Dropshipping is a branch of retail sales that allows retailers to sell a product without keeping it in inventory. You may be asking, "What is dropshipping?" If you have ever shopped at a large furniture store, you may have experienced something similar to this business model. You go into the store and select your furniture and the store orders it from an off-site warehouse. The furniture is delivered to you from the warehouse directly. Drop-shipping allows small retailers to carry a wide selection of products without having to invest in expensive inventory.
How does dropshipping work?
You set up an online store. You want to sell designer shoes. It would cost you about $25,000 to stock your store with shoes, so you decide to dropship instead. You find a supplier who sells the shoes wholesale. Let's say the shoes are $20 a pair, wholesale. You list that pair of shoes on your website. A customer then goes to your website and buys the shoes. The customer pays $100 for the shoes. You then purchase the shoes from the drop shipper. The drop shipper then sends the shoes directly to your customer. You keep $80 and never have to see the shoes. How does dropshipping work? To put it simply, it connects products and customers in an easy system that allows you to make money managing the transaction.
Advantages of drop shipping
The biggest advantage is that it is easy to set up your store and get started selling. Once you have developed a relationship with a wholesaler, you can get started right away. In a traditional business, you would have to purchase the inventory upfront and then try to sell it. If you buy too much of an item and it doesn't sell, you're stuck with it and may have to reduce the price to sell. With drop shipping, if an item isn't selling well, you can just remove it from inventory with no risk.
These businesses are also easier to run than traditional businesses. You don't have to worry about product storage, picking, and packing, shipping, returns, or inventory tracking. You don't have to continually order products to maintain the right stock levels. These businesses are so simple that you can run them from anywhere in the world with a few clicks of the mouse.
With a drop-ship business, you can test out different products until you find the one that works best for your company. You might start out selling birdcages, then switch to selling women's scarves. You can switch up your inventory according to the season, selling pool toys in the summer and holiday decorations in the winter.
Disadvantages to consider
You have little to no control over how long it takes to get the product to your customer. If it takes you one day to order the product from your wholesaler and the wholesaler takes three days to ship it to your customer, there's nothing you can do to speed up that process. It pays to work with suppliers who are committed to fast processing and shipping. Customers are used to getting things in two days or less, so you have a real challenge here with the slower drop ship process.
Another disadvantage is that since you don't actually hold the product, you have no real idea of its quality, features, or limitations. If a customer emails you to ask you a question about the size of your bird feeder for sale, you're completely dependent on the wholesaler's description to guide you. Unless you order a sample of each product, you have little idea of the actual quality of what you're selling. In addition, it can be hard to handle refunds and customer service issues if you have to go through the added step of contacting your wholesaler for help.
E-Commerce software companies that offer dropshipping
Highly rated for its handy plugin, WooCommerce offers a suite of powerful tools that will make running your site a breeze. With WooCommerce, you can import all of your products to your online store at once, upload product information, and automatically contact your supplier when you receive an order. You can assign specific inventory to specific suppliers and easily see where all of your inventory is coming from at a glance. Certified Woocommerce developers can tailor software features for your business requirements.
Best if you are setting up a Shopify store, Oberlo allows you to quickly and easily add products from several wholesalers to your store. With Oberlo, you can set up an account and get started in minutes. Sell a wide range of products from several wholesalers through an integrated system of adding and managing products.
This cloud-based e-commerce shipping software is one of the easiest to use and is a favorite of sellers who want to sell a range of products. With an intuitive dashboard that tracks your order from start to finish, Best for simplifying your logistics processes, Easyship works with suppliers from all over the world.
This free platform offers a variety of features to make your new company run smoothly. Download inventory reports, print shipping labels and manage your customer service with ease. Track your orders and issue refunds right from your dashboard. You can even choose a white-labeled option that adds your company's name and logo to the customer's invoice.
Mainly used for integration with Amazon and eBay, eComDash is inventory management and fulfillment software that makes keeping track of your sales a breeze. The system automatically syncs your site's inventory to that of your wholesalers, taking away the stress of having to constantly manage inventory. You can set inventory rules for each of your suppliers, removing a product from your site if suppliers' inventory is low, for example.
Dropshipping can be a lucrative and flexible way to earn money by selling the products you love. What is dropshipping? It's a great business for people who want to work from home or to work while traveling. You can sell from anywhere in the world, 24 hours a day, 7 days a week. Find your supplier and your platform and get started today.