Dropshipping is a form of sales in which you do the entire process from product selection to sale, but skip shipping to the customer. so actually What is Dropshipping?? The following article will help you better understand Dropshipping to have a really right direction for you.
Depending on the Dropship model chosen, the customer shipping task will be assigned to the manufacturer, product supplier (suppliers) or warehouse (warehouse). These parties accept the Dropshipping model and work with you through a platform or they can communicate directly through means such as phone, message, social media… customers at retail prices. You will profit from the difference between the wholesale price and the retail price.
To ease your imagination, here is an example of how a Dropship order works:
- You find customers and customers buy on your site for 300 USD.
- You place an order and trade with a supplier for $ 200.
- This supplier will package the product and ship it to the customer with their information. So you have earned 100 USD profit for yourself.
This is the most basic Dropshipping operating model. Your customers only know that you are the only supplier of the product to them. Currently, several platforms to support the Dropshipping model were created to facilitate the technology of the implementation process of this business model.
Review the pros and cons of Dropshipping
Dropshipping is one of the online profit models that are gradually gaining popularity in the market. However, before deciding to join this business model, you should consider its pros and cons to weigh your options.
Dropship is currently getting a lot of attention from people thanks to the benefits it brings to participants.
Doesn't require a lot of capital to get started
If you run a traditional business, you will have to invest some money for storage. However, with the Dropshipping model, you can start making money online without having to spend a lot of capital and worry about importing goods that lead to inventory. You don't need to buy the product unless you've already made a sale and the customer has made the payment. Since there is no need to worry about inventory issues, you can start this potential business with very little capital.
By eliminating the problem of warehousing and warehouse management, the cost of running your business will be quite low. You can set up a home office with just a computer with an internet connection. The cost you have to spend in a month can be less than 100 USD. If you expand your business model, this cost will likely increase. However, overall, this is still a relatively low rate compared to other types of traditional businesses.
Freedom in terms of time and workspace
With an internet-connected device, you can work wherever and whenever you want. Dropshipping does not limit your working space and time. As long as you maintain easy communication with customers and suppliers, you can start your work right away.
Actively find suppliers and select products
The business market is large, diverse with many niches, products and items to choose from. You can actively choose and contact the desired supplier. Also, upload your supplier's product catalog to your website for free without having to spend money on the products you sell.
Simplify business processes
With Dropship, you don't have to deal with issues related to physical goods. That means you can skip the steps of managing and paying for the warehouse, packing and shipping, tracking and managing inventory, or handling related paperwork… So the business process Your business is much simpler.
Generate steady income and easily expand market size
The order processing tasks are handled by the supplier, so the Dropship sales model allows you to increase your sales and increase sales with less effort and money. Did you know that with a traditional online business model, you will have to deal with more work, particularly customer-related issues, in order for revenue to grow. However, if you apply the Dropship model, everything is relative and it is much easier to scale for better profits.
With the above attractive advantages, Dropship is becoming a business model that attracts many participants. Even for long-time traders in the market, there is no denying the appeal of this type of business model.
In addition to the advantages that Dropshipping brings, this business form also has some limitations that you need to consider before getting started.
Compared to other online business models on the market, the level of profit that Dropship brings requires high competition. You can easily start a business and create your own brand with just a small investment. Low costs can lead to lower quality and lower site quality. This makes it difficult for customers to come and buy products from you, and customers will weigh and compare the price you offer. This is the cause of your profit reduction. However, you can completely choose the right Dropship form to minimize this situation.
Inventory and shipping issues
While you'll skip shipping and don't need to invest in inventory, that doesn't mean you're not responsible for the problem. In fact, if you have many different sources of supplies and goods in large quantities, it will be difficult to track and synchronize your orders. Fortunately, your provider can support your technology platform, but if not, you'll need to perform these tasks manually.
Furthermore, the issue of shipping costs is also a dilemma. If customers place an order with many products from different suppliers, it will be difficult for you to ask customers to pay for each product because customer psychology often sees this as your responsibility. And if you have already charged fees, calculating multiple costs at the same time will cause you a lot of difficulties.
Responsible for vendor errors
Although you are not the person who provides products directly to customers, you are actually responsible for customer-related issues. The quality of the product will depend on the supplier, so you cannot control it. Low-quality products from unscrupulous manufacturers can damage your brand.
Furthermore, many of the best suppliers still make mistakes when packaging and shipping products to customers. Problems with bad packaging, damage or loss of goods… are your sole responsibility. At this point, you have to be the one to apologize and correct the incident.
Is Dropshipping For You?
Dropshipping is a form of online business that is not demanding on participants. Anyone who wants to choose a potential way to make money online can start with this model. However, like some other forms of online business, Dropship also has certain requirements for participants.
Before starting a business with this model, you need to prepare a solid foundation of Digital Marketing and a certain entrepreneurial mindset. You don't have to finish your studies to start working, but you can study and work at the same time to accumulate more experience.
In fact, Dropship still requires a certain capital of at least 100 USD for you to start a business. This money is not used to import goods, but it is the budget you need to use when making a website, running ads or paying for some online services…
Consider all aspects to see if you are really suitable for this type of business. If you're still in doubt, the advice for you is to get started right away. With a model that requires little capital but is full of profit potential, you should definitely give it a try. Who knows, maybe you will find a suitable investment environment where you can earn a steady income every month?
Dropship is a potential model of making money online, but it still comes with some pretty complicated issues that you need to consider before you get started. Build a clear business strategy and outline the issues you might face and how to solve them so that nothing gets in the way of your business branding.