Is Dropshipping for You? 

You may have heard of a new form of e-commerce making the rounds across the internet recently: dropshipping. No, it does not refer to drones delivering your packages to your doorstep (yet), but it is a kind of business model that makes selling products online easier than ever.

If you’ve heard the buzz, you may also be asking—is there any way for you to partake? Maybe you have been considering opening your own business for some time now, and this model is the opportunity you need. Whatever your reasoning, let’s explore if the dropshipping method is for you.

What dropshipping means

First question:what is a dropshipper? When you purchase something from an online retailer, they often
produce the item themselves or have an inventory ready to ship. You place your
order, the seller processes it, and you have a nice package at your door within
a few business days.

Dropship retailers, however, do not hold
inventory. Instead, a consumer visits a dropship website—say, a virtual
clothing outlet—buys a pair of pants for $40, and then the seller forwards the
order to the supplier/manufacturer and pays a $30 wholesale price. The supplier
ships the paints directly to the consumer and the dropshipper retains the $10
profit margin.

Naturally, you are asking yourself: why would
consumers buy from dropshippers instead of directly from the suppliers? It’s
about branding. They establish themselves as trustworthy resources that provide
a variety of quality goods. Dropshippers almost always have multiple suppliers
so that they can offer different kinds of products, which makes their platforms
convenient places for consumers to purchase what they want in one place.

What lifestyle does it support?

If you were to become a dropshipper, you would
almost never come into contact with the products you sell. If you have an
internet connection and a working phone, you can vet suppliers, communicate
with them, build a website, conduct online outreach, and run your entire
business from your home (maybe in your pajamas, if you would like).

The dropshipping method entails far fewer overhead costs than other forms of e-commerce
or brick-and-mortar businesses. If you are not a developer capable of
constructing a website, that’s fine—there are numerous online platforms
available to build your store, like Shopify. Much of your effort will go
towards marketing.

Dropshipping is advantageous for individuals who
want to work their own hours and be location-independent. Maybe you have
children at home, live as a digital nomad, or do not want the pressure of
selling inventory if you are experiencing a slow period; dropshipping enables a
significant amount of flexibility.

Are there any caveats?

Dropshipping has its benefits, but it is not
without its downsides. Profit margins are smaller; you do not want to charge
astronomically higher rates than the wholesale price you paid, or you will lose
customers. You already need to charge higher shipping costs to cover what
suppliers spend (if consumers order more than one kind of item from you, then
you will probably have two separate suppliers sending you their respective
bills).According to Mywifequitherjob.com, most dropship stores retain 10-30 percent
gross margins, while traditional shops with inventory have 50. If you want to
make money, you’re going to need to reach a lot of people.

If something goes wrong with shipping and a
customer does not receive an order, that customer will call you, not your
seller. It’s up to you to contact who you need to (and if you partner with
international suppliers, they might not speak English) and get the matter
resolved—all remotely. It is your reputation that will take the hit.

Your supplier’s geographical locations will alsoaffect logistics, too. Depending on their shipping times, customers may receive
parts of their orders days apart from one another. Competition is also high in
the dropshipping space, which means your brand and prices need to be on-point.

Is it for you?

Whetherdropshipping is for you depends on what kind of person you are. Are you hoping for a
flexible schedule, but also prepared to deal with customers and suppliers when
things go wrong, but from hundreds of miles away? Are you creative enough to
execute effective marketing campaigns and convince a loyal following of people
to purchase from you? It’s possible to scale a dropshipping store quickly, but
you need to be adept at customer service.

Dropshipping is an attractive business model that many entrepreneurs are taking advantage of. It will not be free of headaches, but it will cost you less and is easy to get up and running. Do you believe that dropshipping is for you?

Image Credits: Dropshipping  from Nik Symkin /Shutterstock