If you’ve ever asked, “Is dropshipping right for me?”
I’d like to help.
There are people out there, who you’ve probably heard of, making hundreds of thousands of dollars from dropshipping.
And let’s face it, we could all use some more income.
But is it really true?
What have they done right? What did it cost them to start or get there?
And most importantly, should you do it?
I’ll be answering these questions to help you understand dropshipping. By the end, you should have a clearer idea of whether or not dropshipping is for you.
Let’s dive in, shall we?
What is Dropshipping?
Dropshipping is a model of business where you sell products without ever having to be in contact with or in possession of the products.
Dropshipping has two main methods: the manual method and the automated method. With the manual method, a customer would buy an item from you. You would manually create an order with a supplier, and have the purchased items sent to the customer.
The automated method works similarly except that when an order is placed by your customer, your software would automatically send the order to your supplier, and the supplier would send the items to your customer.
So while stores normally have the products in a storage facility or displayed on shelves for customers to pick out, you would not need to hold the product as an intermediary.
Sounds super easy right?
Let’s go into more detail on how it works, so we can see just how easy (or hard) it is…
How Does Dropshipping Work?
There are three major parties involved in dropshipping.
- The dropshipper (hopefully you if you decide to go through with it)
- The customer
- The supplier
As the dropshipper, you would need to have a platform where you showcase your products. This could be a website or a social media site where an audience can see the different products that you have on offer.
You also need to find suppliers to partner with for the product. This involves doing due diligence to pick a reliable supplier.
Remember, you will be very reliant on them to not only have good quality products, but also deliver them on time and in good condition.
Once you have pointed out the suppliers you want to work with, you then source clients.
You do this by marketing your platform or brand to get people to visit and potentially make a purchase.
When a client makes a purchase, the supplier then takes over.
This is a wholesaler or a manufacturer that has the products you would like to sell.
They get information about the client and their order from you as the dropshipper. And they proceed to package and ship the order to its recipient.
Depending on your agreement, the supplier/manufacturer can add your brand to the products sold through you. This makes it much easier to brand yourself and even get repeat clients.
If you have a different agreement, then the product will maintain the original company’s brand.
That makes it harder to have repeat customers, or achieve customer loyalty as they are loyal to the original brand and not your brand. But you can still work with this.
This could be a follower or a visitor on your platforms that decides to purchase from you.
Your aim as you create and grow your platforms is to encourage visitors to buy from you.
Now in case they have any complaints or want to return products, you would come in again.
It would be your job to handle complaints and returns. You would give them the details to have the product returned to the supplier and organize a refund if applicable.
You may also decide to simply send the customer a new product without having them return the one they have.
This depends on your return policy agreement with the supplier, the costs a return would incur, and what would be better customer service for your client.
Back to the platforms, let’s see what kind of platform you need to have to be a dropshipper.
Do I Need a Website for Dropshipping?
No, you don’t need to have a website for dropshipping.
You can use social media sites, like Instagram or Pinterest to sell products.
Some platforms like Facebook and Instagram also have a shop feature for people to view your products without having to leave the app.
So if you are thinking of starting dropshipping but don’t want to have a website, consider using social media platforms.
Having a website does have its perks, though. As we will see later on in ‘Dropshipping Through a Self-owned Website.’
But how much does it cost to start a dropshipping business?
Can I Start Dropshipping with No Money?
Yes, you can start a dropshipping business with no money. But, before you get too excited, let’s see what that would look like.
And if it’s feasible.
The platform for dropshipping can be one of many options.
And as we saw before, it doesn’t always need to be on a website.
Social Media for Dropshipping
If you opt to operate your dropshipping business through a social media site, it would cost you nothing but time and effort to set up.
Now getting buyers from the social media site may be done organically, or you could employ some paid marketing techniques, like Facebook Ads.
These get you a larger viewership and increase the likelihood of conversion into buyers.
But it would also cost you some money. Which then means dropshipping would not be free for you.
Dropshipping Through MarketPlaces
The second option for dropshipping is to use available marketplaces.
Here, you would create a site on a platform that already exists. You would then use their resources as well as their viewers as potential customers.
And there are numerous marketplaces that you can use. Here’s a quick list of some really good ones:
You would typically set up an account with the marketplace and list your products there.
