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What is Dropshipping Business? Explained in Detail
Drop Shipping

What is Dropshipping Business? Explained in Detail

Business is a game of motivation, if you are not truly motivated, are you even an entrepreneur?

Keeping this statement in mind you need to understand that business ventures are ever-growing, they do not slow down at the yellow light instead they can make a U-turn at the online platforms. 

Therefore, enter the world of online business opportunity – dropshipping. 

If you are looking for a business opportunity to rise then the best chance is to take a step into the world of the modern business world. Dropshipping requires little investment at an initial stage which is why smart entrepreneurs are working towards great ventures for the future. But the main question is; how does dropshipping work?

If you are planning to start an online business, at some point you must have come across the dropshipping websites. Unfortunately dropshipping is not everyone’s cup of tea. To break into the eCommerce platform, it may take a good while to understand the process. Therefore you need to find a reliable and trustworthy source to guide you. 

So here we are! More than happy to become your guide for the day, down below is constructive guidelines about dropshipping. 

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Think out of the box – what is dropshipping? 

People keep asking this question “what is drop shipping” or “is it worth the profit or not?” To answer the first question,

“Dropshipping is an online business model that enables a company to operate without storing an inventory. According to the workflow stocks (products) are purchased from a third-party supplier and shipped directly to the consumer”.

Now to answer the second question, just know this, a seller does not have to directly handle the sale. This is quite a handy fulfillment model that is in use by almost 33% of the online stores. The purchases are made through a hands-off process. Imagine the merchant as the middle man or a bridge directing the consumer with the third party supplier. They take care of the products. 

So to make it clear we have further divided the fulfillment process into 3 steps;

  • Customers place an order for a product on the online store (retailer)
  • The retailer forwards the order (details) along with the customer’s details to the third party supplier (dropship)
  • The third-party supplier ships the package in the retailer’s name

Since most businesses do not have enough capital to invest in a physical store, an online front store seems a pretty good option, right? It facilitates you to free up the resources. want to work with us

How profitable is Dropshipping?

On average the profit margins can be from 15%-45% but it does depend on the consumer products too. For instance, consumer durables and luxury items tend to yield up to a 100% profit margin. The niche is important in terms of earning a higher profit margin. Once you have decided the niche, find the supplier that isn’t already saturated. 

Another way to ensure maximum profit is to have direct contact with the manufacturer instead of the supplier. This reduces the extra expenditures (cutting out the middlemen). 

Some of the other drop shipping benefits include; 

  1. Easy setup 

You just need to follow the above mentioned three steps to begin the dropshipping business. Find a good supplier (must be trustworthy) and set an appealing website (better to localize it) and start selling your product! That’s it. 

Even an amateur online entrepreneur can start their very own dropshipping business by following proper guidelines. 

  1. Minimum setting up costs

The traditional business models require land, building, employees, and the majority of the cost incurred is on the expenditures. Even purchasing inventory requires a huge amount to keep the sales running. In a dropshipping business, you have the advantage to skip this step entirely. You do not need to pay anyone except for the website domain, theme, hosting, and so on. 

The minimum cost works in the favor of the entrepreneur. 

  1. No misc. costs 

Since dropshipping is all about the workflow method, the business owner is not bound to purchase any stock. Therefore it does reduce the extra potential costs like renting to zero. No electricity bills or phone bills need to be paid. 

Only a fixed cost will incur for the website and that’s about it. 

  1. Lower risk 

The dream of any business owner is to have low risk and high-profit margin. Although the risk is a given factor in every business domain, in dropshipping the risk level is quite low. 

The little investment made over the website is the main cost that will incur. Since there are no building or lending of properties, you do not face the pressure to keep up with the extraordinary maintenances. Especially in case if your dropshipping business is short-lived no harm done to the products either. 

  1. No boundaries 

You are not bound by geographical or political boundaries in this line of business. Dealing through the website gives you a competitive edge to target audiences from all over the world. of course, you have the choice to target specific countries. 

You can run your dropshipping business from the comfort of your home or even if you are sitting in the cafeteria. You just need a good internet connection and a laptop. 

  1. Variety of products

Instead of focusing on a single product, you can offer a range of products online. It’s easy to find a supplier/manufacturer for almost every product online. You can choose the categories that guarantee the highest sales (like durables, luxury items, cosmetics, etc.). 

So it’s best to make a list of products you are interested in. steal our organic traffic blueprint

This sounds interesting, right? But let’s talk about the risk factor. Like any other business, there are some basic cons you may have to face in case your business venture isn’t a success. 

  • Lower profit margins
  • Liability on sole ownership (in case something goes wrong)
  • Customer satisfaction is low due to the product’s quality 
  • Unforeseeable credit issues 
  • High level of competition 
  • Quality of products can be tricky 
  • Inventory tracking can be broken 

Note: in case of cancellations, order change, or late deliveries, you can face these downsides. Miscommunication is another issue that is easy to rise.

Minimize the dropshipping mistakes

The downside of dropshipping may look like an ugly side of the business but there are some measures you can take to avoid any mistakes. 

  1. Make a free choice regarding the products. Do not choose products on the basis of your likes/dislikes. Think of the customer. 
  2. Customers are not okay with buying “copied” items. In most countries, it is illegal so beware!
  3. Do not pitch in just because everyone is doing it so. Avoid jumping on the bandwagon if you haven’t planned the inventory. 

Dropshipping is an exclusive and yet growing approach for the online market. Do you think you have what it takes to be an online business owner?

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