Dropshipping business for dummies

1. What is a dropshipping business

The dropshipping business is a retail fulfillment method where a store doesn’t keep anything in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product. Read more here.



Retailers that drop ship merchandise from wholesalers take measures to hide this fact or keep the wholesale source from becoming widely known. This can be achieved by “blind shipping” which means shipping merchandise without a return address. Or “private label shipping”, it is when you are having merchandise shipped from the wholesaler with a return address and brand on the item, customized to the retailer. So the wholesaler might include a customized packing slip, including details such as the retailer’s company name, logo, and contact information.

Dropshipping can occur when a small retailer receives a single large order for a product. The retailer will arrange for the goods to be shipped directly to the customer from the manufacturer or distributor. Dropshipping was common with expensive products but today it is done with any kind of product.

2. The best way to create a dropshipping business store

The best way to create a dropshipping store is to join a platform that allows you to create, to source and even automates your store. You will have a monthly fee and will have to meet all their requirements. Here is my list of platforms and apps to help you create a dropshipping business: you can read our review here.
Alidropship
Dropified
Ecwid

Commercehq

Dropshipme

Woodropship

But is you would like to create your own and just use a plug in to help you with product sourcing, you can follow the steps in this article, creating a website for your business. But you will still have to buy a plugin to help you (it is cheaper this way too). Buy alidropship plugin, you will pay only once and there is no monthly recurring fee.

dropshipping

3. How to choose your product and where to get your products

– how to choose your products

In choosing your products you need to be sure of the demand and the deliverability.

 Market research:

A market search will help you determine if there is a demand for what you would like to sell. Without demand, your products will not sell.

When you are sure there is a demand, now check your competition, what is your competition doing and how can you stand out and gain more market share.

Ease of delivery:

In the e-commerce market delivery is the key to success. So how fast you deliver can be a game-changer. That is why when you are choosing your products, make sure it is something easy to deliver. It can be easy to deliver by its size, by the carrier you are using or by the supplier you choose.

– where to get your product for a dropshipping business

How to Choose the Best Suppliers

Here’s a quick-reference checklist of questions to ask yourself before signing on to do business with someone:
How do they handle returns or damaged products?
How is their customer support? (Feel free to test this yourself.)
Do they ensure orders?

How long does it take them to fulfill an order, from the sale to delivery?
Do they offer fraud protection?
Can you find reviews or references online?

When a supplier checks out all the boxes, that you know you can do good business.

4. Market your store, products & get traffic

For free traffic, you will have to make sure to optimize your website for the search engines. But for paid ads here are some great platforms:

– on google shopping
– on social media
– affiliate marketing, see if you can also create your own affiliate program or join an affiliate platform.

5. Sales channel for a dropshipping business

Here are some few places you can use to display your products. I say display because you can make sure that the checkout is done on your website for some. Also, displaying your products to social media can help with SEO, as it gives you backlinks. You can sell here:

– sell on Facebook & Instagram
– On eBay
– sell on amazon
– point of sale
– create your affiliate program

You need to check with these platforms because some do not accept people outside the USA or a certain country.

6. Create your private brand or label for dropshipping

– what is private label:

we talk about private label when you order products from the factory and you pay an extra cost to have your brand on the product. You do not need to have designed the product.

This can be an expensive process. Because for a private label, the order should be more than 100 pieces and for some product, it can be a 1000 pieces.  So the supplier will keep your products and ship to your client on order. Your brand will be known and trusted with private label. And the downside is that you have a lot of products to sell, plus the stocking fees.

– print on demand:

This can be a mixture of dropshipping and private labels. Because you do not have the stock of the product but you still get to sell it with your brand. You create your design, submit it to your print on demand company. And when you have an order, you pass it to the printing company. Which will print and deliver to the client with your label.

7. Pros and cons of dropshipping business

– Pros

 Less start-up Capital Is Required :

Probably the biggest advantage to dropshipping is that it’s possible to launch an e-commerce store without having to invest a lot of money in inventory upfront. Traditionally, retailers have had to tie up huge amounts of start-up capital purchasing inventory.

All you will need to start is the sum of a domain name, a hosting fee or not, a monthly subscription to a dropshipping platform, a marketing cost, and your internet. Which, is way cheaper compared to starting your e-commerce with your own inventory.

Easy to Get Started:

Running an e-commerce business is way easier when you don’t have to deal with physical products. With drop shipping, you don’t have to think about:
Managing or paying for a warehouse or a place to keep your inventory
Packing and shipping your orders, it is done by your supplier
Tracking inventory for accounting reasons and finding a smart way to get rid of the unsold items.
Handling returns and inbound shipments,
Continually ordering products and managing stock level, to keep your store up to date.

Low Overhead expenses:

Because you don’t have to deal with purchasing inventory or managing a warehouse, your overhead expenses are quite low. In fact, many successful dropshipping businesses are run from home. As you grow, these expenses will likely increase because you will need assistance in managing orders and customer care. But will still be low compared to those of traditional businesses.

