You’ve probably already heard about how lucrative a dropshipping business can be if you found this page. You may be familiar with the concept in general but are seeking a clearer explanation of what exactly dropshipping entails as a business model.
Online retailers can take advantage of supply chain management through dropshipping.
It’s a simplified version of traditional retailing in which a shopkeeper takes orders from customers for items he doesn’t keep in stock.
An alternative is for the merchant to locate a third party, a supplier -, who agrees to fulfill his orders and sends the goods directly to the buyer (the merchant’s customer).
In a dropshipping arrangement, the vendor ships the goods directly to the customer without any involvement from the retailer.
Products are promoted by the retailer on his online store, and the final consumer makes a purchase;
After a purchase is made, the retailer arranges payment for the products and shipping from the suppliers, and then notifies them via email of the details of the order to be fulfilled.
After an order has been processed and shipped, the supplier will email the merchant with the package’s tracking number. The merchant will then pass this information along to the customer.
With a dropshipping model, the retailer is responsible for all advertising and promotion while the manufacturer handles inventory management and shipping.
Below, we’ll break down the history of dropshipping, explain how it works, and discuss the advantages it provides for everyone involved, from the retailer to the wholesaler to the customer.
What is dropshipping: Origins and Evolution
Due in large part to developments like these, dropshipping has expanded rapidly in recent years:
The proliferation of online shopping thanks to the Internet and commerce
Sales Platforms on Social Media: Facebook, Instagram, and TikTok have all introduced features to assist their users with product sales;
As shipping methods have improved, consumers can now receive their orders from anywhere in the world in a matter of days.
Back in the late 1990s and early 2000s, dropshipping merchants primarily sold their wares on marketplaces like eBay and Amazon. Since then, however, they have shifted their focus to content management systems (CMS) like Shopify and WooCommerce.
Why is Dropshipping so popular?
Sales figures for retail eCommerce in 2019 show a total revenue of $3.5 trillion, with dropshipping accounting for 33% of that total. In 2022, sales are projected to reach $6.54 trillion.
As a result of the widespread implementation of COVID19-mandated quarantine measures, online commerce and online purchasing have emerged as global priorities for 2020.
Dropshipping, a business model with low startup costs and high potential profits, is increasingly common in the booming eCommerce industry.
It’s a great way to test the waters as a business owner, so long as you’re committed to learning the ins and outs of the industry, studying up on the most effective marketing strategies, and keeping abreast of emerging trends.
Let’s talk about the win-win for all three parties now.
Benefits of Dropshipping for Merchants
If you’re a retailer, you can gain a lot from opening a dropshipping shop, including:
Launching a dropshipping store on a content management system (CMS) like Shopify takes only a few hours, and you can sell your products on marketplaces like Amazon or even via social media channels like Facebook and Instagram if you so choose.
Start-up costs are low because you won’t have to buy any inventory or pay for storage space because you won’t be keeping any of the products you sell in stock, and operating expenses won’t go up because you won’t have to hire people to pack and ship your customers’ orders.
A business where you can set your own hours and sell whatever you like;
Since an online store is not like a traditional storefront, you can set your own hours and sell to customers all over the world from, say, Italy.
Simple to market because you can push any product you want and pay for it only after a sale has been made; if one product doesn’t do well, you can simply switch to another.
Simple to keep up because you wouldn’t have to worry about keeping any unsold inventory on hand; just focus on running your online store.
Benefits for Suppliers
If you’ve read up on the benefits of running a dropshipping business, you may be wondering why a manufacturer or wholesaler wouldn’t just sell his wares directly to you. In reality, there are numerous explanations, some of which are listed below.
it has the potential to significantly broaden its distribution network thanks to its unrestricted access to various sales channels (both online and off).
They can make sales with no upfront investment in advertising or product placement;
Since the supplier isn’t investing in inventory, they can use the dropshipping model to expand into new markets and even new countries.
Benefits for the Customer
Most consumers have no idea that their product was sent via dropshipping because suppliers are specifically instructed not to include any promotional materials in the products they ship on behalf of merchants.
The benefits to the customer outweigh the slightly longer shipping time compared to locally available products.
More products to choose from;
Reduced costs compared to both traditional stores and online marketplaces based in the seller’s home country;
What is Dropshipping: Trends
Over the past few years, dropshipping has undergone tremendous development. What worked in 2016 and 2017 is not going to cut it today.
If you’re wondering if you can make money through dropshipping today, the answer is yes. We’ll tell you more: it’s more relevant than ever because the pandemic has hastened shoppers’ transition from brick-and-mortar to online retailers.
There has been a shift in the narrative with regards to suppliers. For a while, dropshippers relied heavily on Chinese online marketplaces as a source of goods. However, this strategy is no longer viable.
Since the dropshipping supply method can be easily established, competition has increased exponentially, and Chinese marketplaces sell products at B2C prices, reducing profit margins.
What is dropshipping: Suppliers
We get that it’s tempting to get your business off the ground by having AliExpress B2C resellers handle all of your order fulfillment, but be aware that doing so can lead to a number of issues.
Shipping Delays Many buyers have complained that AliExpress resellers have shipped their purchases slowly despite paying for the fastest shipping option.
Challenges in Product Sourcing The language barrier makes it difficult to source products on Chinese marketplaces like Alibaba and AliExpress, where few vendors possess functional English skills;
Low Quality of Purchased Items, with the Product pictured sometimes looking very different than what the customer receives;
Stop postponing your future and start a dropshipping business today!