Ultimate Guide to Dropshipping

If you are considering starting your own business, then it is likely that you have heard about “dropshipping” several times already. Is it worth the risks? In a second, you’ll learn what dropshipping is, how to dropship, why it could be a good idea, but also what the risks are.

Let’s go!

What dropshipping is?

Dropshipping is an order fulfillment method that allows your business to sell products to the customer online without the need to rent any warehouses or offices.

How?

You would have to enter into an agreement with suppliers. Although the clients would order products through your website, the product would then be sent directly from the supplier to the client. It means that you wouldn’t have to worry about the shipping either.

Many people who don’t have much experience with e-commerce try to earn some money through dropshipping because it is less complicated than the traditional model. Dealing with the storing of the product, but also with the shipping, can be just too much hassle.

Okay, so what are the other reasons why so many people try their luck with dropshipping?

Low costs!

With the dropshipping, many of the costs that usually would be a part of running the business are eliminated. You don’t need offices; you don’t need warehouses, you don’t even need workers. All that you need is the internet connection and the website. It means that you could be managing your company from, well, anywhere.

The worst-case scenario?

Even if you discover that when it comes to the products that your business is selling, no one shares your enthusiasm, and there are far fewer clients than you’ve expected, it won’t be the end of the world. You are not storing the products in bulk; if no one orders the products through your website, you won’t be losing any money, apart from those spent to keep your website running.

It means that if you have an idea, that is risky, but that could potentially be a hit, then dropshipping could be the way to go. Sure, you might not earn a lot of money, but you won’t go bankrupt either.

Less hassle with shipping!

One of the crucial factors why people decide to choose this order fulfillment method is that they don’t have to worry about the shipping, though dropshipping offers also another advantage. The product goes straight from the supplier to the client, which means that the product itself will be traveling less. It means that the chance that it will get damaged is decreased.

Okay, but if everything about dropshipping is great, then why isn’t everyone choosing this method?

Well, there are several factors involved:

High-level competition

One of the reasons why many people discover that dropshipping might be just too hard for them is that it is a highly competitive industry. Even when it comes to really obscure niches, you are likely to find fierce competition.

Low-profit margins

You won’t be ordering the products in bulk, so the price that you’ll have to pay for the product will be higher. It means that you won’t earn as much money per product sold. On top of that, you’ll have to offer prices comparable to the ones of your competitors, which could additionally decrease how much money you earn.

You’re the one who is responsible!

If there is something wrong with the product, the customer will contact you, not the retailer. Sure, you are not responsible for the shipping, but the clients will buy the products from your website. It means that it is especially important to choose retailers that are trustworthy and reliable, or you will risk losing your customers.

No branding

Another issue that you’ll be facing if you decide to dropship is that it will be much harder for you to develop a relationship with your clients. In most cases, you won’t be able to influence the colors of the package or add something to the package. It means that improving your company’s image is going to be challenging.

Is dropshipping a good idea?

If you want to learn more about dropshipping, you are likely to encounter websites that will claim that dropshipping could make you rich, fast. Is it true? Well, it certainly could, but your business could fail as well. If you are careful, and don’t make any rash decisions, then sure, you might earn quite a sum, but don’t expect that it’s going to be either fast or easy. Otherwise, everyone would be doing it.