What is DropShipping?

February 17, 2020  

     Marketing  

   1752

What is DropShipping?

The eCommerce industry is providing many opportunities to start their own business & to grow. One os such term is Drop Shipping. Someone who is into online selling and buying might have come across the word Drop Shipping. Still, many people are not aware of What is Drop Shipping

There are very fewer people who understand the Drop Shipping business well & can explain the same to others. Someone who is going to start an online business & if one trying to get into dropshipping than it might be difficult for him, as there are very fewer resources available about the drop shipping.

Here is the definitive guide of Drop Shipping which will give you an idea about

Let's take a deep dive into the world of Drop Shipping.

What is Dropshipping?

When the company runs an online business without maintaining any inventory & has no warehouse to keep the products and not even ship the products on their own to the customers, this is a business model in eCommerce considered as Drop Shipping. 

In this business, model retailer ties up with other companies that manufacture the products or has a warehouse to store the products and ship the products to the customers on behalf of retailers. 

Drop Shipping is a beautiful & money-minting business wherein the retailers have not to invest in physical presence such as a store, warehouse, etc. In this model, retailers don't have to handle the product directly. 

When the retailers receive the order, retailers forward the requirement to the drop shipper & the supplier send the product to the customer & charge the retailer for the process of the product.

If we want to summarise what is dropshipping than below mentioned 3 sentences are enough


  • Customer place an order to the retailer
  • The retailer forward the request and other details to the drop shipper
  • Drop shipper pack the product & ship it to the customer on behalf of the retailer


Let's see other factors of the dropshipping in detail.

 

How does Dropshipping Work

After understand What is Drop Shipping, it needs to know how dropshipping works. Instead of explaining the writing, visual will work better in this section



Advantages of Dropshipping

If someone wants to get into eCommerce industry than drop shipping is a great business model, like much other business drop shipping, also has an advantage. Let's take a look few of its advantages

 Easy to Start 

Running an eCommerce is convenient when you don't have to manage or store the products by yourself. When in dropshipping you don't have to take care of certain things such as 


  • Controlling for warehouse
  • Packing and shipping the product
  • Handling inbound & returning products


In a nutshell drop shipping business is easy & convenient to start.

 Less Overhead Expenses 

If the company is not buying inventory & not storing the same, then there will be less overhead expenses. Such business can be done from home & need a laptop and the internet. If the company will scale than the overhead also gets increased but still less as compared to other businesses.

 Run your business from anywhere 

Drop Shipping can run from anywhere as you don't need a physical store and warehouse, just a laptop and internet connection. Be a beach or hill or any the place else you can run the dropshipping business.

 Easy to Grow

In retail store traditionally if you want to grow, you have to invest & give more time to grow, however in dropshipping business you have to forward the orders to the suppliers & get more time to scale the business.

 Low in Risk

If there is no sale of the product than you won't earn but at the same time you won't lose, that makes the drop shipping business less risky.

 Variety of Products

In dropshipping you don't have to store the products & not even you have to pre-buy it, you need to mention the products on your online store & get the order and forward it to the supplier. 

 

Disadvantages of Dropshipping

Above we discussed the advantages of the dropshipping at the same time, it has drawbacks as well. Let's see what the cons of drop shipping are

Low Profit

The sale you make maximum money goes to the supplier. It's true that there is less investment, but returns are also less. 

Takes time to build Audience  

If you are selling than also you have to make an audience to sell more so that you can get the float, and making an audience is a little tedious task & it takes time.

Complications while Shipping

If retailers are selling various products, they might get associated with multiple drop shippers & that may increase the difficulties while shipping of the product to the customers.

Inventory related Issues

If you receive an order however you are not sure the supplier has that product in the stock, in that case, may the order will get canceled. Tracking the inventory with the drop shipper is very difficult, or it takes more time & effort. 

High Competition

Due to the popularity of the dropshipping business, there is high competition. High competition makes this little business tough to manage effectively.

Error from the Supplier

If the retailer gets the order & forward it to the supplier, however, while shipping the packing maybe not sufficient, there might be a damaged product, and there could be an issue for which retailer will blame. 

 

How to be Successful with Dropshipping

In the above section, we discussed the advantages & disadvantages of drop shipping, in this section, we will discuss how to effectively manage the benefits & how to take care of problems of dropshipping means how to become successful in this attractive business

Choose the Best Supplier

Choosing the best supplier to get the best result is very important, however finding the best supplier needs the time. If you didn't get the best suppiler than you will lose the customers as customers expect the best.

Great Customer Service

When running the business both customers and business may face issue related to any things, when the problem comes, it needs to be addressed & has to be taken care off & make sure that customers meet the less problem. Excellent customer service will help you to make a good impression on the customers.

After All its a Business

Dropshipping business can run from home, garden & from anywhere but after all its an activity which requires time, effort & investment. 

Is Dropshipping a Good Business Option

Ecommerce is a booming industry & many businesses & entrepreneurs are making an effort to make the mark in dropshipping business. Still drop shipping is an attractive business due to less investment.

Many retailers are making money by cutting down the shipping cost & choosing the quality supplier. Quality supplier & loss cost of shipping can make this business profitable. 

 

Future of Dropshipping

Drop-Shipping has a very bright future, as many new entrepreneurs are selecting drop shipping as a business option due to its low initial investment to start. More and more people are moving towards online shopping; this movement makes the business opportunity for many others. 

Not only customers are moving towards online shopping, but the manufacturer also looking for an opportunity in the online shopping era, they are going for good quality of products and effectively serve the customers. Ecommerce itself is a booming industry and other industries related to eCommerce also growing well.

 

Conclusion

Drop Shipping is a lucrative business, like many other businesses; it also has advantages and disadvantages. Still, many Entrepreneurs are choosing the drop shopping as the business opportunity, and the reason is booming eCommerce sector. Entrepreneurs are overlooking at the disadvantages and considering the advantages and trying to start the dropshipping business to scale more.

In a nutshell drop shipping is a great business opportunity. 

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