Drop shipping

What is Drop Shipping ?

Drop shipping is a business model where a seller doesn't keep any inventory of the products they sell. Instead, when an order is placed, the seller purchases the product from a third-party supplier who ships the product directly to the customer. This allows the seller to avoid the upfront costs of buying inventory and managing a warehouse, and instead focus on marketing and sales.

The seller sets their own price for the product, which is typically higher than the price they pay the supplier, allowing them to make a profit. However, because the seller is not handling the inventory themselves, they have less control over the quality of the product and the speed of shipping.

Drop shipping can be done through online marketplaces like Amazon and eBay, or through a standalone website. It can be a good option for entrepreneurs who want to start an online business with low upfront costs, but it also has its challenges, such as finding reliable suppliers, managing customer service, and competing with other sellers who may be offering the same products.

How drop shipping works

Drop shipping works as follows:

The seller sets up an online store or marketplace and lists products from a supplier that they have an agreement with.

The customer browses the seller's store, chooses a product to purchase, and places an order by paying the seller.

The seller receives the order and payment, then passes the order details to the supplier, including the customer's shipping address.

The supplier then picks, packs, and ships the product directly to the customer on behalf of the seller.

The seller keeps the difference between the price they sold the product for and the cost they paid the supplier.

The customer receives the product and the seller handles any necessary customer service issues.

In this way, the seller doesn't hold any inventory or physically handle the product. Instead, they act as a middleman between the customer and the supplier, taking care of the marketing, sales, and customer service aspects of the business while the supplier takes care of the fulfilment and shipping. The seller's profit comes from the markup they add to the product's price, minus any fees associated with the payment gateway and the online store or marketplace they use.

There are several drop shipping websites available that offer products from various suppliers, making it easier for sellers to find products to sell without having to negotiate with suppliers individually. Here are a few examples:

AliExpress: AliExpress is a popular online marketplace that allows sellers to purchase products directly from Chinese manufacturers and wholesalers. The website offers a wide range of products, from electronics to clothing and accessories, at competitive prices.

SaleHoo: SaleHoo is a drop shipping platform that connects sellers with verified suppliers from around the world. The website offers access to over 2.5 million products from over 8,000 suppliers, along with training and support for new and experienced sellers.

Oberlo: Oberlo is a drop shipping app that works with the Shopify e-commerce platform. The app allows sellers to import products from AliExpress directly into their Shopify store and automate the fulfilment process.

Doba: Doba is a drop shipping platform that offers access to over 2 million products from 200 suppliers. The website offers tools for product research, order management, and inventory tracking, along with training and support for new and experienced sellers.

Wholesale Central: Wholesale Central is a directory of wholesale suppliers and drop shippers. The website offers access to thousands of products from over 1,400 suppliers, along with tools for product research and comparison.

These are just a few examples of drop shipping websites available to sellers. It's important to do your research and compare the features, fees, and products offered by different platforms to find the best fit for your business.

HOW TO EARN WITH DROP SHIPPING

To earn from drop shipping, you need to follow these steps:

Choose a niche: Start by researching and selecting a niche that you're passionate about and has a high demand for products.

Find suppliers: Identify suppliers who offer products that fit your niche and have a good reputation for quality and reliability. You can find suppliers through online marketplaces, directories, or by contacting manufacturers directly.

Create an online store: Set up an online store using an e-commerce platform like Shopify, WooCommerce, or BigCommerce. You can also use a marketplace like Amazon or eBay to sell your products.

List products: Add the products you want to sell to your store, including descriptions, images, and pricing. Make sure to set your prices high enough to cover the cost of the product, shipping, and any other expenses, and still leave you with a profit.

Promote your store: Use social media, search engine optimisation (SEO), email marketing, and other strategies to drive traffic to your store and generate sales.

Fulfil orders: When a customer places an order, forward the order details to your supplier, who will handle the fulfilment and shipping directly to the customer.

Handle customer service: Be available to handle any customer service issues, such as returns, refunds, or exchanges.

Monitor performance: Keep track of your sales, expenses, and profits to ensure that your business is profitable and make any necessary adjustments to your pricing, marketing, or product offerings.

By following these steps, you can earn a profit from drop shipping. It's important to remember that drop shipping requires hard work and dedication, as well as ongoing research and management of your store and suppliers to ensure a successful and profitable business.

Drop shipping has its advantages and disadvantages, and it's important to consider both before starting a drop shipping business. Here are some of the pros and cons of drop shipping:

The Good:

Low startup costs: Drop shipping requires very little capital investment upfront, as there is no need to purchase inventory, rent a warehouse or hire staff.

Wide product selection: With access to millions of products from multiple suppliers, drop shippers can easily offer a wide variety of products to their customers.

Flexible location: As long as you have an internet connection, you can run a drop shipping business from anywhere in the world.

Scalability: Drop shipping allows you to easily scale your business up or down depending on demand, without the constraints of managing inventory and warehouse space.

Low risk: With no inventory to manage, there is no risk of being stuck with unsold products, which can be a significant cost for traditional retail businesses.

The Bad:

Lower profit margins: As a middleman between the supplier and the customer, drop shippers make a smaller profit per sale than if they were buying and selling the products themselves.

Limited control over products: As a drop shipper, you have limited control over the quality of the products, shipping times, and customer service provided by your suppliers.

Fulfillment issues: Drop shipping relies on your suppliers to fulfill and ship the products, and any delays or mistakes can reflect poorly on your business.

Competitive market: Drop shipping has become increasingly popular, and as a result, the market can be highly competitive, making it difficult to stand out from other sellers.

Customer service challenges: As the face of your business, drop shippers are responsible for handling customer service inquiries, which can be time-consuming and require a high level of communication and problem-solving skills.

Overall, drop shipping can be a profitable business model for those who are willing to put in the time and effort to research suppliers, manage their stores, and provide excellent customer service. However, it's important to weigh the pros and cons and consider your own skills and resources before deciding if drop shipping is right for you.