It can be equally nerve-wracking to figure out where to start with an online business and equally intimidating, especially when you think you don’t know what to do or where to start. But with dropshipping, you can dip your toes in the industry, with minimal risks and commitments but all the profits (at least in beginner’s terms).
We’re going to tell you what exactly is dropshipping and the 6 simple steps to starting out. After this, you can see just how easy it is and also where you can begin your journey!
What does dropshipping even mean?
It’s a business model that allows a seller to run an online store without having to care for a large inventory. Instead, as the seller, you have a catalog that your customers can browse through and when the customer chooses what to buy, only then do you order said product from your supplier/manufacturer to either be sent straight to the customer or, you first, and then the customer.
And that’s pretty much what a dropshipping business is and how it works. You are very much the middleman in this equation. The shorter your supply chain, the higher your margin@profit.
To recap, think of a dropshipping venture in its most basic form, a 3-step process:
- A customer orders a product from you (Product price = $10)
- You pay the supplier for the order (Wholesale price = $5)
- The supplier gets the product straight to the customer (Your profit = $5)
OR let’s say you have your own brand name for your site and you want to get it out there. You can get the supplier to ship the product to you first and then ship it to the customer yourself. But because you’ll be handling the shipping and packaging costs, your profit would be less.
Why consider a dropshipping business venture?
Dropshipping can be a great step to realizing your entrepreneurial aspirations or even as a side hustle. If you’re one without big enough capital to go big, limited ideas or creativity to make your own products, or you’re just a really big fan of a brand, then a dropship business model is definitely the way to go.
The benefits to dropshipping
Speaking of not having a big enough capital, that’s one of the many things you don’t have to worry about when starting a dropship business of your own. Here are several reasons why this business model is such a popular one:
1. Less upfront capital is required
The possibility to launch your own online business without having to invest thousands in initial costs is a superb up. You only have to cough up some cash to the supplier when a customer places an order. This also means you don’t have an inventory to clear out and with no inventory, there’s not really any notion of “breaking even” or “loss”.
2. Easy to start and easy to set up
In addition to not needing some large stocking up to do, you also need minimal infrastructure to get going. You don’t have to worry about things like;
- Paying for a warehouse
- Packing and shipping orders (unless you want to)
- Inventory tracking for accounting (obviously)
- Managing your stock level
3. Low costs to maintain
Overhead expenses are very low. Without all those initial things a traditional business would need, you can practically start anytime and anywhere.
4. Flexible run
And while we’re at it, yes, most dropship businesses are home-based, where the only office you have is wherever you want it to be. You’re your own boss with your own rules. If you have a stable internet connection and effective means to communicate with suppliers and customers, then you’re all set.
5. Wide selection of products for customers
Since there’s no pre-purchasing that you need to do, you’re not really set on a specific product type that you can sell. For instance, you can start your dropshipping with a general theme like music albums so you can sell albums from multiple artists or clothing and you can sell clothes from different brands. Or maybe you want to change things up entirely and follow the recent trends. Having wider product selections means having a wider customer reach.
6. Easier to experiment
This means that dropshipping can give you more leeway to try new things and test the market on what works and what doesn’t. You can try adding new product categories if you think they’ll sell and of course, buying a new product doesn’t tie you to a commitment to inventory.
7. Simpler management
Once you’ve secured a trusted and reliable supplier and have set up everything else that you need, you really are only left being responsible to manage your storefront/website and yourself. You don’t really need staff or to rent any warehouse space.
8. Easily scalable
Growing sales and popularity for your business will always come with some more work, but your entire business model doesn’t have to change much and stays more or less the same. You’ll have to put in more effort in sales and marketing, but infrastructure growth won’t skyrocket parallel to your growth.
