In this article, we will introduce you to the basic concepts behind dropshipping. We will also share some of the tools you need to start your own dropshipping business.
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Here, we will cover:
- Definition of dropshipping
- How dropshipping works
- Is dropshipping worth it?
- Dropshipping success rate
- Advantages of dropshipping
- Disadvantages of dropshipping
Definition of Dropshipping
Dropshipping is a method of fulfillment practiced in many online businesses. In a dropshipping business, the online store does not stock products in its own inventory. Instead, the store owner buys it from a third party when the end-customer orders a product.
Usually, these third parties are product suppliers. In a dropshipping business, the suppliers handle the shipping and fulfillment of the order.
How dropshipping works
If you are running a dropshipping business, you will actually act as a middleman between the supplier and the end customer.
As a dropshipper,
- You will not manage your inventory of products.
- You will not handle the fulfillment of any order.
- You will ‘buy’ an item from the supplier only after selling it to your end customer.
Is dropshipping worth it?
By now, you have a fair idea about what is dropshipping. But the question is, is dropshipping worth it today?
Short answer – yes. Even today, dropshipping works when done correctly.
But if you are not aware of the common dropshipping pitfalls, your success will drastically fall down.
This brings us to the question, what is the success rate in a dropshipping business.
Dropshipping Success Rate
With different powerful tools available today, it is easy to start a dropshipping business. Moreover, expenses and overheads are low in any dropshipping business.
This, in turn, can generate high profits.
Look at the different case studies at Spocket. The success of several entrepreneurs, just like you, are sufficient to prompt you start a dropshipping business right away.
But remember that you can only succeed in a dropshipping business only if you plan it properly from the very beginning. You must also choose the right tools.
Advantages of Dropshipping
In the above sections, we have told you what is a dropshipping business. Here, we will discuss some of the advantages of dropshipping.
You do not need a huge upfront investment to start a dropshipping business. All you need is a brandable domain name and an online shop with a platform like Shopify.
Next, you can create a free account with a dropshipping platform like Spocket and import products from quality suppliers.
As you can see, there is no expense for managing your own inventory. All you need is the expenses for your Shopify store and a domain name. You can upgrade to a premium Spocket plan only if the free features are not sufficient for you.
Running a dropshipping business has negligible overhead. You do not manage your inventory. You do not handle fulfillments even.
There is no requirement for a dedicated shop location. As long as you have an active internet connection, you can run your dropshipping business.
Variety of products
Since you have no upfront investment to stock your inventory, you are free to offer a variety of products on your dropshipping store.
As long as your suppliers can supply the items you put up in your store, you have no restrictions on your catalog.
Scaling up a dropshipping business
Scaling up a dropshipping business is also easy. You can leave the complexities of handling logistics to your suppliers and focus only on growing your business.
Disadvantages of Dropshipping
You must remember that dropshipping is not the magic recipe for your online success. In fact, there are many dropshipping pitfalls you must be aware of.
Since it is so easy to start a dropshipping business, the competition is really high. Unless you choose the right niche, high competition can result in a narrow profit margin.
A dropshipping business will always source items from different suppliers who may be geographically separated. This leads to a unique complexity in automating the shipping process.
Moreover, your shipping expenses increase if there are multiple products in a single order sourced from different suppliers.
A dropshipper does not own the inventory of products. While this eliminates any upfront investment in a dropshipping business, tracking and controlling the stock becomes difficult. This is more of a concern as your supplier may also be supplying items to many shops simultaneously.
Moreover, your brand takes the hit if your supplier makes some mistake during the fulfillment process. Besides, if you work with a mediocre supplier, be ready for a bumpy ride ahead. The key here is to work with selective and vetted suppliers from platforms like Spocket.
In this article, we have explained what is a dropshipping business. We have also discussed the major pros and cons of a dropshipping business.
Dropshipping is one of the easiest ways to launch a successful online business. At the same time, it is never a zero-risk business model. Just knowing what is dropshipping is not enough to run your business. Learn to avoid the pitfalls of a dropshipping business.
Are you well equipped to run your dropshipping business now?