What Is Dropshipping | How Does Drop Shipping Work?

What is Dropshipping?

Dropshipping is a business model of eCommerce 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 parts, you drive traffic on your online store, get sales, and manage customer relationships.

In other words, Drop-shipping is somewhat different from a traditional online business plan, wherein your online store needs not to keep the product inventory. Rather the store owner enters into an agreement with the dropshipper and agreeing that dropshipper will be happy to fulfill any order that comes from an online store.

Many business owners are today investing their money in establishing dropshipping companies megacities. For example, if the price of the product on the 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?

Before you deciding for starting dropsipping business you must know its benefits and disadvantages:

Benefits

1. Need Less Capital: You need less capital to start a business as you need not to keep inventory.
2. Buy products after receiving orders: You only need to order for the product from your supplier once you get orders from the end consumer hence no capital investment.
3. No need to invest in inventory: You required less capital investment as you order once you get the order.
4. Shipping handled by supplier: The best part of this business model is that the supplier manages all packaging and shipping parts till the end consumer.
5. Easier to experiment with products and markets: 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 no. of products to your consumer.
6. Limited risk exposure: The risk of losing money is less like all liability of product inventory is lying with your supplier. You only liable when you order from your supplier after receiving orders 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 products to your customer as you work with more than one supplier.

Disadvantages

1. Low Margins: There are suppliers, wholesalers, and manufacturers who provide shipping and storage services. Which means you have to pay a more price to them compared to bulk wholesale prices.
2. Lack of control over product quality and deliveries: As dropshipper is very far from you and invisible to your customer, the whole responsibility is on you for the quality of the product. It’s your responsibility to resolve any issue of customers even if it isn’t your fault. Ultimately your image tarnish.
3. Risk of supplier running out of product inventory: As you are sitting far away from your supplier. Sometimes you are not aware of the inventory level of the product at the supplier end and you still accept orders 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 you will find a lot of information there. But searching dropshippers online can be misleading. Some suppliers may meet with less experienced eCommerce entrepreneurs and that can be dangerous for your business. It is most important to research intensively and find authentic and genuine suppliers.
2. Get on the phone: Once you list out the all suppliers, your first step to pick the phone and call to that supplier and try to get more information. You can also talk to directly manufacturer to chack 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: 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: Shopify is one of the leading companies in dropshipping companies in the country. It offers you starting from managing virtual stocks to sales. It offers a complete solution for people looking forward to getting established as dropshippers.
3. India Mart: IndiaMart is one of the leading companies 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.

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