Dropshipping what it is and how to start your own business
If having an e-commerce is in your plans, you may have heard of dropshipping somewhere. With so many points to consider, many entrepreneurs end up giving up on the idea.
The doubts that intimidate them are essentially "How Dropshipping works" "How to start a dropshipping business".
Take a deep breath! In this article we will clarify these doubts and make a thorough analysis of the advantages and disadvantages of this new logistics management technique, so that you make the best decision in the face of your business needs!
Have you ever stopped to think about the revolution that digital has installed in our lives? Both personally, for the great accessibility to information, and at the professional level, by the new work tools and the endless possibilities of remote work.
There are no ways to make money on the Internet! Let the digital nomads say it, for whom a time from 9:00 to 18:00 and, an office in the city center no longer makes sense.
All you need is a good WiFi connection to work, already the script may well travel the world! Who knew it would be possible to travel full time and live from a Youtube channel or even from a blog and online store.
The icing on the cake for those who aspire to build online businesses is to sell and live carefree with a stock structure, a physical space for products and packaging to rest before they go on their way.
Tempting dropshipping isn't it?
Today we're going to dive deep into this theme, are we counting on you?
Dropshipping what is it?
What is to kick are articles talking about dropshipping in such a beautiful and technical language, that many are left with more questions than they already had!
In this article we will proceed in a different way: we know that for those who are taking the first steps in ecommerce it is difficult to assimilate so much information at once, so let's address this topic in the simplest way we know.
Dropshipping gives you the opportunity to sell online, moving your online store to being the intermediary between suppliers (those responsible for inventory), sellers and customers.
In this scenario, as a seller you are only responsible for promoting and selling the products of your e-commerce, delegating the headaches with the management of the stock and the shipment itself to the customer to a manufacturer, distributor or retailer.
It all goes great, but what will be the key to the success of this technique?
Without a well-defined niche, without investing in digital marketing and effective communication channels to strengthen the relationship with suppliers and customers does not go very far!
Now that you're not in the dark when it comes to dropshipping, see how it all works!
Dropshipping how does everything work?
After all, how does the dropshipping business model work?
Revenue will be generated from the difference between the amount you pay for the product and the final price paid by the customer.
In practice it would be something like: on a Tuesday tomorrow the customer orders a product in your online store and, as a seller, will forward the order and customer details to the dropshipping supplier. The supplier is responsible for sending the order directly to the customer on their behalf.
Hence it is rightly stated that dropshipping is a solution to simplify the online sales process!
This way, you no longer need a physical place to store your products as well as the charges associated with them. All you need is a laptop and a good Internet connection!
The retailer makes your business more profit in the difference between the price you buy from the supplier and the price you sell to the end customer.
In addition, it is very usual large details to be insightful to the point of using this technique to increase their own sales volume. And how do they do it? Customize all orders and promotional content from Drop Shipper.
Get to know the advantages and disadvantages of the Dropshipping model!
- Low capital requirement
Since you don't have to store the products in a physical store or deal with packaging and shipping costs, you may well start with little money.
The biggest capital you'll invest is the time to determine your own niche, choose the most relevant products, suppliers and set up your store, or upload products, images, videos and write good descriptions.
- Easy to start a business with little resources
Everything gets easier from the moment it has good suppliers and a niche market. Then you can focus 100% on building a good Minimum Viable Product, that is, a safe and reliable store and on a dissemination strategy.
It is best to start with a single supplier and evaluate the results.
- Have very low costs
The truth is that you don't need a lot of money to venture into a dropshipping business, as you'll be free of storage charges, packaging costs, so we don't talk about all the logistics related to stock management and accounting.
When it comes to advertising you can always invest some in social networks like Facebook or Instagram Ads, harness the power of advertising targeting to get your products to the right people at the right time!
With the right people we mean who is truly interested and willing to buy.
- More Flexibility
No one will place restrictions on the location you prefer to work with. What's more, you can always risk buying, making quick decisions and shaping products taking into account the type of promotion, to the extent that your customers' behavior and feedback gives you more information.
- Diversity of offers
Not assuming the role of supplier will have more control over the list of products, means that you can have several brands and suppliers, which meet the needs of your target audience.
- More scalability
Imagine that you have a clothing store, in the traditional business model if you had to send to another store, the expansion would entail proportional costs.
The same is no longer true of the dropshipping service, where you can create a contact network that allows you to make transactions at very low costs.
But not everything is a sea of roses in Dropshopping!
- Low margin:
Don't kid yourself! It will enter an extremely competitive market, which translates into a genuine price war.
The best solution is to find a suitable niche market and from there focus on developing a competitive advantage, other than the price!
- Unstable inventory:
You will be very dependent on suppliers and, just one of them is in stock, to be forced to suddenly change the offer of your store. If you don't, you risk losing customers and, with them, the credibility it took to build!
- Complexity in shipments:
With multiple suppliers it will be expected that shipments will vary from one moment to the next, which may not be so easy to deal with the end consumer.
- Many factors out of your control:
A simple error in the product can completely devastate the name of your online store and not who provides it.
So the secret that for everything to go well is to find good suppliers.
- The drama of Returns:
This will be the big obstacle in betting on dropshipping! Suppliers do not accept returns very well.
If they accept, they will be notified to know when they received the item.
That said, the ideal will be to test for yourself and evaluate whether or not it is sustainable for your business.
If you're inclined to move forward with dropshipping, stay with us! As promised, we will now explain to you how to get everything into practice!
How to Start a Dropshipping Business?
Here is our step-by-step to start diving into this business typology:
- Study very well the products that are most easily sold in popular markets such as Amazon! This market is present in usa, united kingdom, germany, france, italy, spain, japan, canada and china. As you can see, it has its tentacles in several countries.
- Analyze consumer trends and the most promising market segments: an online business opens many horizons, and can easily reach places that a physical business could hardly get. Always start because a market you already know!
- Structure all logistics: determine the characteristics that your online services will have and what will be the costs associated with packaging and shipping. If you want to start, take a risk with smaller products, leave price negotiation for later!
- It can be challenging, but look for products that are less likely to be returned: Shipping is a complex issue, but if you have low return rates everything gets easier!
- A good move is to discard products with very low margins;
- Choose products that need to be replaced or repetitive purchase; and think of products that are not very easy to find;
- Sell products that offer value to the online shopping experience, think what kind of products are more enjoyable to buy online than physically?
- Consider the potential for press coverage: is there any product that is the new sensation of the moment?
- Do an exhaustive search on what your persona is searching for, the websites you visit, the content you consume and relevant to you in the best-known search engine, Google. Use tools like Google Trends and the Google Adwords keyword planner to find out the trends of the moment;
- 10.Invest time and effort to discover the group of people who want to buy your products;
- Keep an eye on social media to keep track of everything you're talking about about your products, and what people are interested in knowing exactly about your products.
We have reached the end of the guide on Dropshipping, it remains to wish you good deals!
If new questions arise, do not hesitate to contact us.