What is dropshipping?
Dropshipping is defined as a retailer fulfillment procedure that does not require any sort of business to keep the products in stock. If in case a particular store sells products with the help of dropship technology, the item is said to be purchased by third party applicants. After that, it will be shipped to the buyer directly.
In this overall process, the seller will never directly handle the products to the buyer. The only difference existing between the standard retail model and the drop shipping technique is the sender is not directly involved. Instead, the seller makes use of third party applications to get the deal done. This explains what is drop shipping?
The working process of dropshipping on Shopify
There are two different methods for dropshipping implemented on Shopify. One way to find a supplier in North America and the other way is to find them directly on the Shopify application.
Later on, Shopify has been replaced Oberlo which has been developed by Shopify and is an individual platform to find sellers. This application has access to browse AliExpress where you can very easily import the product and make sales. As soon as a buyer buys the product then you will be fulfilling their order through Oberlo through the application.
An interesting feature is that Oberlo automatically goes ahead with this process. The only thing you need to do is simply check the details and go ahead by clicking on the order button. Then the AliExpress supplier will directly send the product to the customer.
Advantages of dropshipping
Considering drop-ship is one of the best business methods that inspire entrepreneurs to come up with their business ideas. Dropshipping enables you to find the difference existing between various business ideas and how to select in-demand products. Let us get into the details know why dropshipping has become popular.
Easy to start
It is too good to be true that it is really very easy to come up with an eCommerce business. Because the online procedure does not involve any paperwork or physical products and everything will be processed online. So you can feel free to start it and make everything easy.
Requires less investment
One of the biggest advantages that explain what is drop-shipping, is it is economical as it does not require investment to launch an online store. Before the retailers have to get associated with capital purchasing investors and invest huge amounts. But with the launch of the dropship method there, there is no need to buy a product until and unless you have made the sale and paid to the customer directly.
Testing is easy
If you would like to test the aptitude of the customers then it is very easy with the help of dropshipping. This will enable you to know the pulse of the buyers. One the biggest advantage associated with this is that you will have the maximum ability to sort out and potentially sell products before you could commit it to buy a large amount of it.
You will have more flexibility especially in terms of location. Running a drop-ship business can be processed anywhere since it does not require any physical status and need to be active online. Until and unless you maintain proper communication with the suppliers you can very easily manage.
Drawbacks of dropshipping
Keeping aside the advantages of dropshipping you should also get ready to face the disadvantages of it. Let us consider knowing a few of them in advance so that you will be prepared for even the worst.
You will find over-optimistic entrepreneurs who are readily focused on the “low overhead” part, ignoring the clear evidence. This explains how does dropshipping work, because the overall process requires very less capital which means that lower barriers to entry which affects the competition in the field. Therefore more the competition less will be the success rate of your business.
Relative low-profit margin
Generally speaking the dropshipping does not require managing or store your investor which leads to low overhead. It requires low investment and you will even get low profits.
This, in turn, affects the quality of the website and customer service. But this will never have any impact on the customers from comparing the prices and will, therefore, increase the fierce competition.
No control over the supply chain
Considering it as a standard e-commerce customer complaint regarding any product or any other issue then you can directly address yourself. When you consider what is drop-shipping you are more likely to get set the mercy of your supplier but you are solely responsible to talk with the customers directly.
How do drop shippers make money?
By now you have clearly understood what is drop shipping? And how it works. Now let us concentrate on how it makes money. The dropshipping works as product curators that select products that can be marketed to a wide range of customers. By doing so you will be investing money and time that will help customers to find the predict the customers required.
This process also includes the cost of providing customer support in case if there is an issue with the product. And this is considered as the final price where the product is sold to the buyers. With the overall costs included in it, how does dropshipping work appropriately and mark up the individual products that are exchanged between various business organizations. This is one of the reasons why most of the drop shippers consider dropshipping stores to provide then with excessive sales which the suppliers may not get.
So, is dropshipping worth it in 2020?
Finally the dropshipping has been considered to be a perfect method for e-commerce businesses. This is perhaps a good idea for even a startup. It has lots of advantages but at the same time, the method is available with inbuilt complexities that can be sorted out depending upon the way you treat them. Therefore you need to take a step forward that will enhance you to work effectively to cope up with dropshipping.