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What is Dropshipping? A Step-by-Step Guide 2018

The Ultimate Guide Dropshipping 101: What It Is and How It Can Make You a Successful Online Retailer

With the era of digitization, the introduction of the internet changed the dimensions of the working ethics of businesses. This quick and handy connectivity offers ease of access to one and all. You can thus say that the evolution of internet unveiled the world of e-commerce to work, socialize, market and purchase the products and services through a mediated website.

A quick glance at the e-commerce revolution

The world of internet is today loaded with ample of exciting success stories of e-commerce retailers such as Amazon, eBay, and others. Fast growth coupled with low market share investment are detrimental factors to expand the online retail business to develop further. It further facilitates the new and energetic aspirants to mark their presence with a winning stroke. However, to achieve triumph in the e-commerce business, you need to be aware of the online marketplace and its changing inventory, mobile-friendly purchasing, and digital marketing factors. Besides, virtual reality technologies to are used for the e-commerce businessmen to hover on.

Many hypotheses are hovering over the concept of Dropshipping. Irrespective of what people tell you, Dropshipping is not a get instantly rich scheme. It is one of the sources to earn easy money. You gain by selling other’s good and then your part of profit out of it. However, we all know that nothing worth comes easy. If and only if you have a right approach to be followed along with a proven strategy; Dropshipping can help you reach far off. In this ultimate guide to Dropshipping, we shall learn Dropshipping from its different perspectives. To begin with, let us acquaint ourselves with what is the actual meaning of Dropshipping?

What is Dropshipping?

Technically, Dropshipping is a method designed for retail fulfillment. Dropshipping business holders do not store the products which they sell. In place of this regular business strategy, the store works in collaboration with a third party, purchases their products and resell those purchased products directly to the customer. Likewise, merchant or the middleman has no opportunity to see these products.

To bifurcate Dropshipping from the retail fulfillment process, it can be said that in Dropshipping the selling merchant neither stores the inventory nor owes it.

dropshipping model

Pros of Dropshipping

The requirement of low capital investment

One of the most significant advantages of Dropshipping is to that you do not need to a be a million dollar investment. You can accomplish your dreams to launch an e-commerce store with the minimal amount of capital investment and still make a considerable income out of it.

On the other hand, if you look at the retail stores, there the retailers need to invest in many surpluses to purchase inventory. With Dropshipping at your fingertips, you do not need to buy a product in person until you have to make the sale and receive the payment from your customer. It is thus possible to kick-start your Dropshipping business with minimal capital investment.

It is more comfortable to start ahead with your Dropshipping business

When you run an e-commerce business, it is comparatively easier since you do not need to deal with the products in person. With Dropshipping, you rule out all the hustles of:

  • Warehouse payment and management
  • Order packing and shipping
  • Inventory tracking for accounting purpose
  • Inbound shipments and returns handling processes
  • To handle the products continually and manage the level of stocks efficiently.

Lower levels of Overhead

Since you neither purchase an inventory nor manage a warehouse, your expenses on overhead are quite smaller than your expectations. The majority of the Dropshipping businesses operate virtually with a laptop for less than a 100 dollar investment per month. The moment you start flourishing in your Dropshipping business is the moment when you will feel that your expenses are likely increasing but at a slower pace than the traditional counterparts.

Location Flexibility

To run a Dropshipping business, you do not need to have a physical location to set up your office. You can run it from anywhere. You need to have an internet connection handy with you. As long as you can maintain communication with your product suppliers and customers easily, your business running and management becomes a cakewalk for you.

An array of products

As you do not need to pre-purchase the products, you have the liberty to offer a wide variety of products to your customers. In case your suppliers stock an item, you can mention it on your website for selling purpose. There is no or minimal cost requirement involved.

Scaling is more comfortable than the retail outlets

On the one hand, it is evident that with traditional business, you need to work hard thrice if you dream of earning thrice what your business renders you. On the other hand, in the case of Dropshipping, when you leverage your suppliers, the majority of the work involved in order processing shall reside on the suppliers. In turn, you will have lesser or infinitesimal amount of work on your part.

