You must have heard about drop shipping business, or maybe you’re trying to start a drop shipping business. Generally, drop shipping is a system of online selling of a product, where the seller or the online retailer does not have to have a large capital. In other words, if you want to start a drop shipping business, you don’t have to have your own product and you don’t have to stock the product in a warehouse. However, even though you have no goods stock in your warehouse, if you run a drop shipping business with (at least) the right basic skills to start a drop shipping business and the art selling strategies, you could potentially sell the goods with a fantastic amount of sales.
What is Drop Shipping Business?
Drop shipping business is a selling system in which the seller does not keep goods in stock. Instead, the seller cooperates with the manufacture or the wholesale suppliers that stocks their own inventory. The seller sends the details of customer orders and shipment to the suppliers, and then the suppliers ship the goods straight away to the customer.
How to Start a Drop Shipping Business
In running a drop shipping business, you don’t have to bother about the delivery of goods. The supplier will do it for your sales. How about the sender’s name on the packaging? Basically, if you cooperate with suppliers that provide a drop shipping cooperation, they will keep your credibility as a dropshipper. So, when they wrap the goods, they will write your name or your store name on the packaging as the seller.
If you know the e-commerce strategies, it’s possible for you to launch an e-commerce store without having to invest thousands of dollars. However, you need to define a product some products to sell on your online store.
In marketing the product, you can do it both online and offline. But, if you are really capable of internet marketing, it’s usually more effective if you market the product online. You can market a product through relevant online forums, online stores, your personal blogs, social media (Facebook, Twitter), messenger apps (BBM, Whatsapp, etc), and other online media.
To improve your basic skills to start a drop shipping business, read more about the process of drop shipping, the advantages of drop shipping business, the disadvantages of drop shipping business, and the tips to choose the right suppliers for your drop shipping business.
How the Process of Drop Shipping Occur?
1. The Dropshipper Take Some Information about the Product from the Supplier
The system of selling in a drop shipping business is actually quite simple. You as a dropshipper just need to choose some products from dropshipping suppliers, take some pictures of the products, and then share them to the marketing media with a brief description.
2. A Customer Orders an Item
When there is a customer would like to buy the item, then the buyer chooses an item, and sends the money to you in accordance with the price that you specify to the item.
3. The Dropshipper Processes the Payment to the Supplier
You as a dropshipper then continue the payment process to the supplier based on the information of the purchased item along with the data of the buyer. In this step, you have taken the profit from the item’s price difference between yours and the supplier’s.
4. The Supplier Delivers the Item
In this step, the manufacturer or the supplier will then pack the item purchased and delivers it to your customer on your behalf as a sender.
The Advantages and Disadvantages of Drop Shipping Business
Indeed, a drop shipping business looks very easy to run. Meanwhile, even though you can run a drop shipping business from anywhere, the important thing first is you need to have an internet connection and a computer or a gadget that can support your drop shipping business. But, of course, every business has its advantages and disadvantages as well as a drop shipping business.
The Advantages of Drop Shipping Business
To start a drop shipping business, here are the advantages you would get:
1. You Can Start a Drop Shipping Business with Small Capital
As explained previously, a drop shipping business can run the business without having to incur a large capital. You as a dropshipper can market and sell products online. You can empower social media sites (Twitter, Facebook), your own SEO-friendly websites, messenger apps, and online forums that allow you to make your own selling page.
2. Drop Shipping Business is Practical
As a dropshipper, you don’t need to bother to deal with the procurement process, the packaging process, and the delivery process. All of those processes have become the responsibility of the product supplier. In addition, you also don’t need to bother with the business planning process which is quite complex. The business planning process is undertaken by the supplier.
3. You Can Run a Drop Shipping Business from Anywhere
As long as you get an internet connection and a computer or a gadget available on your desk, you can start a drop shipping business. You can also build and maintain relationships with your consumers online, for example; via email, chatting, and social media.
4. No Business Operational Cost
A drop shipping business is unlike any other conventional business that requires substantial operational costs. You can run a drop shipping business without business operational cost. However you need to make sure you can pay your electricity bill, employees’ salary, and room rental cost (if any). In a single player drop shipping business, you may just need to spend a very small fee, internet connection or data plan cost.
The Disadvantages of Drop Shipping Business
Before you start a drop shipping business, generate good ideas on how to draw back your dropshipping business out of these advantages:
1. Small Gains
Generally, the potential profits from a drop shipping business could be small. Indeed, you raise the price tag as you want. But, of course, it is very risky because that way could undermine your consumer’s confidence. A dropshipper is normally would not set a price tag of an item not far from the price tag that set by the supplier.
2. The Information of Items Stock is Not Up to Date
In most cases, many dropshippers cannot take the information about the availability of goods cannot be taken directly from the suppliers. It could be a purchased item from a dropshipper has been exhausted and the stock availability information has not been updated supplier’s website.
3. It’s Hard to Sell a New Coming Products in A Drop Shipping Business
When a customer asks for more details about the knowledge of a new coming product, usually dropshippers cannot explain more detail, because they still don’t know much about the product. Most dropshippers only focus on the marketing without knowing the details and specifications of the goods. This could confine the consumer intention to buy the new coming product. In such a case, most consumers don’t purchase the product.
4. A Dropshipper is at Risk of an Accidental Fall Guy
A supplier may accidentally ship defective goods, shortage of quantity, or late in the delivery process. And when one of which happens, of course, a healthy consumer will complain. But, the buyer will not complain to the supplier, but to the dropshipper. Whenever a buyer got disappointed with the delivered goods or the late delivery, even though it due to the supplier’s work, it will be always accidentally the dropsipper set up as a fall guy.
Tips to Choose Suppliers for a Drop Shipping Business
To prevent undesirable things happen in your drop shipping business, you must be selective in building cooperation with a supplier or a number of suppliers. If it’s possible, make cooperation with a supplier that provides a wide range of product categories. It is important to make easier for you in getting the products’ information and knowledge. A dropshipping business will only be able to run properly if you cooperate with suppliers who can guarantee the quality of delivery service. Below are the tips to choose suppliers for a drop shipping business:
A dropshipping business will only be able to run properly if you cooperate with suppliers who can guarantee the quality of delivery service. So, to start a drop shipping business, consider the tips to choose suppliers for a drop shipping business below:
1. Choose from a Wholesale Type of Supplier.
Usually, wholesalers are not willing to take a big profit per item, but they concern to the number of goods sold.
2. Choose Suppliers that Have Clear Drop Shipping System
In choosing suppliers for your dropshipping business, find out about their booking process, goods checking process, the purchase confirmation process, the packaging process, and the shipment process. Read carefully the information the suppliers provide on their company profile websites.
3. Choose Easy-Reach Suppliers
However, you must understand that most suppliers usually do not want to linger talking to you via telephone or chat. Because they have to serve many other dropshippers. So, make sure you choose suppliers that guaranty fast respond or easy-reach. To practice this, make some tests by contacting suppliers as many as possible. If you are really sure that your dropshipping building process is in this step, click here and contact them one by one both via the contact form or telephone call.
4. Make Sure the Suppliers Enclose Your Store Name on the Packaging
Usually, the suppliers you choose will ask your name and your online store name. It’s important as will be used to be written on the goods packaging that will be delivered to the buyers. The supplier shall write your name or your online store on the packaging.