What Does Drop Shipping Mean?
There are a lot of ways to making money online, affiliate marketing, selling courses, creating websites and many more. One on the growing ways to making extra income online is drop shipping. What does drop shipping means? To put it simply selling products online for a markup price. Product are sold are sold by a third party and the seller doesn’t make any of these items. Sellers uses a variety of wholesalers of product placement.
So you as a drop shipper find products for sell and match customers that want those products. Acting as a go between is how the drop shipping marketplace works. Furthermore the application of a business model is not always as easy as the business theory. Like any business there is a learning curve. Learning the basics and understanding that you might not have overnight success is important.
What does drop shipping means according to wikipedia:
Drop shipping is a supply chain management technique in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to either the manufacturer or a wholesaler, who then ships the goods directly to the customer.
We have a good understand of what it means to drop ship, what do drop shipping experts say. Lets take a look at some of the opinions of successful dropshippers.
Is Drop Shipping worth it? Some Experts answer this Question.
Darius Grigorjevas
Head Customer Success @ Hostinger.com
Twitter:@Darius_Grig
Dropshipping is a model that lets a retailer, in this case, you, sell products to a customer without you needing to have an inventory and keeping it in stock. You have agreements with wholesalers, and according to them, you sell their products, while they deliver it to your customer under your name. You gain income from selling that product at a higher price while buying it at a wholesale price.
In the simplest way, we could narrow down the process of dropshipping like this:
A client visits your e-store, sees a product he likes, orders it. Once you have been paid – depending whenever you have everything automated, or you do it yourself, you approve the order and have the manufacturer or wholesaler deliver the product to your customer under your name.
Why dropshipping?
The reason behind its popularity lies behind the advantages it has to offer, such as:
- Sell what you want. It’s up to you to choose what you want to sell as long as your chosen wholesaler provides that product.
- No inventory needed. Your wholesaler sends the product straight to the customer. You don’t need to have a warehouse where you should keep your products.
- Work from anywhere, anytime. As long as you have an internet connection and a computer, you can work whenever you wish to work.
- Low starting costs. There are barely any expenses when starting a dropshipping business. Things you are going to need are a computer, internet, an e-commerce website, and hosting provider
to have your website online. - Easy to enter the market. Anyone can enter the market by having an idea and wishing to make it come true. Since all you need to do is create an e-store, find wholesalers and start selling their products, with some understanding, anyone can do it.
- No concerns regarding shipping. Since your wholesaler takes care of packaging and sending the item to your customer under your name, you don’t have to worry about doing so.
- Passive income. Even though at the start it will take lots of time to market yourself, it will get easier once you set yourself up. Marketing will take less time, and you will be able to make sales even when sleeping.
Should you choose Dropshipping?
Dropshipping is for those who are interested in the industry and to those who wish to start their own business. If you can relate to these qualities – this can be a great start. To help you decide if you should go with this model or not, here are some essential facts you need to be aware of:
Things you control:
- Your schedule. It’s up to you to decide how much time and when will you spend on your store. However, the time you spend on your store will be reflected in the results.
- Products you sell. The freedom is all yours to choose what you want to sell and who will be your wholesaler.
- Ways of marketing. None controls how you should market your store. Be it by contacting influencers or ordering ads – it all depends solely on you.
Things you don’t control:
- Your supplier. If your supplier stops producing the item, either you will need to search for a substitution or delete the item from your store.
- The quality of the product. Since throughout the entire dropshipping process you don’t get to see the product, you can’t double-check and know exactly what your customer will get. Since the customer isn’t aware of a third party, the reviews will be up to you to handle.
- Shipping time. Since you don’t handle packaging and shipping, you can’t set the exact date of product arrival yourself.
All of these things can quickly be learned online and through your own experience, therefore as long as it’s something you are interested in, you won’t feel stressed managing it.
In the end, dropshipping attracts lots of people since you don’t need to have a warehouse full of items you want to sell. You also get to have complete freedom of what kind of business you want to start. As long as you are passionate about the matter and have enough patience to help your customers and respond to their reviews, you are going to have a booming business with this model.
That is dropshipping. Now it’s up to you to decide if you want to join the ride. For more you can follow Darius on twitter link bio.
eCommerce Store Owner & eCommerce Mentor
In essence, this is the core of what drop shipping is. It’s selling an item that you don’t own before you have possession of it and then giving me get me the item at an agreed upon time.
