differentiate yourself from your competitors (who have been around longer and are more popular).
Of course, choosing the right niche is a crucial decision for any business, but many dropshipping businesses seem to completely overlook it.
Most dropshippers assume that they can just choose a hot trend and jump on the bandwagon.
In order to establish a successful dropshipping business, you need to select your products carefully and base your choices on what your audience wants and needs.
You have to make sure the products you offer have significant value to your customer base.
Many popular dropshipping products are only popular for a while.
If you choose products that have lasting value, you’ll be able to offer products that can stand the test of time.
Suppliers
Since you’ll get your products directly from suppliers, you obviously want to work with companies that have a great track record and solid communication.
You’ll need to put some serious time and consideration into this part of the process.
You don’t want to choose the first wholesaler you see, and you also don’t want to blindly go with the most popular suppliers you can find with a Google search.
Weigh up your options, compare prices, and make sure you have access to the dropshipping products you need.