Do you want to open a Shopify online store, or have you already done so and heard about drop shipping recently?
It looks like a good chance, and it is. But you should also know that there are other kinds of drop shipping. If you want to run your business successfully for a long time while only putting a small amount of money into it, you might want to think about the tips below.
When you open an online store, you need to decide what your main profile will be, what kinds of products you will sell, and who your target audience will be. After figuring out where to put your business, you need to find your sources, especially the ones from which your products for sale will come. You can do one of the following.
You can sell things like:
- make on your own,
- sell items from other online stores (and from marketplaces) ,
- get from genuine wholesalers.
People usually think of the last two options when they hear the term “drop shipping.” Selling your own products can also work with the last two options, but if you want to use the real drop-shipping method that can bring you long-term success, it’s best to work with wholesalers and not retailers or marketplaces.
How does drop shipping work? This is a closed chain with three parts: the physical customer, the suppliers (wholesalers at first), and the virtual marketplaces/retailers. It’s a cycle that never ends. When a customer orders something from a store that doesn’t really have it in stock, the store orders it from the supplier. The customer gives money to the store, and the store gives money to the supplier. Suppliers usually deliver the product to the customer, but there is another way: supplier to retailer to customer. If you use this method, you may need to rent a warehouse, but it is not necessary. With drop shipping, you can make your store successful in the long run with a small amount of capital.
The business of retailers and wholesalers
Retailer + retail marketplace (as supplier) + customer = bad business?
Items from other online stores or retail marketplaces can be brought into your Shopify web store. There are also a lot of marketplaces that sell things and let other stores resell things from their stock. Some examples of these are AliExpress, eBay, and Amazon. From another angle, retail marketplaces have more retailers who sell their own products there, and Shopify web stores can be linked to these ones.
What’s going to happen? The owner of the Shopify online store picks out one product at a time from the marketplace to sell in his own online store. Then he puts them in the right place and puts them up for sale. Since there aren’t any real stocks, there’s no reason to pay for a warehouse. When someone orders something from a marketplace, it will go straight to their home. You don’t have to spend a lot of money on the business, and the new virtual stores will have a lot to choose from.
Well, it might look like a good idea. But this type of e-commerce has a lot of problems that can make a business fail quickly and for good.
Here they are:
Long delivery time: Customers usually have to wait a month or more for the product they ordered to be sent to them. No one likes it.
Higher prices: To make money, the owner of the Shopify web store sets the margin between the prices of items from suppliers and retail marketplaces. But who wants to pay more for something when they can get it cheaper in the original store, like on AliExpress?
Customs duty and VAT: If a customer orders goods worth more than a certain amount, they have to look for order forms, deal with VAT and customs duties, and pay more.
Unknown quality: Since Shopify web stores don’t have warehouses, they can’t even see and check the products they sell.
Lost package: It’s not a new problem for people who buy things from other countries, and it can be inconvenient for both the web store and the customer.
Problems with guarantee: Web stores have to send packages back to the other side of the world, where they can get lost again. The biggest problem is when a retailer goes out of business and there’s no place to send back products that need warranty service. Then, there’s no way to get your money back or a new product.
Reliability at issue: You don’t know anything about the sellers on the market, so you can’t tell if they’re trustworthy or not.
Banks move apart: Banks don’t like to work with money from traditional drop shipping businesses because they don’t trust them.
Items arrive from different places:
If a customer orders something from a marketplace that comes from more than one store, they won’t get everything in one big box. Instead, they will get as many packages as orders they placed. There’s nowhere for them to wait for each other.
Just don’t sell products that you have with one retailer to another retailer.
Retailer + wholesaler (as supplier) + customer = good business?
If you want your Shopify web store to be successful in the long run, you should use a newer form of drop shipping instead of the traditional one. (which was the one mentioned before) We talk about the following in this case. As a retailer, you work with real wholesalers who will be your suppliers. You’ll sell their products in your online store, so people will buy them. You choose your suppliers based on what kind of shop you want and what you want to sell, like women’s clothes, gifts, or home decor. Then you make a deal with those suppliers so that you can work together and do business with them for a long time.
This process is a bit like traditional drop shipping in that money moves from the customer to the store to the wholesaler. People will place orders with you, and you’ll put them all together and send them to the supplier. Now something different. The supplier will send you the packages, and you will need to get them to the customers. This is good because you can be sure of what you are selling. Also about how good the items are and whether or not they are broken. You don’t even have to worry about renting a warehouse because you can put the packages in your own living room, garage, or kitchen.
You will get a price list from the wholesaler…
…where you can see what you can buy and sell and how much it will cost. In fact, this is how things worked at the very start of business. Only the way things worked changed. You buy a product for a certain price, add a margin, and then sell it for a different price. You will still make money from this.
If you use novel drop shipping, you don’t have to choose each virtual item from the supplier’s list one by one. Everything is bought from the wholesaler. You can get their data feeds, but they are in different file formats. Different kinds of data structures exist as well. So it will likely be hard for you to use the manual settings. If you want this to be easy, all you need to do is use the right Shopify app, which can easily solve these problems.
Why should people buy things from your web store?
Why working with real wholesalers is a good idea:
responsibility: if you make a deal with the supplier, you will continue to work together. You can talk to them about any problems, and they won’t just disappear.
quality: You decide who you want to work with, and you know what products it sells. You can be sure that it’s good. You’ll be surprised by nothing.
lower purchase and sales price: Wholesalers sell products for less than retailers do, and even if you add a margin to the price, it will still be a good deal for the customer.
guarantee: Problems with warranties are not hard to deal with.
fast shipping: If you buy something from a cross-border seller, you’ll get it in 3–7 days. If you order from a local supplier, you and your customers can get the goods in 1-2 days or on the day you place the order.
you don’t have to keep your money in products:
supplier’s database is being kept up to date. You don’t have to pay a lot to invest.
Do you want your business to be successful in the long run, and do you take it seriously? We definitely think that you should use the new drop shipping method to build your retail business.