Is Drop shipping a great way to start a business? Absolutely.
Is it a great way a business relatively cheaply and easy to start? Yes! (Maybe this Drop shipping thing is for you after all!)
But…
Are you looking to become a millionaire overnight?
Are you looking to product instant cashflow?
Then you may want to rethink things.
I wish I could tell you otherwise, but it’s hard. Like any other business, you need to learn drop shipping and learn it well. If you’re able to learn the tactics and strategies of running a well run store (s), there is no reason why you can’t make it into a viable business for yourself. But let’s take a step back.
Whether you want to sell leggings, other fitness products, magnetic eyelashes, drones, posture correctors, indestructible shoes, or whatever, dropshipping is a great way to start testing if you can sell any product.
For example, tomorrow you wake up and decide that you want to explore new ways to make some supplemental income that may one day replace the income from your day-to-day job. You decide that you want to sell real products. Not e-books or videos, but real products (physical products) that people will receive and use.
A great way to test if you would be able to sell product is to dropship.
So, to continue our example… You decide on selling a pair of leggings that you found from China. You notice that they have great reviews and that the supplier has great ratings. Conveniently, you will not have to order until you sell units. On the other hand, if you were to use a traditional retail method of selling, you would have to order a minimum order quantity (MOQ) and find a place to warehouse those leggings and find a way to fulfill the orders.
We now have a great and relatively low risk strategy. We do not have to worry about purchasing inventory, warehousing it, shipping it (While we do have to make sure that things are running smoothly, we do not have to worry about getting the items to the ultimate destination.)
So you decided on a product, what now? Now that we chosen a product we have to decide how we are going to sell it. There are many options. One of the them is just to list it on Amazon. However, when listing drop shipping products on marketplaces like Amazon or eBay, you’re immediately competing with lots of other vendors who may already have inventory and may have systems in place to ship rapidly at much lower prices.
Product Lead, media @ Shopify
Twitter: @W_RyanSmith
Drop Shipping is a fulfillment method in retail where a store does not keep the products it sells in stock. Instead, products are stored by the product supplier. When a customer makes a purchase from the store, the supplier then fulfills the order directly to the customer, which means the store owner never sees the physical product.
Unlike traditional retail, dropshipping allows merchants to sell products without ever holding any stock or inventory themselves. Third-party suppliers fulfill all orders for the merchants.
Pros
Little to no initial investment
With dropshipping, you only pay for what you sell. This means that starting an online store could potentially cost as little as $30, or whatever price an e-commerce platform charges for users. Naturally, this opens the floodgates for virtually anyone to begin an online store and dropship their products.
Simplicity
Running an online store is simple with dropshipping. No need to worry about handling physical products, ordering shipping labels, or fulfilling your own orders. It essentially eliminates the accounting experience needed to run store that stocks its own inventory, leaving you with more time to focus on marketing and building your brand.
Product variety
Almost any physical product you can imagine is available for dropshipping. Home goods, toys, apparel and jewelry are just a few of the categories that product suppliers offer to online stores. You can sell a wide selection of products on your online store with dropshipping, or focus on a specific niche.
Cons
Low margins
The biggest detriment to dropshipping is the relatively low margin potential. With starting an online store becoming very easy through dropshipping, many merchants start online stores and sell products at the lowest prices possible to turn a profit. While it’s great to see e-commerce open up to many different people, many markets and niches have become saturated with stores selling similar products at the same prices, which can make it difficult to sell online.
However, managing inventory yourself can easily kill potential margin gain. This is what drives many merchants to dropship their products. Handling your own inventory is a complex, never-ending battle that takes a lot of time. Unless you have the capital and experience, it isn’t the most efficient option.
Supplier error
As a dropshipper, you are effectively handing over all shipping responsibilities to your product suppliers. This means that order processing, shipping, and fulfillment all fall on the shoulders of the supplier. However, if there are any issues, customers will blame the merchant who sells the product, creating a great risk for any merchants who do not choose reliable suppliers.
Lack of inventory control
When you manage your own inventory and products, it’s fairly simple to keep track of items that are in and out of stock. With dropshipping, you are handing over control of inventory to the suppliers. Inexperienced suppliers will have trouble communicating to you which products are out of stock or low on stock. Failing to maintain communication between merchant and supplier can lead to unfulfilled orders and angry customers.
What is Dropshipping?