Business

What Is Dropshipping And How Can You Take Advantage Of It

By Christy Bella | July 17, 2020

Table of Contents

What are the benefits of dropshipping

Are you a novice in the field of business, who cannot wait to get started? Perhaps, you already have an established e-commerce business, looking for more ways to expand your trade. Either way, dropshipping might be what you need right now. If you are curious to know more about dropshipping store suppliers and interested in becoming one yourself, you are in the right place.

What is dropshipping?

The dropshipping business model is one that allows entrepreneurs to start a business without risking too much. It also allows previously settled business owners to expand their current trade. Essentially, it is a method for retail fulfillment or the management of supply chains. It involves three or more people, including the dropshipping supplier , the manufacturer or retailer or wholesaler, and the customer.

The functioning of this supply chain is quite simple. The dropshipping suppliers do not store products or keep an inventory. However, they do take customers’ orders and their details for shipment, etc. The suppliers transfer these details to the following retailer, or a wholesaler, or the manufacturer itself. At the end of the process, the retailer or wholesaler or manufacturer ships the products directly to the customers.

While the retailer stores goods in a relatively smaller amount, the wholesaler stores and sells them in large quantities. The manufacturer, on the other hand, is the person who produces the goods. Therefore, dropshipping suppliers play the role of a mediator while gaining profits as well.

How can you benefit from dropshipping?

The dropshipping business model, undoubtedly, contains multiple advantages for entrepreneurs. Whether you are new to the market trends or whether you are just experimenting, dropshipping products will prove to be beneficial. The following list of advantages speaks for the same.

Easy setup

One of the most significant advantages of dropshipping is a remarkably easy setup. Dropshipping does not require extensive preparation or investment to begin. The capital required is minimal, namely all that is necessary for launching an e-commerce store, including a domain name, etc. As a dropshipping supplier, you do not need to spend a large amount of money to begin. Moreover, dropshipping does not require you to have an inventory or to purchase products beforehand. A warehouse or knowing the process of shipment is unnecessary. As a result, dropshipping is a lot more convenient than the various traditional business models.

Low risks

As noted above, the investment cost for dropshipping is near to nothing. The overhead expenses for start a dropshipping, without an inventory or a warehouse, are low. Most of the dropshipping suppliers work from home with the facility of the internet. Even if your business grows, the expenditure remains low. Moreover, as a dropshipping supplier, you do not need to engage in product returns or inbound shipments. Your initial commitment does not have to be enormous, and so, the risks of dropshipping remain minimal.

Variety of products

As a dropshipping supplier, you do not need to purchase products in advance, unlike say, a shop owner. Instead of stocking products, all you have to do is enlist them on your website or online store. Therefore, since you do not need to invest beforehand, you can offer a variety of products to the customers. As a result, you can understand the various market trends for yourself and see what works for you. Testing the customer purchase patterns, in turn, would allow your online business to grow and gain more profit.

Facile expansion

The Dropshipping has easygoing growth. It is unlike the traditional business model, where your efforts and workload would increase with customer orders. Thus, since you are not engaged in shipment or inventory management, all you have to do is process the orders.

Flexibility

As an e-commerce business owner, you have the flexibility to work from wherever you want. The only detail necessary is that you remain in contact with the customers and the retailers or wholesalers or manufacturers.

Summing up

Although the dropshipping business model does not guarantee instant richness, taking precautions can lead to the same. Understanding market trends and planning with care would allow you to make the best out of it. If you take the right steps, this easy to set up and low-risk business model can be quite advantageous.