All the benefits as mentioned earlier are a crucial part of making the Dropshipping business model to be a success for merchants at both the levels of beginner and established ones. However, you need to understand that one that glitters is not always the purest forms of gold. On the one hand, where there are merits of Dropshipping, on the other hand, Dropshipping has its share of demerits.

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Cons of Dropshipping

Lower Margins

Lower margin is one of the significant hurdles to operate in a Dropshipping competition. The reason behind the same is that is it easier to start with a Dropshipping business and that too with minimal capital investment. The basic strategy to skyrocket the Dropshipping as adopted by most of the merchants is to set up your shops and start selling your products at rock-bottom prices. This step is an attempt to generate and multiply your business revenues further.

Issues related to inventories

With the traditional retail businesses, it becomes convenient to store in your products and track those products which are in and out of stock. On the other hand, when you source your products from different warehouses; fulfilling other merchants order, your inventory keeps on changing on a day-to-day basis. There are still ways in which you can work ahead with your store’s inventory synchronization with your suppliers; such solutions won’t be working efficiently. Additionally, you will not find the suppliers supporting the technology on a regular basis.

Complexities involved in the Shipping process

In case you are working with different suppliers, your website product shall be sourced by multiple dropshippers. This step further leads to complicating your costs of shipment. Let us take an example, where a consumer places an order thrice each of which is made available via different suppliers. As a Dropshipping business entrepreneur, you will be incurring sperate shipment charges for delivering each item to your customer. You cannot pass on these charges to your consumers as doing so may force you to lose your customers. This is the most significant demerit as the customers may feel that you are now overcharging for the shipment cost being incurred. On the other hand, if you do not want to pass these charges on to your customer’s, such calculation automation are the most difficult ones to handle.

Errors of Suppliers

Sometimes, it so happens that we are blamed for things that we are not guilty about. You have to take the responsibility of being the culprit even if you are not involved physically in the situation. Similar is the case with the biggest Dropshipping suppliers too. Iven they can be upheld guilty for mistakes in fulfilling orders.

Learn from the most common mistakes of Dropshipping

Some of the quick to refer common errors incurred by Dropshipping businessmen are enlisted here. If you want your Dropshipping business to flourish ahead with colossal success, learn from these mistakes and avoid making those.

  • When you expect that your product sells on itself.
  • Narrowing down your supplier strength to just a single supplier.
  • Issues or stresses related to shipping rates.
  • Sale of goods with the trademark label.
  • Expectations beyond your reality.
  • Give up over the Dropshipping business hurdles.
  • Investing much time for determination of niche for Dropshipping
  • Increase in the reliability of vendors.
  • Expecting a smooth and quicker flow of money.
  • Product information or order information is made difficult to access it.
  • Lack of an adequate brand display.
  • Shipping issues related to product damage or product loss.
  • Complications in return policy.

What is Shopify?

Shopify is one such e-commerce platform which has its headquarters in Ottawa, Ontario. As of August 2017 above six lakh, merchants were the active users of Shopify platform. Shopify assists the dropshipping business aspirants to sell their products online. With Shopify at your fingertips, you have the liberty to establish your brand online with a customized domain name and a store on the online platform. You have the following benefits with Shopify platform:

  • You can fully personalize your online store appearance as and when you want.
  • The addition of new sales channels is now an easy task with Shopify.
  • Perfect management of unlimited products and inventories.
  • A single step order fulfillment process.
  • Ability to track your sales and growth patterns.
  • Today, Shopify homes to around ten lakh active users spread across the globe.

What do you get with Shopify?

  • You receive a complete website which you can customize as and when you want.
  • Unlimited access to product inventory, bandwidth, and data related to customers.
  • Selling assistance on new sales channel such as Amazon.
  • Gateway supported payment methods.
  • Order fulfillment process automation with the assistance of 3rd party apps.
  • 24/7 customer care support for resolving all your queries efficiently.  

While running to expand the businesses on the online platforms along with the offline retail stores, dropshipping can act as the best option in assisting you with this. The aforementioned points are sufficient to explain the advantages of this method, so do not wait and get indulge into it for getting a huge profit.

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Editorial Staff at Techlofy is a team of Digital Marketing experts led by Ashfaq Ahmad.

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