What is Dropshipping?
Dropshipping is a business model of e-commerce where an online store sells products to consumers, but the products move directly from the wholeseller to the final consumer without being stored by the online store owner.
When your customer makes an order, you connect with your supplier who can be a manufacturer or distributor and have the product shipped directly to the customer.
While your product supplier manages all packaging and shipping part, you drive traffic on your online store, get sales and manage customer relationships.
In other words, Dropshipping is somewhat different from a traditional online business plan, wherein you need not to keep the products inventory. Rather you enter into an agreement with the dropshipper (supplier) and agreeing that dropshipper will fulfill any order that comes from you.
Many business owners are today investing their money in establishing dropshipping companies in megacities.
For example, if the price of the product on wholesale market is $150, the dropshipping online store can sell it for $200 to $250 making a commission of $50 or $100.
How does dropshipping work?
You can see below infographic to understand how dropshipping business model works.
Before you decide on starting a dropshipping business you must know its benefits and disadvantages:
1. Less Capital Is Required.
You need less capital to start a business as you need not to keep inventory.
2. You only order when you receiving orders.
You only need to order for the product to your supplier, once you get an order from your consumer hence no capital investment.
3. Zero inventory at your store.
As mentioned in point no. 2, you required less capital investment as you order for the products once you get the order from a consumer.
4. Supplier handles Shipping.
The best part of this business model is that the supplier manages all packaging and shipping part till end consumer.
5. You can experiment with various products.
You can experiment with different-different products by displaying on your online store as you need not to keep inventory at your store. In other words, you can work with more than one supplier so that you can offer a large number of the product to your consumer.
6. Limited risk exposure.
The risk of losing money is less as all liability of product inventory is lying with your supplier. You only liable when you order to your supplier after receiving an order from your customer.
7. Start working from home.
This is really an attractive option for homemaker women, as you can work from home. You only need a computer and a fast speed internet.
8. List a large number of products.
It has the flexibility to offer a large number of the product to your customer as you work with more than one supplier.
1. Low Margins.
There are suppliers, wholesalers, and manufacturers who provide shipping and storage services, that means you have to pay a more price to them compared to bulk wholesale prices.
2. Can not control product quality and deliveries.
As dropshipper is very far from you and invisible to your customer, whole responsibility is on you for the quality of a product. It’s your responsibility to resolve any issue of the customer even if it isn’t your fault. Ultimately your image tarnish.
3. Lack of control over the supplier’s inventory.
As you are sitting far away from your supplier, some time you are not aware of the inventory level of product at the supplier end and you still accept the order from your customer. In this case, you lose the trust of your customer.
Finding the Right Dropshipper for Your Business
How to search for a Dropshipper
1. Internet search.
The Internet is a natural way to search for potential partners, and it is true you will find a lot of information there. But searching dropshippers online can be misleading as some suppliers may meet with less experienced e-commerce entrepreneurs and that can be dangerous for your business.
It is most important to research intensively and find an authentic and genuine supplier.
2. Get on the phone.
Once you list out all suppliers, your first step to pick the phone and call that supplier and try to get more information. You can also talk directly to the manufacturer to check about that supplier.
3. Work with an aggregator.
Dropship aggregators offer the benefit of a single window system where you can work with many suppliers. Doba, is a good example of an aggregator. You can visit DOBA or WorldWide Brands to find product distributors.
There are some dropshipping companies in India that offer thousands of products. You just need to track and maintain the stocks online via their mobile and online app. They also offer you the convenience of shipment and payment using multiple modes.
1. P & R Ventures Dropshipping
P & R Ventures offers direct services from manufacturers to the consumer end. It is presently involved in supplying, manufacturing, exporting and trading of shipment for FDA approved and medicinal products and is based in Nagpur – Dhigori.
2. Shopify.in Dropshipping
Shopify is one of the leading company in dropshipping companies in the country. It offers you starting from managing virtual stocks to sales. It offers the complete solution for people looking forward to getting established as drop shippers.
3. India Mart Dropshipping
IndiaMart is one of the leading company in the dropshipping industry. It connects thousands of suppliers with their buyers. This online company offers the perfect platform to large and small enterprises and individual agents.
Read More : Business Ideas