What is dropshipping
When deciding to open your own online store, you can use one of the available work schemes – setting up your own business by purchasing and reselling products for dropshipping. This scheme consists in transferring the tasks of storing goods and logistics operations to the supplier, while independently setting up the store and attracting customers.
This scheme includes a number of steps:
- Choosing a supplier, concluding a corresponding contract.
- Selecting goods from a supplier, setting a higher value on them in your own online store.
- Customers checkout in your store.
- Forward order information directly to supplier.
- Supplier sends products to buyer.
- Payment for goods and receipt of remuneration.
Therefore, to open a store and effective sales, you do not need to have your own production and warehouse facilities. Also all logistics and storage of products are handled directly by the supplier.
Benefits of Dropshipping
- Initial investment may be small. There is no need to purchase goods in bulk, payment can be made after the buyer’s payment. In addition, you do not need to invest your own funds in production, therefore, there are no risks associated with this issue.
- No need for storage space. In this case, you only need a computer and the Internet to promote a particular brand. The supplier prepares, packs, delivers the goods.
- It is entirely possible and even recommended to cooperate with several suppliers at once, of course, if there are no restrictions in the agreement. Also this makes it possible to increase the choice and attract more customers. There is no binding to a specific location – the store can be managed from anywhere.
Disadvantages of dropshipping
However, there are also some disadvantages:
- lack of control over all processes and the ability to influence cost, product availability, quality. Everything in this case depends solely on the supplier;
- risks to store reputation;
- profit may be lower than expected.
Despite the disadvantages presented, dropshipping is an excellent workflow for beginners with little money.
The seller should carefully choose a supplier company, since it is he who is responsible for the quality indicators of goods and their delivery to users. In the process of choosing a supplier, you should focus on the following aspects:
- Payments. You should inquire if there are any ongoing contributions. But mostly suppliers receive income from sales of the seller, in this regard, the need for additional expenses is eliminated.
- Real suppliers of goods. It is necessary to find out where the products are supplied from – from the manufacturer or reseller. The second option increases the markup. It is worth working directly with the manufacturer of the product.
- Availability of information about parcels. You should find out if the company places information about itself on the parcels. Naturally, you don’t need it. It should contain only the data of the online store.
In addition, you need to test the quality of service, the responsiveness of managers’ responses. A variety of delivery methods are desirable. You need to learn about all delivery methods, including working with courier services. Updating information about goods must be prompt. A reliable supplier regularly updates the product availability data and informs the seller of the slightest changes.