Introduction to Dropshipping

January 5, 2019 2:00 pm Published by Leave your thoughts

 

Whether you’re a first-time or seasoned seller, you would’ve probably heard about dropshipping. But what is it, really?

Dropshipping is an online retail method where the seller provides products without possessing the actual stock. This also means that a dropshipper doesn’t need to handle shipping and fulfillment. That task is handled by the product’s supplier or manufacturer.

Once the buyer places an order and makes payment, the seller will then liaise with the supplier and pay the cost of the product. The supplier will then manage all the fulfillment and shipping process from thereon.

Dropshippers usually operate their own webstore, with the exception of the few that sell through smaller marketplaces (e.g., Carousell or Mudah) or social media channels (like Instagram or Facebook). Through the webstore, buyers will have the same buying experience as any other e-commerce websites.

Dropshipping is a pretty attractive option for first-time sellers, especially those that have very low capital and looking to test the waters of e-commerce before investing more time and money. But can you actually make a good profit with this model?

Here are some pros and cons of dropshipping:

Pros

  • The entry barrier is low and you only need minimal capital to start.
  • You won’t need to handle fulfillment and shipping, which removes a big burden off your shoulders.
  • Since you don’t store the products yourself it also removes the need for you to spend money on storage rental fees.
  • With e-commerce solutions like AVANA, you don’t need to be tech savvy to start an online retail business through dropshipping.
  • You can operate a dropshipping business from anywhere, whether it’s from your sofa at home, at a cafe, or by the beach.

Cons

  • The profit margins are low.
  • When the supplier or manufacturer manages all the fulfillment and shipping process, you won’t have control over those crucial parts of an e-commerce business. Which means if there’s a delay on the supplier’s side, your reputation will suffer.
  • Shipping time often makes or breaks an online retailer’s business. With dropshipping, due to the limited number of suppliers that offer dropshipping services, their shipping times are often long and can range anywhere from 7 to 30 days.
  • You need reliable suppliers to ensure your customers get a consistent level of quality service.

 

Getting into dropshipping might seem like an easy route into e-commerce but as you can see now, it’s not all a bed of roses. Nevertheless, there are also lots of online sellers that have succeeded in creating a dropshipping business.

The level of competition in e-commerce is rapidly increasing every day. And in the dropshipping market, it has become even more competitive than ever before.

Find out if dropshipping is the right method for you in our next article.

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This post was written by Nina