What is dropshipping? This question has sparked curiosity among the entrepreneurs, especially the new ones. Dropshipping is beginning to gain popularity because of several success stories that emerged in the business landscape.
In fact, 22-33% of the online retailers have used dropshipping as a strategy. Even the big names like Amazon and Sears have utilized this method.
But how does dropshipping work? Should you jump into this trend? And what are the important things to consider before you start this kind of business?
What is dropshipping?
Dropshipping is a business model that allows you to sell products without the responsibility of carrying an inventory or shipping goods.
Instead of purchasing a big amount of inventory, you will partner with a dropshipping supplier and list their merchandise for sale. When you sell a product, you will purchase the item from your supplier and have it shipped directly to your customer.
How much profit do I need to start a dropshipping business?
You can start this business with minimal capital, because you don’t have to front the costs of the items you’re selling. However, there are some startup and maintenance costs, such as:
- Your online store- Even if you choose to use a selling platform like Amazon or Taobao, you need to consider listing and sales fees. You can open your own online store, but you also have to pay for hosting, extra plugins, etc.
- Supplier fees – Some suppliers will charge a fee when you use their drop shipping services.
- Marketing – You have to market your business and use some strategies such as social media ads, email marketing, or blogging.
Before you get excited to start your own dropshipping business, let us discuss its advantages and disadvantages.
The Pros of Dropshipping
1. Minimum capital and low expenses
Because this business begins with an e-commerce platform, there’s no need for you to shell out a huge amount of investment. Unlike brick-and-mortar stores, you don’t have to pay for warehouses or rent a place for your office. In fact, you can even start and run your business from the comfort of your home.
Also, since you don’t have to carry an inventory, it makes the business model less risky. You don’t have to hire employees to manage the shipping of goods as well. Your main expenses will only include the cost of goods, website maintenance, and marketing ads.
2. Wide range of products
The products that you’ll sell are not pre-ordered items, so you can grow your reach by offering a number of brands to your customers. With this, you can easily monitor whether the items are high performers or not.
If there are certain products that don’t convert well, you can easily remove them from your store. You don’t have to worry about the costs because you didn’t purchase inventory.
3. Easy to set up and scalable
This type of business is easy to start. You can even open your own store within a day. You don’t have to take product photos because you can easily import product details and images from your dropshipping partner.
In addition, dropshipping business is extremely flexible and scalable. Location will never be your problem – you can work anywhere as long as you have a laptop and a strong internet connection.
Disadvantages of Dropshipping
1. Tight Profit Margins
The margins for this kind of business are usually low because of some reasons.
First, you don’t get discounts on products because you don’t purchase in bulk. Second, since this business is easy to start, the competition is tight. You have to keep your prices low to attract customers.
2. Lack of quality control and supplier errors
You don’t have a hold on the quality of the products that you sell because you depend on the suppliers. Whenever they’ll make a mistake in packaging or in product delivery, your company’s name is being compromised.
Even if you are not at fault, you’re still accountable and you have to pay for these damages if needed.
3. Inventory challenges
Inventory is important in your business because this is where you can track your profit and the products that you need to re-stock.
However, because you’re communicating with many suppliers, syncing your inventory with them is not easy. Since they’re also fulfilling the orders of other businesses, your inventory changes within the day.
How to start your dropshipping business
Choose a trusted Dropshipping website
Selecting a platform for such business is crucial because they are in charge of shipping and products.
If you want to build a dropshipping business and get into the Chinese market, there are top dropshipping companies in China that you can work with. Some of the famous names on the list are AliExpress from Alibaba, Taobao.com, Tmall.com, and JD.com
These websites offer an array of products with lowest prices but with good quality. Most of them have promising good shipping services and contact support.
Pro Tip: Want to learn more about Taobao? Check out this post and see how the excellent platform can make your business grow.
Give value to your business
Your website is the mere foundation of your business. If you want to be credible and turn website visitors into loyal customers, you have to sell products that will establish a relationship with your audience.
Knowing the basics of content marketing will help you achieve this outcome. This strategy will help you build a strong online presence. It will also let you tap the emotions and interests of your audience.
Find your niche
Specializing in one type of product will help you stand out and boost your profit margins. When you have a target market, it will be easier for you to endorse your goods because you know what your audience needs.
Let’s say you want to get into laptops. Instead of offering different brands of laptops, you can consider selling cute cases, skins, or accessories for college students.
Remember, the key is to do a little research, know the trends, and offer something that other sellers don’t have.
Leverage Social Media Platforms and SEO
Social Media and SEO are powerful enough to reinforce your business’ visibility.
Optimizing your content will drive traffic to your website. Through this, you’ll increase your online presence and you’ll eventually get into the search rank. Websites such as SEOmoz, SEOBook, and Distilled are your go-to sources to learn more about SEO.
Leverage the influence of different social media platforms such as Facebook, Weibo, and WeChat in expanding your reach. Paying for ads, creating pages, and sharing valuable content on these sites will make you become more engaged with your followers.
The Wrap Up
Now, it’s time to shift from ‘what is dropshipping’ to ‘should I try dropshipping?’
If you’re a budding entrepreneur and you want to enter the marketing landscape, then this is for you.
This business method provides you with several learning opportunities, such as setting up a store, driving traffic, marketing, and customer engagement. The good thing is, you get to experience these without spending too much. You can hone your skills while running a dropshipping business.
There are downsides, but keep in mind that these challenges will shape you into a better entrepreneur. With creativity, good work ethic, proper mindset, and resilience, your dropshipping business will surely have a bright future.
Have you tried dropshipping? Do you have valuable tips that will help entrepreneurs succeed in this path? Share them with us below!
Build your brand’s voice, reach out to your market, and create a strong online presence through online marketing!
NextStep will help you extend your brand’s reach to China through WeChat and Weibo Marketing. Go local with content in Chinese, English, and French.
Contact us today and get to know more about our services!