What is Dropshipping? How Dropshipping Works
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| What Is Dropshipping |
What Is Dropshipping?
What Is Dropshipping? Dropshipping is a business model that has got mass popularity in recent years. It involves selling products online without keeping any physical fram or shop. Instead, when a customer places an order, the seller purchases the product from a third-party supplier who ships/deliver the item directly to the customer. Dropshipping can be an good way to start an online business as it only require few investment and can be done from anywhere in the world with an internet connection. In this blog,we will discuss into what dropshipping is, how it works, and the pros and cons of Dropshipping.
How Does Dropshipping Work?
To understand how dropshipping works, let's look at a example. Suppose you want to sell a product, let's say a men jeans on your online store. Instead of purchasing the dress in bundle and keeping it in a warehouse/shop, you partner/collab with a supplier who already has the jeans in stock. When a customer places an order on your online store, you forward the order to the supplier, who ships the jeans directly to the customer. You pay the supplier for the jeans, and the difference between the amount you charged the customer and the amount you paid the supplier is your profit/margin.
The process of dropshipping Requires the following steps:
Choose a niche and find a supplier - You need to identify a product niche you want to sell and find a good supplier who can provide the products you want to sell.
Create an online store - You need to set up an online store or website where customers can purchase your products.
Add products to your online store - You need to add the products you want to sell to your online store, along with their descriptions, images, and pricing.
Promote your online store - You need to promote your online store using few marketing channels, such as social media, search engine optimization (SEO), Instagram, YouTube,Twitter and paid advertising.
Receive orders and inform/forward them to the supplier - When a customer places an order on your online store, you send/forward the order to your supplier, with the customer's shipping details.
Supplier ships the product directly to the customer - The supplier ships the product directly to the customer, and you pay the supplier for the product.
Customer receives the product - The customer receives the product, and you earn a profit on the difference between the amount you charged the customer and the amount you paid the supplier.
Advantages of Dropshipping
Less investment - As dropshipping does not require purchasing inventory/warehouse/shop, it requires very few initial investment. You can start a dropshipping business with just a website and an internet connection.
Low overhead costs - As you do not need to maintain a warehouse or shop, your overhead costs are lower than those of offline retail businesses.
Flexible location - As dropshipping can be done from anywhere in the world with an internet connection, it offers the freedom to work from anywhere, including your home.
Wide range of products - As you are not limited by physical shop, you can offer a wide range of products to your customers.
Scalability - As you do not need to worry about managing shop, dropshipping businesses are highly scalable. You can add new products and scale your business quickly without worrying about shop management.
Disadvantages of Dropshipping
Lower profit margins - As the supplier sets the price of the products, your profit margins are lower than those of traditional retail businesses.
Limited control over product quality - As the supplier ships the product directly to the customer, you have limited control over the product quality. If the product is defective, it can result in negative reviews and it can damage your reputation.
Shipping times - As the supplier ships the product, shipping times can be longer than those of traditional retail businesses.