Imagine a business model where all you have to do is create an ecommerce brand and focus on selling stuff while a third party handles the inventory, shipping and fulfilment.
You don’t pay for the product until the customer places an order for it.
Dropshipping is an online business model with probably the least barriers to entry which attracts novices and professionals alike to select a niche, create a brand, market, and make money.
If you’re new to this arena of online business and wants to know more about what is dropshipping, how dropshipping works, and how you can start a dropshipping business in 2019, you’re at the right place. Here’s a complete guide explaining everything about the dropshipping business model.
What Is Dropshipping?
Dropshipping is an online business model based on an order fulfilment strategy where the merchant sells a product under his own brand but doesn’t keep an inventory or handle the shipping and fulfilment of the product. Rather, he purchases the product from the third party as soon as a customer makes a purchase and makes them ship directly to the customer.
An example of a drop shipping website could be an ecommerce store dealing in drones and drone accessories. The store takes the orders under its own brand but the actual shipping is carried by Aliexpress.
Benefits Of Dropshipping
A dropshipping store looks exactly like any other traditional ecommerce store but doesn’t bear all the risks involved in running an e-commerce store.
Dropshipping Is Easy To Start, Manage, & Grow
To start a profitable dropshipping business, all you need to do is to find a profitable and not-so-competitive niche, a good supplier, a website and some marketing skills. You don’t require a warehouse to store the items or partnerships with the delivery companies to handle the fulfilment. All that is done by the supplier you’ll order from.
Dropshipping Involves Very Less Investment
Most of the investment a dropshipping store requires is in the form of marketing and branding. This investment is just a proportion of what a full-fledged ecommerce store that also handles fulfilment requires.
Location Of The Merchant Doesn’t Affect The Business
You could be sitting in your apartment in India while your customers from the US order the products which will be fulfilled from China. Your location doesn’t really matter as you don’t handle the delivery.
Merchant Doesn’t Have To Deal With The Unsold Inventory
As you don’t have to deal with the actual product, there’s no stress on how to deal with the unsold inventory.
Dropshipping Involves Very Less Losses
Even if your dropshipping business fails to get traction and more sales, you won’t suffer much loss as there was not much investment in the first place.
How Dropshipping works?
The dropshipping process is very easy to understand. You’ve already gotten an overview of how dropshipping works, but here’s a detailed explanation for you to get a better understanding and launch your own dropshipping store.
Dropshipping Business Model
The dropshipping business model can be divided into two segments –
The front-end: the front-end is how things look to the customer. He sees your store like any other niche ecommerce store and orders the products he likes at a price set by you. After a few hours or days, he receives a notification that his order has been shipped. The notification also includes the tracking information which lets him track the order just like with any other ecommerce website.
The back-end: As soon as the customer orders the product, you purchase the same from the supplier and ask him to ship directly to the customer. The customer never gets to know about the fulfilment process as he gets the same experience like that with a traditional ecommerce store.
How to Start A Dropshipping Business In 2019?
Even though drop shipping isn’t a new business model, there are ways to profit from it in 2019. Here’s a guide to help you pave your way in this new online ecosystem.
Create A Website
Your website is how you’ll interact with your buyers. Yes, social media pages do help with the same. But a website will increase the buyers’ trust which eventually will lead to more sales. We suggest you create a website using Shopify as it’ll come with Oberlo which is a tool designed especially for drop shipping and will minimize the efforts required from your end.
Here’s an article we wrote on how you can create a website for your startup.
Find A Profitable Niche & Products
This is one of the hardest parts of starting a dropshipping business but if planned right, this could result in unbelievable profits. Start by looking out what’s trending on –
- Google Trends
- Instagram (check the ads)
Some niches you can look for are –
- Accessory-heavy niches like laptops, phones, drones, etc. so you can target the accessory micro-niche and pave your way through.
- Accessory-heavy hobbies like golf, biking, etc. where you can target their passion and or problem.
- Products that are innovative and hard to find locally.
Once you’ve found a trending niche, start searching for the products that are within the $100-$200 range. It’s the ecommerce “sweet spot” as it’s large enough for good profits and small enough that customers won’t require to personally speak with someone before making the purchase.
Find A Trustable Supplier
If you’ve created your dropshipping website with Shopify and Oberlo, you don’t need to do much but search Oberlo for the product you’ve just found and the tool will take care of the rest.
But if you’ve chosen WordPress or any other CMS to create your website or any other CMS, here’s a list of best dropshippers to choose from –
- Sunrise Wholesale
Add Your Products
Once you’ve selected your products and the supplier, list the products on your website at around a 30% profit margin. Write your own description and avoid copying from the seller’s website. Draft it in a way that it complements your marketing strategy.
Market Your Store
Dropshipping business requires aggressive marketing strategies. You need to target your audience on Google (choose the appropriate keywords for the advertisements), Facebook (use Facebook Pixel for remarketing too), and other social media networks properly and develop a personalised advertisement for better conversions.
We suggest creating a video showcasing the product benefits for your advertisements as video ads get better results. You can also use social validation strategies like comments, reviews, ratings, and testimonials to gain the trust of your prospective customers.
Go On, Tell Us What You Think!
Did we miss something? Come on! Tell us what you think about our article on how dropshipping works in the comments section.
A startup consultant, digital marketer, traveller, and philomath. Aashish has worked with over 20 startups and successfully helped them ideate, raise money, and succeed. When not working, he can be found hiking, camping, and stargazing.
Great article – just a quick question. When, as a drop-shipper, I purchase goods from a supplier at wholesale price, would I be forced to buy bulk, or can I buy individual items (as the orders come in at the store) but at a higher rate?
That’s the best part about dropshipping. You can buy single goods at wholesale price from marketplaces like Aliexpress.
Thanks for you sharing the article.
Hi. Just a question. If the item is delivered directly by the supplier, how do I attach an official receipt along with the item?
The supplier and the seller have a deal where the supplier attaches the official receipt on behalf of the seller. The products and the labels are white-label (no-brand) usually. But you can have a word with the supplier and ask him to use your brand logo on the receipt. Many would not reject your request.
Thank you very much!