In this technology-based shopping era, it is vital to know How to start a dropshipping business. Dropshipping, a modern business model that is swiftly taking over the internet. Fortunately, it is the JIT (Just In Time) that will save wholesalers and retailers post covid-19. Dropshipping is the future sure way to make money online for businesses. The brick and mortar model, also known as the traditional model of business, is now being replaced by online business.
Table of Contents
- How to start a dropshipping business
- Online companies involved with dropshipping merchants
Dropshipping is a program where sellers register with the big ecommerce platforms to increase their sales rate. Looking at E-commerce giants such as Amazon, Alibaba, Shopify, eBay, among others, you can tell that online business is winning. It is through these online businesses that drop shipping was born.
Drop shippers are the individuals or businesses that act on behalf of the customers. How to dropship for free may see like impossible mission. I can say it is not the case. Dropshipping for free is possible since you do not own any product. The owner, supplier or manufacturer is responsible for all products. Your role is to reach out to customers through marketing the products. They forward the customer’s order to the manufacturer, wholesaler, or supplier, makes the payment, and the seller ships the requested items to the consumer.
What is dropshipping?
From the perspective of a supplier, dropshipping is whereby a merchant advertises a product to consumers. Although they do not hold any inventory, they still earn from the sales made. Once a customer orders the products, in turn, the drop shipper makes the order for the item on the supplier’s website for them to deliver directly to the customer’s location
Reasons you should adopt dropshipping model
Knowing how to how to start a dropshipping business is vital. The existing e-commerce businesses are not only dealing directly with consumers but also supporting dropshippers. They stimulate sales for online sellers resulting in higher revenues. They operate using the customer order fulfillment model. A dropshipper does not hold any inventory of products but wholly rely on retail sellers and wholesalers for business. Without a supplier, they will not have any products to market to prospective buyers.
Online shops act as suppliers to dropshippers. These now have a sure way of making more money because of the large number of orders made by this new group of buyers. Therefore, traditional businesses should be willing to take their business online to enjoy the sales benefits that drop shippers are bringing.
Whether one is operating a wholesale or retail online business, there is lots of money to be earned from drop shippers, but first, the business should have an online platform. It is through the platform that drop shippers can identify the products on behalf of the customers and place the order. The more the number of drop shippers a retailer or wholesaler attracts, it is guaranteed that their bottom line will improve because of increased sales.
Factors that will attract dropshippers to your business
How to start a dropshipping business calls for consideration of various essential factors. A business needs to understand what dropshipping business is and how to engage dropshippers to increase value. What kind of suppliers interest drop shippers?
Product categories should be wide
Dropshipping merchants are attracted to suppliers that offer various products. The more products you have on your online shop, the more the number of drop shippers that will be attracted to your business and place their orders. Product variety means having different products within a specific product line. Wide product choice enhances the drop shippers’ experience.
Since dropshippers assume the responsibility of ordering the products that will satisfy their customers, this responsibility also entails providing customers with advice on products. Therefore, an extensive product range creates an opportunity to identify the best products for customers. The other reason the wide product range is attractive to drop shippers is that they serve customers with different tastes and preferences. Stocking variety offers them the convenience of getting all that customers need in one website.
Different varieties of a product may also be sold at different prices. Therefore, a drop shipper will have the opportunity to select the product category that is within the customer’s budget. Stocking a single type of product limits the drop shippers’ choice, and they will go to the competitor who is providing such an advantage.
It is good to understand how to start a dropshipping business to set competitive prices that spur you to success. The goal of every business is to make profits, and it is so even with dropshipping merchants. An online retailer or wholesaler has to set competitive prices to attract drop shippers. Wholesale prices are even more attractive because they allow the drop shipper to quote a reasonable higher price to the customer and make a profit. Therefore a business will make more money from drop shippers if it sells products to them at a fair price.
Sometimes the profit margin on items is too small, such that a drop shipper has to rely on volume to make substantial profits. Therefore, if they identify a seller who can sell to them at a lower price, their loyalty to this seller is assured. There is high competition in the market, and lower prices provide the business with a competitive advantage.
Reliable logistics services
The supplier is in charge of shipping the products ordered by a drop shipper to the customer. Under such circumstances, the supplier must offer reliable logistic services. The drop shipper merchant promises customers the timely delivery of the ordered products. Delays by the supplier to deliver the goods within the specified time may cause the drop shipper to lose the client. Therefore, a supplier needs to understand that drop shippers do not tolerate delays in the delivery of products to the customer’s location. Such an inconvenience may ruin the reputation of the dropshipping business. New customers make decisions based on the online reviews, and so, a business has to be reliable in shipping, or else, it will not attract drop shippers.
Providing reliable shipping requires the business to identify carriers that offer worldwide shipping options. The wider the logistics network, the higher the number of drop shippers that the online shop will attract. For example, an e-commerce platform like Amazon has many drop shippers because it can ship products globally.
Other factors to consider when planning for the carrier service include the carrier’s package size limit, rate, tracking tools, and policies. Drop shippers will be attracted to the supplier who is providing fair prices and can meet all their other logistics needs. The priority for drop shippers is to serve customers’ interests, and one of these interests is the fast delivery of products. Therefore the supplier has to partner with shipping companies that can provide quick shipping services. The supplier should also offer a return policy. Without a return policy, a drop shipper may have doubts about ordering products on behalf of their customers from such a business.
Online companies involved with dropshipping merchants
Amazon is one of the most recognized online companies in the world. At Amazon, everything is provided for you even if you do not how to start a dropshipping business. It is a business that has a vast number of suppliers that are based in various parts around the globe. The company gets products from the suppliers and manufacturers, they are store them in their warehouses and later ship to customers. Apart from dealing with direct customers, the number of Amazon drop shippers are also growing each day.
