Before anything else, you first need to understand what dropshipping is and how it helps your business. To answer that question, dropshipping is a business model in which inventories are not required and is ultimately an online business model.
This model suits online retailers, the e-commerce type that does not include stock inventories. It has an advantage over other models because it cuts costs on many things, primarily logistics.
Customers place orders forwarded to the suppliers, who deliver the product to the customers’ doorstep. Dropshipping is used globally by retailers and wholesalers.
Ideal for New Entrepreneurs
This business model is great for new entrepreneurs. This is because it works perfectly for any entrepreneur who is good at selling their products. All they need is the right supplier and the proper shipping processes for the orders.
Once the suppliers are all set, they need to go back to focusing on the crucial aspects of dropshipping. The elements that they need to focus on include the following:
- Creating an outstanding store and exceptional branding.
- Finding the right niche and products that are popular among customers.
- Marketing that drives traffic to the store’s website and the store as well.
- Converting the visitors to customers and ensuring they stay as such.
How Does This Business Model Work?
The model consists of these steps that complete the process;
- The order placed by a customer
- The order is processed by the retailer and forwarded to the supplier
- The order is then fulfilled by the supplier at the warehouse and,
- The product or customer’s order is shipped to their chosen location.
If or when the customer is satisfied with the product and services offered, then all is well, and the seller can try and woo more customers by using the recommendations from the satisfied customers.
The problem only arises with a dissatisfied customer. When this happens, the customer might want to return the product and ask for a refund.
Advantages and Disadvantages of Dropshipping.
Everything has its pros and cons, and the dropshipping business model is no exception to the same. Let’s see some pros and cons so that you can decide whether the model suits you.
The dropshipping business is easy to start. This is because it does not need too much investment like other businesses. The only thing required is an online store where customers can see and buy your products.
In the model, there are no inventories needed. This makes the business more flexible and can be run from anywhere. All you need is a laptop and a good internet connection.
Those are just a few of the pros; let’s see some of the disadvantages of the model as well;
The cons include high competition, limited customization of the products, low-profit margins due to the increased competition, less control over the inventories and the customers are pretty uncontrollable as well. Otherwise, the model works well for most entrepreneurs.
Whether dropshipping is the best model for you depends on various factors, including but not limited to mindset, motivation, and the amount of research you have done on the business, among other things.
Therefore, you must assess all factors before venturing into the dropshipping business.