Dropshipping is the business model which allows companies to take a step towards a new way to operate things without manufacturing or maintaining their own inventory. It is a way of selling products that provide business owners to have their customer orders to get fulfilled directly through a wholesaler and manufacturer.
What really happens here is that the product is sold through the third party from the seller (wholesaler or manufacturer) directly shipped to the customers. In this process, the seller never actually sees or touches the products.
In short, you can say that Dropshipping is a business that allows you to sell and ship products that you don’t own and don’t stock.
Process flow:-
- You receive an order
- Forward those orders to your suppliers or Dropshipping partner
- Supplier or partner fulfills the order and delivers to your customers
Facts of Dropshipping
Low-profit margins
You won’t have to manage anymore and store your own inventory, the overheads are low on the contrary so the returns. All you will have to be clear on your vision and have to put less money on the process though you get less money out too. It explains that you will have to do a lot of business just to stay stable and floating to gain a lot of turn on profits. This is one of the processes where big things begin through small steps.
Highly competitive
There are many entrepreneurs who are focusing toward Dropshipping a lot, it is because this requires a low amount of capital to start a business. This means low the barrier a lot of competition in it. You can say that smaller businesses have to cope out into their profits just to stay competitive with their prices and if it lacks than this may create unsustainably.
There is no control over supply-chain
When you talk about Dropshipping there are a lot of issues over quality, fulfillment’s and even return policies create more problems in your online business. It is necessary to look over the situation and try to focus over one-time resolution.
Dropshippers are trapped over delivery issues which are really a core issue sometimes that affect the delivery and out of control too. This is basically happening because of the supply chain process which delays over communication and slow response this creates longer to fix the issue.
High risk over legal liabilities issues
Dropshipping business and even B2B solutions is about making a profit through a small sale with high demands and into this process supplier has to focus a lot. It is because sometimes you don’t always know where the merchandise comes from and are getting delivered.
This is more effective cause when suppliers illegally use a trademarked logo or any other companies intellectual properties. Such entire situation creates a complicit over vendors. In short, you will have to look over these problems which are taken into consideration for solid Dropshipping contract and this is the first thing you will have to keep in the head while choosing suppliers for your online business.
Way to problematic to build a brand
Whenever you sell a product that is amazing and your customers will always focus mostly over on those branded products, though soon at some moment they forget about the shopping experience entirely.
Everything which you will have to look on to on prior is branding because every online shopper will prefer and tend to go first for their favorite online store. It is the process which will give you more reason over Dropshipping by linking up with already pioneer brands than the new ones.
Is Dropshipping worth and fit for your online business?
It is really tough to answer this question but generally, you can say that Dropshipping is a better place for first time sellers and merchants, who are really into growing their business by investing less capital over the business.
Dropshipping is not ideal for every merchant who is willing to control over their brands, whether it is from products to presentation over customer’s perception. The true fact about Dropshipping is that it isn’t easy or possible too. The dropshipping is all about creating a market with owning anything through the virtual world but one thing has to be kept in mind is that every business comes with some stress and challenges.
What are the challenges you will be facing while Dropshipping business?
More competition
There is high competition which creates a lot of effect over the online drop shipping and even other companies might be using the selling eCommerce strategy for creating competitive price and markdowns. Before you enter into the world of online market make sure to have every information about the current market and your competitors.
Controlling your fulfillment process
The dropshipping business is about taking and giving control over fulfillment speed and quality over to the shippers. In this online eCommerce business shipping holds a lot of power over the customer experience.
If the shipping procedure is not followed properly or something goes wrong with the product or the packaging then your brand will take a hit over the reputation. It is important for you and your fulfillment partners to have a trusting relationship to light up the business effectively.
Shipping cost can create perplex
If you are into the multiple suppliers and third parties who are into involved into your Dropshipping business, one must have to look over the costing because everyone has their own price to share. In this situation, a customer would always prefer to switch over to the different options. So make sure to go with the right one before starting a Dropshipping business.
Are You looking to Develop an E-commerce online store?
Pros of Dropshipping:-
Low start-up cost
The first step is to start with an investment to open a Dropshipping business that will cost only to open an online e-commerce shop, it is the only thing which makes difference because you won’t have to buy goods in advance or need a warehouse for it.
State of getting freedom and independence
It gives you an opportunity and a stand to expand your online business through drop shipping, you can work from anywhere just need access to the internet to get connected with the world of your online eCommerce store.
A high amount of sales possibilities
This is all depending on your approach towards your customer because you will be able to create to stand of your own through advertising the store, word of mouth, PR, online commercial, blogging and other. This will surely boost up the number of sales and endless possibilities for your business.
Creating more opportunities for purchases
There are numerous amounts of opportunities for drop shipping business because you will be having a lot of options over suppliers with competitive prices. If your eCommerce online store is made with different design, description, photo, video and valuable content than it will heavily effect on your future goals.
Focus overselling and testing more products with less risk
This is about understanding the demand of the market, it is the phase where if you really know what is demanding as a product and doing well for retailers or resellers, you can immediately come up with a direct approach with offers to your customers. In this case of Dropshipping, it will allow you to test many items without any risk of carrying inventory. Every single thing you pay for is what you sale through your online Dropshipping online eCommerce store.
Cons of Dropshipping:-
Other companies product
Dropshipping is the business where you do not own anything but just a reseller. All you have to find more about is the competitors who can stumble your visibility over the market. If you don’t keep your eye open over your competitive companies.
Homogenization of goods
When you are planning to sell consumer products makes sure you to look over the high competition because these goods might be very common. It is to make sure that you have some individual product which can make your items that only you can offer and some few others.
Risk on the weakening of products
This is the process where you may get exhausted by the supplier by providing you the products on time or if they run out of stock. So it is better to have the practice to choose a Dropshipper that has an integrated warehouse system which will keep you update when some items run out of stock or not available.
Bad customer services
This happens when your suppliers don’t deliver the product on time with the wrong item and mess up with the customer’s order; such situation customer will take it out on you for sure.
Such type of services can create a big problem with understanding and perception towards your online eCommerce store. Make sure to look on over maintaining a personal touch with the retailer who manages their own inventory to provide quick resolution. If you want to get rid of these problems try to provide services over on first response resolution.
Conclusion
In short, you can say that Dropshipping is one of the easiest way to start an eCommerce online business, which still comes with a bit of risk and hard work. You can use any of the methods with Dropshipping as primary order, fulfillment method or any other business model, it is all about choosing the right one for your business and makes sure to do some research before starting an online eCommerce store with Dropshipping techniques.
E-commerce development is on stage where you can practice all different techniques and expect different possibilities, all you have to do stay update about the market on every single trot of time.