The reason that Amazon has many drop shippers is because of the many advantages this e-commerce offers:
Amazon has many suppliers– It is the reason it can offer a wide variety of products. Because of this, a drop shipper has an unlimited number of product categories to meet customers’ needs adequately. Amazon sells millions of products, and so it even attracts drop shippers that want to concentrate on various product from different product lines.
It offers the best prices– It is the key reason that Amazon is a supplier of choice for many drop shippers. Because of these low prices, drop shippers are assured of making profits by selling the product to the final consumer at a higher price. It has many suppliers providing identical products, thereby creating an opportunity to compare prices, and selects the seller with the lowest price
Fast and Cheap shipping-The The cost of shipping can be a hindrance to a customer purchasing products online. A business that engages in dropshipping has to ensure it charges customers low shipping cost is if it to succeed amidst the competition. Therefore, the low shipping rates offered by Amazon comes in handy. Additionally, it provides the benefit of fast shipping and customers that order goods through a drop shipper can get the ordered items the same day in a few days.
Payment terms- Amazon pays suppliers every two weeks. The suppliers that are registered in Amazon are sure of getting their pay after every 14 days.
Shopify is among the most versatile electronic commerce platforms today. it is good to understand how to start a dropshipping business on shopify since it is the first company to provide complete support to sellers. Businesses set up their online shop in this platform and sell their products directly to the final consumers. The sellers also make deliveries to customers for products bought through drop shippers. Currently, this platform has over one million users selling a variety of products.
What Shopify offers drop shippers
User-friendly interface- The Shopify platform is easy to use and allows the integration of various apps that can be helpful for dropshipping. It also allows for a registered online shop to carry out marketing engagements that contribute to attracting drop shippers to the business.
Reliability– Shopify is a reliable platform that ensures that prospective customers and even suppliers have access to the platform 24/7 to keep track of orders and deliveries. This is also a benefit to the drop shippers because they can adequately fulfill their responsibility to their customers. There are no system downtimes that may interfere with them placing an order with a particular supplier on behalf of a customer
Mobile responsiveness- The platform’s themes are mobile responsive, meaning that it is possible to create mobile-optimized stores on Shopify. It an added advantage to suppliers because it translates to increased accessibility to customers and drop shippers because many people use mobile phones today.
Easy and timely payment– Shopify offers convenience in paying and receiving payment. When registering, one has the opportunity to choose the payment mode they prefer. Once the supplier or drop shipper receives the payment from the customer for a product, the funds reflect almost immediately either in their bank account, PayPal, or any other mode.
Knowing how to start a dropshipping business on Alibaba is a renowned online market place that connects buyers and sellers. Wholesale businesses establish an online account on the Alibaba platform where they list the products they are selling. All the companies listed on the platform sell their products in wholesale. It is easy for the wholesalers to engage with drop shippers because there are no restrictions on their interaction or how the products are sold.
The benefits offered by Alibaba
Low prices for products-Alibaba suppliers sell their listed items in wholesale prices. Since the products are sold in bulk, it is also possible to negotiate the price. The low prices are an advantage to drop shippers because they can make more substantial profit margins from the orders made by their customers. Once the drop shipper has paid for the item, the supplier organizes for the delivery to the final consumer.
Customization– The platform allows for the buyer to make requests for customized products. It is one of the unique aspects of Alibaba. It is attracting drop shippers that are looking to purchase items that are developed according to the specifications of a customer.
Wide product range– Alibaba is an e-commerce platform that you are likely to get any item you may be looking for, whether it is machinery, foodstuffs, electronics, apparel, or any other product. The wide product range is because of the large number of suppliers that have registered on this platform. The variety of products benefits the drop shippers because they can access what the final customer needs easily. The purchases made by drop shippers contribute to growing the sales for the suppliers.
eBay presents a complete guide on how to start a dropshipping business. The e-commerce platform that allows business-to-consumer and consumer-to-consumer sales. eBay offers sellers, both small and large, with a platform with no restrictions to entry to entry that they can use to grow their businesses. The platform has over one billion listings, and it has over 170 million buyers. Among the buyers, there are drop shippers that act on behalf of buyers by making orders from the business or individual supplier, and expecting them to ship the item to the customer.
The reason eBay attracts dropshippers
The auction option– eBay is regarded as the leading online auction marketplace. The auctioning of products benefits the purchasers because they can quote a lower price than the market price. The drop shipper can quote a lower price than the amount the customer has paid them for the item.
Savings on shipping- eBay is an online company that provides its sellers with the benefit of savings on shipping. Sometimes they even offer more than 50 percent off. Since the drop shipper quotes the price of the item and the shipping fee to the customer, they can save some amount when the supplier asks for a lower amount to cover the shipping cost.
Oberlo combines the best technologies to bring together great resources to help start dropshipping business. Here, a dropshipper can find products to list in any platform, and start independent dropshipping business in few easy steps.
Advantages of using Oberlo
- Ease payment gateway integration
- Email marketing
- Product tracking
Is dropshipping legal
In this world, every sector has it own rules. When you intend to venture into any business online, you need to understand the requirements and the legal factors that you should abide to operate.
So, the question is; is dropshipping legal? The answer is YES. Dropshipping is a business that makes manufactures, wholesale traders to reach customers quickly. Ecommerce platforms have made this business to grow. It is currently the new approach that any manufacturer needs to adopt to avoid storage costs and other minor operational expenses. The dropshipping model is clear and interesting, meaning it is legal and profitable.