What is Dropshipping?

What is Dropshipping?

Drop shipping is a fulfillment method that enables a store to sell products without keeping them in stock. The store instead purchases the product from a third-party supplier, and then has it shipped directly to the customer. The seller does not have to deal with the product directly.

Drop shipping is different from standard retail in that the seller doesn’t own or stock inventory. To fulfill orders, the seller buys inventory from third parties such as wholesalers or manufacturers.

What is dropshipping on Shopify?

Drop shipping on Shoplift is possible in two ways: Find a supplier in North America or elsewhere in the world using supplier databases, and then find a Shopify App that connects your store with thousands of suppliers.

Lobber is a marketplace created by Shoplift to help independent business owners sell products. Lobber allows you to browse Ali Express, import the products that interest you directly to Lobber with a click of a button.

Lobber will allow you to fulfill a customer’s order once they have purchased a product. Lobber makes this easy by automating the process. All you need to do as a store owner is verify the details and then click the “order” button. The product will then be sent directly from the Drop shipping supplier, to the customer, wherever they might be.

Dropshipping has many benefits

Drop shipping is an excellent business model that aspiring entrepreneurs can start with. It’s easy to set up. Drop shipping allows you to quickly test out different business models. This gives you the opportunity to learn more about how to market high-demand products. Drop shipping is a very popular business model.

1. You need less capital

Drop shipping has the greatest advantage of all. You don’t have to invest thousands in inventory upfront. Traditional retailers had to invest large amounts of capital in order to purchase inventory.

Drop shipping is a model that allows you to sell products without having to buy them. It’s possible to source products quickly and start a profitable Drop shipping company without large inventory investments. Drop shipping is less risky than traditional retail businesses because you don’t have to sell inventory up front.

2. It’s easy to get started

Drop shipping makes it easier to run an eCommerce store. Drop shipping takes out the hassle of:

    • Management of a warehouse or payment
    • Shipping and packing your order
    • Accounting reasons: Inventory tracking
    • Returns and Inbound Shipments:
    • Continue to order products and manage stock levels

3. Low overhead

Your overhead costs are very low because you don’t need to manage a warehouse or purchase inventory. Drop shipping is a home-based business that requires little more than a computer and some recurring expenses. These costs will increase as you grow but they will remain low when compared to traditional brick-and mortar businesses.

4. Flexible location

Drop shipping can be operated from almost anywhere that has an internet connection. You can manage and run your business as long as you are able to communicate easily with customers and suppliers.

5. Large selection of products available

You don’t need to pre-purchase items that you are selling so you can offer a variety of trendy products to potential customers. You can list an item for free if it is in stock by suppliers.

6. It’s easier to test

Drop shipping can be a great fulfillment option for businesses looking to launch new stores or test customers’ appetites for new product categories. Drop-shipping offers the opportunity to list and possibly sell products without having to commit to purchasing large quantities of inventory.

7. Scaling up is easier

If you have a traditional retail store, you will need to do three times the work if you get three times as many orders. Leveraging drop shipping providers will allow you to grow with less growing pains.

Sales growth is always a challenge, especially in customer support. However drop shipping scale businesses do better than traditional eCommerce companies.

Dropshipping has its disadvantages

Drop-shipping offers all the advantages we have mentioned, making it a great option for anyone looking to start an online shop or expand their product range. Drop shipping comes with its own set of disadvantages. Drop shipping is a convenient and flexible way to sell your products, but it comes with a cost. These are some of the drawbacks to be aware of.

1. Low margins

Operating in the highly competitive drop shipping market has its disadvantages. It’s easy to start and there are minimal overhead costs, so many competitors will open shops and sell products at low prices to increase their revenue. They can operate with very small margins because they have invested so little to get the business started. Your margins on this sales channel will be lower if you also start drop shipping from Amazon.

These sellers typically have poor websites and customer service. This can be a way to distinguish your business. Customers will still compare your prices with theirs, however. The potential profit margins of niches will be affected by increased competition. You can mitigate this problem by choosing a niche/vertical well-suited to drop shipping. In Chapter 4, we’ll show you how to do this.

2. Issues with inventory

It’s easy to track inventory if you have all of your products in stock. However, inventory can change daily when you source from multiple warehouses that are also fulfilling orders for merchants. There are now a few apps that allow you to sync with suppliers. Dropshippers can easily “pass on” orders to suppliers with just a few clicks. They should also be able see in real time how much inventory their supplier has.

Lobber allows merchants to automate actions when stock levels reach zero. You can, for example, unpublished a product if it is not in stock. Or keep it published, but set the quantity to zero.

3. Shipping complications

Drop-shippers often work with multiple suppliers. This means that the products you sell online will be procured from a variety of drop-shippers. This can increase shipping costs.

Let’s suppose a customer orders three items. Each item is only available from one supplier. Although you will incur separate shipping costs for each item, it is probably not wise to pass these charges on to the customer. Even if it makes sense to include these costs, automating the calculations can prove difficult.

4. Supplier errors

Did you ever feel like you were being blamed for something you didn’t do? But you had to take responsibility anyway.

Even the most reliable drop-shipping suppliers can make mistakes in fulfilling orders. Low-quality and mediocre suppliers can cause frustration and damage to your business by missing products, botched shipments and poor packing.

5. Branding and customization are limited

Drop shipping is not like custom-made products and print upon demand. You don’t have much control over the product. Drop shipping is usually done by the supplier.

Although some Alibaba drop shipping suppliers are able to accommodate your business’s product modifications, it is up to the supplier to have the greatest control over the product. To make the product viable and cost-effective, any changes or additions must be made to it.

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