The cons to dropshipping
However, like all things, a dropship business does have its downsides, which you as the seller should be prepared for mentally and financially. These include:
1. Low-profit margins
This is the biggest drawback to a dropshipping business and one you should be ready for. That’s not to say that you won’t ever see substantial profits, but if you’re selling in a highly competitive niche, expect slim margins to begin with. With low overhead costs, your competitors are also able to set equally low prices.
2. Lack of control over inventory issues and the supply chain
Whether or not products are in stock or there’s enough inventory, that’s entirely on the supplier’s side to handle. Fortunately, nowadays there are a handful of apps that can sync your business up with your suppliers so you’ll always be updated. How long the supply chain goes before it gets to you can also be an issue, as the longer it is the less money you make.
3. Limited brand building
Your brand name and logo will probably only go as far as your website and the wrapper around the actual product packaging before shipping (if you’re even willing to be the one shipping it). You’re selling another company’s brand and product after all. The only tangible branding for you is just through customer experience.
4. Shipping complexities
There’s a different supplier for every different item you have in your catalog, so expect varying shipping prices when getting to you and your customers, and thus a multitude of different pricing considerations. And that’s not even mentioning any issues on the supplier’s side.
5. Errors and quality control
This is where you’ll most probably get blamed for something that wasn’t your fault. Any mistakes that suppliers make with orders, or any unsatisfactory quality with items is entirely up to you to bear the brunt of customers’ frustrations. Again, not your fault. But you have to deal with it.
How to get started on a dropshipping business
Nonetheless, if you believe that the good of the dropshipping business model outweighs its downsides, then here’s how you can get started on your e-commerce dreams with dropshipping:
1. Choose a dropshipping business idea
What’s your niche? What type of products do you want to promote and help get to potential buyers? It can be anything that you think would sell or something that you’re really passionate about or a brand that you have experience with that you absolutely love and want to share that love with other people.
2. Do competitive research
By now, you’re bound to already find others that have similar product offers like you. So go online and search up the competition, study them, and see what you can offer to the table that they don’t. This is where you’ll start finding your value in the marketplace and how you’re the better option for customers.
3. Choose a dropshipping supplier
You’re going to need to find somewhere to get your supply for sales. This is the most essential part of your business. The internet is here to help you scan through potential suppliers and evaluate the best for you. Think about their reliability, communication, shipping, prices and item selections, which will overall give you the desired profit margins you’re aiming for.
4. Build your e-commerce store
You’ll be needing a place to sell and where your customers can browse what you sell. Setting up your online store is no hustle at all. You can opt for setting up shop on one (or multiple) of the many e-commerce platforms online. If you’re looking to build and set up your own website, then might we suggest Yezza – with only minutes needed to get going!
5. Market your dropshipping store
The thing about businesses is, that people won’t know if you don’t tell them. Spend some capital promoting your store and what you offer. Send emails, make social media posts, advertise on social media sites and Google, and optimize with SEO (Search Engine Optimization).
6. Analyze and improve your offering
See what works, see what doesn’t. See what sells and see which don’t. With the power of technology, it’s easier than ever to analyze your business, from your sales to your engagements with customers. And continuously improve your customer experience and that value we mentioned earlier, to your customers. One example is to integrate your business with an OMS.
Is dropshipping worth it?
ABSOLUTELY. Granted, you put in the work. Dropshipping isn’t entirely perfect or worry-free. But it does have its defining advantages. Careful planning and considerations will get you far in this line of work and reward you with those earnings you want.
Is dropshipping profitable?
It most definitely is. As a side hustle, it will bring you some respectable few extra hundreds in cash. This business model is flexible so making it a side hustle can get you introduced to the online business world slowly and with little hiccups.
And considering how flexible it can be, maybe one day you’ll move from part-time to full-time dropshipper. With enough income and sales and consumer support, you might just be a dropship entrepreneur in the future, with wider reach and bigger income!
Dropship your way to commercial success
If you have that itching ambition to start a business online but lack any serious experience in e-commerce, then dropshipping is a great introductory business model to help ease your way to professionalism.