Have you made up your mind about starting an online store and joining the eCommerce revolution? If yes, then, the very first questions you need to answer are all that pertains to your product such as what products will you sell, where will you get it (the source), and how will you get it across to your customers? Depending on just amazing marketing and extraordinary customer service will not get you very far if you don't source, manage and take inventory, fulfil orders and oversee the shipping processes. We advise that you may skip the hassle and check out dropshipping if this sounds intimidating, stressful, boring, or even tasking.
What does the term “dropshipping” mean?
Dropshipping permits store owners to obtain orders from a wholesaler or manufacturer directly. What this means is that you don't have to worry your head over things like inventory management or shipping; all you need to do is simply transfer orders to a dropshipping partner who takes care of all of the inventory and logistics.
Before drop shipping came into existence, there were formerly two major e-commerce models:
#1. -You can make a unique product from the beginning to the end.
For instance, if you enjoy knitting cashmere cat sweaters which are wonderful, it means that you will have a completely unique product to bring to the marketplace. Nevertheless, the question remains if you can career demand and lift your business.
#2. -Buy inventory in bulk quantity
Here, you don't have to create a new product, but the issue is that you might get stuck with a garage full of widgets you were unable to sell.
But, with dropshipping, your duty is to just market and sell the products while some other person in the supply chain takes care of the product, inventory, packaging, and shipping.
What are the Pros & Cons of Dropshipping?
Honestly, dropshipping can sound like a skyrocket science for making money online but don’t be deceived, because just like every other thing, there are advantages and disadvantages of dropshipping.
What are the Pros?
1. You do not need startup capital.
One of the advantages of dropshipping is that as a starter, you can launch without investing a lot of money. Conventionally, a retailer is supposed to buy and stock inventory in order to sell to consumers, but as a dropshipper, you are able to order a full catalogue of merchandise with slight overhead.
2. The hassle involved is less.
As we started earlier a drop shipper has no business with handling inventory, which means that you do not need to handle either packing or shipping. This permits you to reserve your energy and concentrate on the marketing and growing your business.
3. You can broaden your offerings effortlessly.
The act of dropshipping is a great way to test new products with your audience if you wish to broaden your offerings, thereby permitting you to see if your products are fit for the market without having to invest up-front in large amounts of expensive inventory.
What are the cons?
1. Overseeing the logistics part.
As your business expands, the logistics for dropshipping can be difficult to tackle. It will be even more challenging if your dropshipping supplier banks on numerous warehouses. The result of poor logistics management is poor customer experience, because of inappropriate tracking numbers, wrong addresses, and delays in shipping, this is truly not good for business.
2. You don't have influence over the packaging.
Pay attention to this if you’re an online-only store, the first physical connection you have with your customers is when they open what they bought from you. But as a drop shipper, you have control over the packaging. This means that there is nothing like special touches such as cute thank-you cards that can enable your store to stand out from the rest. Most decent drop shippers nowadays try to have personal label shipping with custom-made invoicing and packing slips.
3. Little interest margins.
Remember that you are not selling a unique product, therefore, It is very hard for small businesses to compete on price. The solution to this is to be willing to invest in something that will distinguish your store, such as great scholastic resources, powerful copywriting, or creating an unusual niche market.
Common mistakes in dropshipping you should avoid.
From the onset, after you have made up your mind to start dropshipping, you need to ensure that you’ve got a substantial strategy in place. While at it, you must endeavour to avoid these common mistakes.
#1. -Expecting that your products will sell themselves
We have earlier mentioned that dropshipping practically puts you in a competitive space, this is because other people are selling exactly the same product that you are. It’s very bad for anyone to imagine that they’ll be able to start dropshipping for their store and then have an instant money-maker on their hands.
The trick is that all the energy and time you save on shipping and fulfilment must be channelled into marketing and SEO because they are the fundamental things that will drive traffic to your store and enable you to make sales as a drop shipper.