 Flexible Location:

A dropshipping business can be run from just about anywhere with an internet connection. As long as you can communicate with suppliers and customers easily, you can run and manage your business.

You also have the advantage of being able to sell to many countries from where you are located, as long as the destination is supported by your supplier.

Wide Selection of Products:

Because you don’t have to pre-purchase the items you sell, you can offer an array of products to your potential customers. As long as your suppliers stock the item, you can list it for sale on your website.

 Easy to Scale:

By leveraging dropshipping suppliers, most of the work to process additional orders will be done by the suppliers. Allowing you to expand with fewer growing pains and less work. Sales growth will always bring additional work, especially related to customer service but a business that utilizes dropshipping model scales particularly faster relative to traditional e-commerce businesses.

– Cons

Low-profit margins:

Because most of the suppliers have their own online website or platform, it is most likely that you need to practice a reasonable profit margin to be sure to make a profit.

But also because it’s so easy to get started and the overhead costs are so minimal many merchants will set up shop. And sell items at low prices to grow revenue. They’ve invested so little in getting the business started so they can afford to operate on minuscule margins and gain a customer base.

 Highly competitive:

Because dropshipping is so easy and cheap to start, lot of people are doing it so there is a lot of competition, keep in mind even the suppliers are online and you do not always have exclusivity with your supplier, chances are your products are sold in many other stores too.

You need to work hard on building your brand and setting your store apart from others, find what can make the difference with other stores in the same niche as yours.

No control over supply-chain:

In standard e-commerce, if customers complain about product quality, fulfillment speed, or return policies, you can address the problems yourself. In drop shipping, you depend on your supplier but you’re the one who still has to talk to your customers directly.

Here is why you need to choose the best supplier, the one who can ship with fewer product problems or delays, and who communicates fast to help you solve any issue as soon as it occurred. Because mediocre and low-quality suppliers will cause endless frustration with missing items, botched shipments and low-quality packing, which can damage your business reputation.

 Legal liability issues:

Although this isn’t a common problem for drop shippers, it’s worth mentioning. Some suppliers aren’t as legitimate as they claim, and you don’t always know where the merchandise comes from.

That is why it is not advised to sell trademark products because there is no proven way to verify that the supplier has the right to resell those products.

Difficult to build a brand:

Drop shippers must understand that the credit for their work goes to someone else. The blind shipping policy is not always respected by suppliers. So the supplier gets the credits.

For a drop shipper to build a brand, it needs a lot of money and experience to establish with your supplier a private label. It is usually done with not less than $5000, that your supplier will accept.

 Inventory Issues:

If you stock all your own items, it’s simple and easy to keep track of which items are in and out of stock. But when you’re sourcing from multiple suppliers, 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’ especially with some cool apps, these solutions don’t always work seamlessly, and suppliers don’t always support the technology required. And just like that, you can lose a winning product or you can oversell it. So you can get the help of some tools as we saw here to make it more easy.

 Shipping Complexities :

If you work with multiple suppliers as most drop shippers do, the products on your website will be sourced through a number of different suppliers. This complicates your shipping process and cost.

Let’s say a customer places an order for three items that come from different suppliers. You’ll incur three separate shipping charges for sending each item to the customer and the order will be shipped in different packages, which is never convenient for the customer.

Conclusion of dropshipping business for dummies

Dropshipping business is a great way to start with an online business. It brings the cash right in your pocket. Still, you need to be committed and ready to improve it every day. The competition is presently standing out from it is the only way you can succeed in the dropshipping business.

I hope this was helpful to get you started in the dropshipping business. Leave your reaction to the comment section.

Thanks

12 thoughts on “Dropshipping business for dummies”

  1. Hi 

    Wow! What an excellent article you have written with lots of important information about “Dropshipping business for dummies”

    First of all thank you very much for sharing this informative and beneficial article with us.I didn’t have any idea about it.After reading your article I understand that Dropshipping is an amazing way to start with online business.You have provided a great well detailed article with many kinds of important tips.I have learned all the necessary information about this Dropshipping business that you have mentioned in your article very nicely.I hope this will be very much helpful for the people who want to start Dropshipping business.I will share this great article with my friends and relatives so that they can take the benefits from this.

    Reply
    • You are most welcome and good luck for your dropshipping venture!

      Reply
  2. Hey there,

    This is an informative article on Dropshipping  Business for Dummies. I do not like my work what I am doing now. Because it’s so stressful and boring at the same time. So I was looking for this kind of opportunity. I really liked your ideas on dropshipping business. I think I will try it. Even I am thinking of starting a affliate program of my own. So your tips will be so helpful for me.

    Thank you for writing this helpful article.