Some, like Shopify, have more capabilities where you can build and launch an e-commerce website with a custom domain.
Shopify also offers a free trial period of 14 days. You can take advantage of this and start your dropshipping business for free. It’s also a great way to try it out with minimal risks before you invest your money in it.
Dropshipping Through a Self-owned Website
The last option is setting up a dropshipping business on your own website.
And this option does have its perks.
For instance, you own your site. Marketplaces like Amazony and social media sites like Facebook are owned by others.
You wouldn’t have much say over the layout and even some product listings.
Some sites could remove your products if they are in violation of their terms.
It may also be more affordable in the long run.
Marketplaces may take a percentage of your sales or charge you a monthly fee.
Your website has fixed charges independent of the sales you make.
You can build your website and install plugins like Woocommerce to help set up the eCommerce store.
You would have to get your audience from scratch, but that would mean that your audience is your own and not that of a third-party site like Etsy or Alibaba.
The costs for this, while present, are also very minimal.
Now with such little investment to start, dropshipping couldn’t really be that hard, could it?
- Shopify – An e-commerce website builder
- BigScoots – Web hosting (or content storage) for WordPress, Prestashop, Magento, and others that can be used to build an e-commerce website
How Hard is Dropshipping?
Like most low-cost businesses, you may need to put in a lot of time and effort for dropshipping.
That makes it more difficult to succeed.
Let’s look at some of the things you would be responsible for.
As a dropshipper, you would be:
- Dealing with suppliers. It’s your responsibility to ensure that they are paid and that they do the supplying.
- Handling the technical side of things, especially if you opt for using your own website. The website needs to be run smoothly, and products updated. The orders also need to be processed.
- Marketing the products. Even when you use a marketplace, you still need to market to people outside of the marketplace, promoting the products on social media sites, forums, and other channels. This takes time and effort.
- Customer service. You would be responsible for communicating with the customers and ensuring they have a great experience.
- Product returns. Whether the products are defective, have the wrong fitting or even just of bad quality, product returns often add to the tasks. You would need to process refunds where necessary, and have a new product delivered to the client.
These tasks take a lot of time but are worth it in your journey to growing your business and increase your income.
Pros and Cons of Dropshipping
Dropshipping has its pros and cons. Let’s see some of its good as well as its bad to help you see what you would be signing up for and if dropshipping really is for you.
- No inventory needed. You don’t hold any inventory as you only purchase an item that has found a buyer already.
- Low starting capital. Without inventory and manufacturing costs, the capital needed to start is very little.
- The packaging and transport are done for you. Your supplier does the delivery and the packaging.
- Power to choose a variety of products to sell. You are not limited to only a few items, and you can mix up items from different suppliers.
- Less likely to be affected by changing market trends. If a particular product stops being a people’s favorite, you can easily find a different product to sell.
- Great for testing the market without using lots of resources. You can try and sell a product to see how people react to it, before making any purchase on the product.
- Lots of time and effort to get it running and selling.
- High competition. Dropshipping is easy to start, especially with the low costs of starting. Naturally, quite a lot of people have gone into the business making it over-saturated, especially in some niches like sale of watches and electronics.
- Quality may not always be good. As a dropshipper, you rely on the supplier to manufacture products. They may not always manufacture the products with the quality you want. If you are not carefully choosing suppliers to work with, you may get some really cringy products.
- No control over the shipping and delivery. Again, you are at the mercy of your suppliers. The products may take a long time to get to the client. You need a good supplier to handle the delivery seamlessly.
- Lower Profit margins. Someone else is handling the manufacturing, packaging and delivery, which is added to the quote you get. You are also not buying the products in bulk, which means you won’t get the low prices that come with bulk buying. This reduces your profit margins.
With these pros and cons, you have a better idea of exactly what you would be signing up for with dropshipping. And if it’s worth your time.
Dropshipping is a pretty low-risk business model. You don’t need a lot of cash or expertise to start.
Once you decide to try it out, put in the time and effort to succeed. Stick around for more than just a few weeks to see if it will work.
And, you can start out as a drop shipper and then branch out into other things later. Like maybe start your own product line. So why not?
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