#2 -Depending on just one Supplier or inability to test suppliers.
You are preparing yourself for logistical issues down the line if you depend on just one supplier without having another option.
You should ask yourself what if they increase their prices to a point you can’t afford? Or what if they run out of business? Or just make up their mind not to work with you anymore?
Worst still, what if they are out of stock on a product and do not know when they’ll get it back in stock. Never make the mistake of not having a backup supplier that you can turn to if your go-to supplier disappoints for a particular order.
Furthermore, whenever you start working with a fresh supplier, ensure that they cut the mustard by placing test orders, and when you lay hands on the order, closely scrutinize it, don't neglect the packaging, the time for the shipment, and so on. To ensure that everything is top-quality, keep placing test orders from time to time on a somewhat regular basis.
#3. Dealing With Irregular shipping rates
Even if you ship all your orders from the same location, haggling with shipping rates can be conflicting. Talk more of when you are shipping from more than one warehouse, or drop ship through numerous suppliers, it will definitely be a nightmare.
What will you do when an order is emancipated from two various warehouses or three varied suppliers?
Now worrying over multi-location shipping on every single order, why not look at the bigger picture. Remember what you are trying to achieve: correct shipping rates, more sales, satisfied customers, and returning customers. The truth is that if you are spending energy over shipping prices on every single order, it means that you are not spending time on creating a convenient shopping experience, developing your store, marketing, etc.
What is the solution to situations like this? Critically look at previous orders and use them to decide on a balanced shipping rate and consider if it will cut into your profit margins, definitely it will on some orders. Nevertheless, you will have an edge over others, and if you’ve properly set your flat rate, the cost of shipping will become even over time. Studies have shown that flat rates and free shipping improve conversion rates because one of the major reasons why customers forsake their shopping carts is as a result of shipping costs.
With all we have said, you can see that dropshipping is not a one-size-fits-all solution, nevertheless, it is a wonderful means to start or heighten an eCommerce store. You have to step back and assess if dropshipping is valuable to your store at every stage of your business.
All about dropshipping on Amazon
Over the years, Amazon is one place drop shipping has flourished. On Amazon, if you decide to sell products on the platform, know that you or the wholesaler you're marketing products for is responsible for making sure orders are shipped and stored properly. Also, you must be willing to be You also must be willing to be transparent about who the two created the product and who the seller is so that the buyers can know who to contact when an issue arises. Also, both the seller and marketer are held accountable for processing and managing returns without any form of assistance from Amazon.
Interestingly, Amazon offers a service where vendors who do not want to pay for warehouse costs can ship products through them, it is known as an FBA (or Fulfilled By Amazon). Nevertheless, Amazon makes it known that the products are not affiliated to them by listing the seller of the product as the drop shipper.
Also, Amazon receives a client's products in large quantity with the FBA program and stores them in their location, also employ their service in shipping the goods to customers on behalf of the vendor. They have also partnered with Shopify to achieve this.
Nevertheless, the disadvantage of this process according to Oberlo is that it is solely operated by Amazon so there's no room for adjustments to fit into what you desire.
For instance, as a drop shipper, you must follow FBA policies which include that you cannot buy products from another vendor and re-sell them using their own name.
All about dropshipping on eBay.
This is an auction site where you are permitted to create an account and business listing and proceed to sell or auction off your products.
But, this is not so much of an easy option because vendors are required to pay several fees, like Final Value Fees, which eBay defines as a percentage of the total purchase which includes shipping but excludes sales tax.
In addition to this, eBay’s dropshipping process just like Amazon is regulated. You are free to sell items from a wholesaler, but you are not allowed to buy the same items from another eBay seller and then proceed to resell them as yours. Also like Amazon, they require related levels of transparency so that the name of the seller and contact information is clear. Finally, similar to Amazon, the seller has to be responsible for any returns, order management, or complaints pertaining to the product.