    Reply
    • Yes affiliate marketing is also a great online business model, make to check my post on https://colombepreneur.com/201… it’s will help you to learn more about it 

      Good luck for your next venture!

      Reply
  3. Hello Davina,

    Can we source our own products by being an affiliate for Amazong for instance? Then, can we include these products in our own e-stores to sell without redirecting our traffic to the likes of Amazon?

    I am very interested to know how to do this but I do not know where to start. I think there are free plugins like WooCommerce but I do not know if they end up charging you.

    Really looking forward to your reply here Davina and thank you for sharing your knowlege.

    Reply
    • Hi dear
      I personally started like you said. I created a store with another store builder but yes you can use woocommerce. What I did was, creating product using aliexpress photos( when it was a nice photo), make a better description. And place my ads in instagram, so people will place orders in my website and then I will place the order on aliexpress and precise the order to be blind ship (meaning the seller should put in the package anything related to his store). This way I never redirected my client to Aliexpress.

      This is the main purpose of dropshipping, it is not affiliate marketing where necessarely send your clients to buy from your supplier and you get a commission. With dropshipping, your clients do not have any relationship with your supplier. They only know your store because they buy completely from you. But the cons of doing it that way, is that you need to be checking the stock availability from your supplier all the time. Unless you choose to invest some money and buy an inventory.

      Now with plugins like Alidropship makes your job of creating a store and placing orders from your suppliers much easier. What you do is after installing your woocommerce to wordpress, you go on and install the plugin. It has a one time cost.

      But I see you want to do it with amazon which also totally fine, you can use the dropified plugin. Keep in mind the plugins are not free, with dropified you pay monthly and get a 14 days free trial.
      The good thing of going for dropship is to start your own online store with no inventory and less start up capital.

      I hope this helps, feel free to reply if you need more insights.
      Thanks

      Reply
  4. Interesting article this is! I have been stuck for ideas on how to diversify in my business journey, when a friend suggests I look into dropshipping. 

    Reading from your article, I must say it’s not as easy as I thought it would be from the little I learnt from her.

    but I love that your article has really simplified the process of how and what it takes to get started.

    But I would like you to clarify me on a few things though;

     1. In a situation where a customer is not satisfied with a product delivered, either for one reason or the other, and have to send it back , Who would the customer have to contact, me or the supplier?

    2. in the case of a refund, would I be responsible for refunding he customer or would the supplier also refund the money already sent to him?

    3. If its something that needs fixing, or replacing, do you have an idea whose responsibility it would be, mine or the suppliers?

    Really hope to hear from you soon, as this will help me decide on what step to take next.

    Cheers..

    Reply
    • Yes, those are the biggest dilemma in dropshipping. Most of the drop shipper chose a product which will not require all of these issues or simply specify on their website that products can not be exchanged or returned.

      But normally, the client will contact you, as they were never in contact with the supplier. You are the one dealing with customers, not the supplier. And the supplier does blind shipping, meaning that the parcel will go with no information about the seller or your shop. 

      In the case of a refund, you will be the one to refund your client fully and deal with your supplier for a refund if it is necessary. Because sometimes the supplier will argue that it was not his fault, especially in the case of delays in delivery.

      You are responsible for everything toward your client If something needs fixing, the client will call you and you will find a solution with the supplier.

      It is a great business model with a lot of responsibility. Here is a list I put together of many other successful online business ideas I hope you can find something useful to help you diversify.

      thanks

      Reply
  5. Hello Davina. Thanks for this comprehensive article about dropshipping. It is very popular so it’s about time I learned something about it.

    It looks like a quite straightforward process. I’m on affiliate marketing and I can say there are lots of similarities, especially in the SEO, paid ads section. I guess the difference with affiliate marketing is that you have to write content that promotes some product.

    Or you can promote your dropshipping website with affiliate marketing. I think that will work too. I’m quite new to affiliate marketing so don’t take my word on it.

    I see lots of dropshipping websites everyday so facts assure me that this works (and makes a profit). Thanks again for this informative article and have a nice day.

    Reply
  6. Hi Davina – Thank you – I’ve always wondered what drop shipping is all about.  I’ve heard the term but never any specifics.  But I’m wondering now, what’s the difference between drop shipping and e-commernce?  Is it that e-commernce has it’s own inventory?  Also, how would drop shipping work with Amazon?

    Reply
    • That is the biggest difference, the other one is also about the responsibility and tasks to accomplish. With a dropshipping store, you do not have to do anything apart from advertising and placing the order to your supplier. Yes, you are still responsible vis a vis to your client in case of a refund or return. But the work is really less. With an e-commerce you are doing everything on all the levels.

      It will not work with amazon because amazon likes to fulfill their orders. But what I will advise with amazon is to go for FBA, fulfill by amazon. All you need to do is buy your inventory, list your products on amazon and leave your inventory with amazon. They will process and deliver all your orders.

      Thanks

      Reply

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