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What is dropship business? Is it worth to start?
Dropshipping is a retail order fulfillment method that does not require to manage inventory, keep products in stock with you. Instead, a third-party supplier will store the products and you can sell those in your platform.
Only thing required from you is, selecting a niche, finding a drop shipping supplier who sells similar product, integrate your platform with supplier’s platform, import products which they offer.
Whenever a customer checkout an order in your store, it automatically redirects to your supplier and they ship the order to the customer.
How to make profit from Dropshipping business?
When you import products from your supplier, you should add additional price and sell it. For example. If your supplier offering a dog belt for $3, you can sell this product for $5 from your store and you make profit of $2 each time when your customer buys that.
Make sure you set your product price including the efforts and money you put on to market your platform. I suggest don’t sell with too low profit margin or too higher. It should be reliable and competitive pricing, which in turn helps you to gain more customer’s trust.
What are all the pros and cons of Dropshipping business idea?
Let us first discuss about benefits or pros of dropshipping model.
#1 Very Less Capital Required:
The biggest advantage of drop ship business is, you can start it with few hundred dollars. You no need to spend thousands or millions of dollars.
#2 No Need to Manage Inventory:
Here you are not going to manufacture the product and ship it to your customer, so inventory is not at all required.
You are not required to invest money to manage inventory and supply chain. Everything will be handled by your supplier.
#3 Flexible Location:
What you need to run Dropshipping business is a laptop and flexible internet along with some $100-$500 dollars to build your online store. You don’t need an office or physical store to start this.
As your business grows, these expenses will likely increase but still it will be low compared to managing traditional brick-and-mortar businesses.
#4 Variety of Products to Sell:
Like any other stores, you no need to buy products from wholesalers or manufacturers, instead you can select and sell different types of products. You can list only those products which are available with your suppliers. Most of the dropshipping suppliers provide in-stock, out-of-stock information by an automated solution.
Even you can flip or add your products based on trending, you can always make more sales. But for this, your domain name and business name should be suitable to all type of niche products.
#5 Easy to scale and run the business:
By leveraging everything on your suppliers, you will be having less burden of work. By focusing on marketing and providing customer services, you can easily increase the sales growth.
Dropshipping is very easy to run and manage than a traditional business. All these benefits make dropshipping a very attractive model to both beginning and established merchants.
Unfortunately, dropshipping isn't works for all. Like all other business models even this model has disadvantages.
So, what are all those disadvantages or cons of dropshipping business?
#1 Low Profit Margins:
Because of many dropshippers selling same products, competition is very high. Some sellers are offering same product with less profit. Because of this, profit margin is very low. But you can overcome of this by selecting a niche that's well suited for dropshipping and providing a best customer service along with high quality website.
If customer returns product, you won’t get anything. Instead you will go in lose.
People usually search for fast delivery of products. If you not ship the order within a week. Chances are very high to lose customers. Most of the time, to gain customers trust, you have to spend more money on shipping. All these situations affect directly to your profit margin.
#2 Inventory Issues:
As you don’t own the products or handle shipping, it will become difficult to manage inventory and ship your products at right time to your customers.
If supplier stopped more selling and high profit margin niche product, you must work on some other niche product from scratch.
#3 Legal Issues:
Even though dropshipping is accepted in many countries, legal issues arises from supplier end. If you choose any supplier who are selling products illegally or don’t have proper licenses to supply overseas, it affects your business when it grows.
#4 Difficult to Build and Promote Brand:
Like any other retail business, building brand is very difficult. For each of your successful sale, credits go to someone else.
Whatever product you’re selling, your customers are going to focus mostly on the product’s brand and forget about the shopping experience entirely. They leave your platform if any other drop shipping merchant offering same product with less price.
Finally, is it Worth to start dropshipping business?
As I told you initially, dropshipping business isn’t perfect and on the other end, it’s stress-free way to build a successful ecommerce business. The model has some advantages but also it has number of complexities. You’ll need to address all those problems which may appear suddenly from suppliers.
Good thing is, with careful and proper planning, efforts and hard work, most of these problems can be resolved. If you, overcome with those difficulties, nothing can stop you to build a high quality and profitable dropshipping business.
From where you can start dropshipping business?
To start your first dropshipping business, you can easily find suppliers from AliExpress, Alibaba. Also, Shopify provides a great platform called oberlo.
Have more questions?
If you have any doubts or questions, you can write your queries in below comment box.