Nowadays, we hear the term “dropshipping” a lot. Understanding what it means and how it could be really beneficial to your business can be complex. We decided to break it down for you in an easy to understand guide.
Dropshipping is a business model where a shop accepts customer orders but doesn’t keep products they sell in stock. Instead, a vendor purchases inventory as needed from a wholesale supplier, manufacturer, or fulfillment house – to fulfill orders.
The biggest difference between a dropshipping business model and standard retail is that the dropship seller does not carry or stock their own inventory – they act as a middleman between their customers and the supplier. Which cuts down on waste and saves the retailer money.
With this model, starting a business has never been easier! Whether you are selling on Amazon, Shopify, Etsy, or a personal eCommerce store dropshipping may be right for you. It’s a low risk way to sell goods without the risk of buying inventory that might just sit and not sell.
Bonus Tip: For our creative audience, learn how you can take your designs and create custom products you can sell in your shop.
How Does Dropshipping Work?
When a customer buys a product from your shop, you as the vendor will transfer the order over to your supplier with your customer’s shipping information. At this point, your work is done and the supplier is now responsible for shipping out your customer’s order.
The most common method for dropshipping on Shopify is to find a reliable wholesale supplier that can provide you with a database file of their product that you can import into your Shopify store or find a Shopify app; like Syncee; that connects your shop to thousands of suppliers.
Sometimes dropshipping is seen as a get-rich-quick scheme – but it is not. It has been around for many years and has proved to be a successful and profitable business model, especially in rough economic times.
Benefits of Dropshipping
Lower start-up costs
The biggest advantage of starting a dropshipping business is that you can quickly set up and launch an eCommerce store without having to carry inventory.
This allows you to make a sale and get paid by your customer before you purchase a product from your supplier. This allows you to focus on sales and marketing instead of investing hundreds, if not thousands of dollars in inventory. Making it a low-risk business. You only pay for what you sell and you don’t have to deal with the hassles of shipping.
No inventory needed
In many traditional retail stores, the cost of inventory and warehouse space are some of the highest costs a business will experience. Given this business model, it allows most people to be able to open their own e-commerce store with little upfront money. Which is ideal when the economy is facing hard times.
Since you don’t have to purchase inventory beforehand there is no need for a warehouse and funds can be invested in efforts to drive more sales to your shop.
Allowing you to put your money towards marketing your products, building your website and targeting your key audience. Websites like Shopify, Etsy and WordPress WooCommerce make it affordable to set up a shop and manage sales.
Scalability
A dropshipping business is not limited by a physical location or the number of workers needed to ship out products. This gives you the opportunity to quickly scale your business from a side hustle to a full-time career. Of course, it will depend on how good you are at marketing. With enough tenacity and the help of YouTube videos and podcasts, it’s easier than before to succeed as an entrepreneur.
Flexibility
As long as you are able to communicate with suppliers and customers, you can run your dropshipping business from just about anywhere with an internet connection. It’s really an ideal career if you like to travel or work from home.
More and more people are breaking away from office environments, wanting freedom of their own schedule. This is the perfect business model for that type of life and flexible schedule. You’re your own boss and there’s no limit to the amount of money you can make with the right attitude and drive.
Test products with less risk
Dropshipping allows you to quickly test new items without the risk of purchasing inventory for a product that may be obsolete or out of fashion – remember, you only pay for what you sell.
It also gives store owners the flexibility to add/test new products from multiple suppliers. Allowing you to make sure the consumer will get the best product for a great price. Marketplaces are competitive, standing out in quality and customer service will be very important to your success of owning an eCommerce shop.
Cons of Dropshipping
Less control over order fulfillment and lead times
In a standard online shop, if a customer complains about the quality of the product, shipping times, or return policies, you can quickly resolve the issue yourself.
However, when you are running a dropshipping shop you are relying on the supplier to provide your customers with a quality product, fast shipping times, and provide a decent return policy. If your supplier drops the ball on any or all of those areas, you’ll be the one left with bad reviews. Which is why it’s essential to find a great supplier that will be consistent and be an asset to you.
Low margins
Many entrepreneurs and creatives are attracted by financial benefits and opportunities to turn their hobby business into a full-time job that is successful. It can be done, but you have to be diligent and focused.
Due to the dropshipping model, your profits from each sale are lower. This means you will need to drive more sales in order to increase profits. Although, many drop shippers invested so little in starting their business, many can afford to operate on these low margins.
Inventory issues
Keeping track of your own inventory can be simple if you stock your own products. But, when you’re sourcing products from multiple wholesale suppliers inventory can change on a daily basis. Staying on top of this is essential to providing your customers with consistency they can count on.
Fortunately, there are a handful of apps like Syncee that can connect a Shopify store with a supplier’s product inventory and automate the dropshipping process. Allowing the business to run smoothly and taking a lot of stress off of your plate.
Difficult customer support
It is crucial to provide your customer with outstanding customer support when trying to resolve an issue when something goes wrong with an order. No one buys from companies that have bad product reviews. Running a fruitful business requires happy customers.
Negative reviews reflect a customer’s first-hand experience with your business and product and depending on just how bad the review is, sometimes there only needs to be one. This is why it’s vital to make sure your supplier is providing high quality goods and shipping in the time frame your customers expect.
Is Dropshipping worth it in 2022?
Dropshipping definitely has major advantages, but this model is not something you can set to auto-pilot to build a successful online business. As with every business hard work and dedication are required. It will take a great website, marketing to help people find you, a great name and unique products to stand out and thrive.
The good news, is this is a low-risk business model, perfect for anyone looking to get their feet wet in managing the business. With careful planning and proper product research, anyone can create a profitable dropshipping business.
Most importantly, you want to find a high-caliber supplier. When looking for a dropship supplier, you want someone that offers a variety of great products. If you’re in the fashion business, finding a blank t-shirt, clothing, and accessories company that offers quality prints is key. Nothing will ruin your business quicker than bad reviews.
Imprint Kids Clothing is a clothing dropship supplier we highly recommend. They take their customer satisfaction very seriously. Selling the highest quality blanks for adults, kids, and babies. All baby clothing blanks are CPSIA certified. Priding themselves on an excellent track record and first-class customer service. By partnering with them for your business, they eliminate the stress of carrying your own inventory and printing, so you can focus on growing your own clothing business.
Let them know how they can serve you.
Follow us on Instagram and Facebook to stay updated on new promotional codes, and new product updates.