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Dropshipping – what is it? Dropshipping rules

Running an online store seems to be so-called nowadays. golden business. More and more people are eager to buy online, and the e-commerce market in the world is not yet saturated. However, many avid businessmen are deterred by the need to make significant investments in order to purchase goods that can then be displayed in a store. However, there is a method to set up a store without a lot of capital – it’s dropshipping.

What is dropshipping?

Dropshipping is slowly becoming a very popular concept and more and more people are looking for detailed information on this topic. It is a specific logistics model used for online sales. It consists in transferring the responsibility for the entire shipping process to the supplier. This means that the online store does not have its own goods and its own warehouses, but only cooperates with an external company that carries out orders transferred to it. Some of the benefits of such a solution are obvious – no storage costs and no need to invest in goods (which may or may not sell), so much lower financial risk. In addition, the transfer of logistics to an external entity makes running a business much easier. Of course, that doesn’t mean dropshipping has only advantages.

Advantages of dropshipping

It cannot be concealed – dropshipping is a very tempting solution that greatly simplifies the process of running an online store and allows you to start earning money on your own account very quickly. You can list many advantages of the system. What kind?

Own business without a lot of capital
Setting up a company usually requires some investments, and in the case of a store they are significant – you need the entire infrastructure to handle orders, as well as the goods and the idea for an online store. Meanwhile, dropshipping allows you to “cut” most of the costs of the project. The only expenses you have to bear at the beginning are those related to the operation of the store’s website and shipping. This means that basically anyone can afford such a business. Moreover, the lack of significant expenses means you can quickly see a return on your investment and start enjoying your profits.

Running your business from anywhere
An online store run in a standard way gives the owner a lot of freedom, but not entirely. It is necessary, among others having a stationary warehouse where goods are stored and where orders are completed and prepared for shipment. Dropshipping is a model that offers much more freedom. You don’t have to have a warehouse that requires inspection at least from time to time. This means you can just work from home and earn money without leaving your home. A trip to another city or even a country is not a problem either. You just need a good internet connection to control your business all the time.

Less responsibilities, less responsibility
By running your own online store in the dropshipping model, you are mainly responsible for collecting orders, acquiring customers and maintaining relationships with them. If the e-shop is integrated with a wholesaler, the inventory and prices are updated automatically. Many companies also offer after-sales service (i.e. primarily returns and complaints). Therefore, the scope of your duties and responsibilities is limited. This means more private life and less stress.

A simple way to do business
The traditional model of running a store also requires much broader knowledge, for example about the logistics process. In addition, it is usually necessary to hire workers, which can also be a challenge. People without experience often find it difficult to enter this world without help. Meanwhile, dropshipping, taking off the most onerous duties from the store owner, means that almost everyone can set up an e-store.

Offer flexibility
If you invest in a commodity, not only do you freeze a large amount of cash, but you also run the risk of it not selling. In the dropshipping model, you can quickly change the assortment if the current one is not popular enough. This flexibility also allows you to adapt to current trends and thus maximize sales. Currently, wholesalers offering cooperation on the basis of dropshipping offer a very wide selection of products from various departments. This in turn increases your options for action.

Fast service = satisfied customer
Reputable dropshipping wholesalers work very efficiently, preparing the order immediately after receiving it. This allows you to offer your customers fast delivery and thus increase their satisfaction!

The disadvantages of dropshipping and the risks associated with operating in this model

As mentioned at the beginning, however, dropshipping also has some downsides like any other business model. However, it is worth knowing that some of them can be minimized or even eliminated. What problems can owners of e-shops operating on the basis of dropshipping face?

Less control over the business
By delegating much of your duties and responsibilities to an external party, you also lose some control over the business. It is the wholesaler who decides how your goods will be packed, shipped and delivered, and you have no right to question it. Therefore, before choosing a partner, you should always carefully check these issues and the rules of customer service (including the return or complaint policy). These are factors that significantly affect the image of the store. If you care about good customer relations (and this is the basis for satisfactory sales results), you cannot ignore it.

Big competition
The numerous advantages of dropshipping and the low entry threshold mean that there are more and more stores operated in this model. Wholesalers also have a limited (though diverse) range. So it’s almost certain that no matter what you choose to sell, someone is already doing it. This in turn means that in order to grab some of the market for yourself, you will have to differentiate yourself. Don’t forget – even a seemingly simple business, such as an e-shop based on dropshipping, requires inventiveness and an entrepreneur’s instinct.

Low margins
Strong competition often also means low margins. Thus, generating a reasonable profit requires obtaining good sales results. However, it is worth knowing that the amount of the margin largely depends on the type of goods offered. There are industries where it is quite high.

Problems with order fulfillment
It happens that cooperation with a wholesaler is not as smooth as you might want and expect. Sometimes the system fails and the goods shown in the store as available are in fact out of stock. Other times, the order fulfillment time may be longer due to the order queue. However, you can partially protect yourself against this by concluding an appropriate contract with the supplier.

Unclear return and complaint policy
If the company and warehouse data are different, this may mislead customers who want to make a complaint or legally return the goods. Therefore, you need to remember to put transparent information on the store’s website about where the unwanted product can be sent to. The problem can also be solved by adding ready-made returns forms to the packages.

Insufficient knowledge of the goods
The dropshipping model allows you to sell any goods. Which means that sometimes you can start operating in an industry that you don’t know well. This, in turn, can become a problem when you start getting detailed questions about specific goods or their parameters. Customers also often expect professional advice on the selection of a product from the store. The solution is to limit yourself to operating in the industry you know or to carefully read the elements of the offer, e.g. by ordering samples from the supplier.

Duplicate content
When running a dropshipping store, you can often become a victim of duplicate content, i.e. duplicate content, which results in a lower position of the store in Google search results. Therefore, never rely on copied product descriptions! Prepare your own and it will pay off for sure.

Dropshipping – how to start?

Nowadays, starting a business in the dropshipping model is quite easy, because there are many wholesalers serving customers in this way in the global market. First, however, you need to create your own trading platform. There are many solutions available that operate on a variety of principles. They differ primarily in the possibilities and costs of setting up and running a store. That is why it is worth carefully analyzing the available options to choose the right one right away.

You can create the store yourself, which is very easy, especially in the case of some platforms, or you can commission it to an external company. Note that the latter will usually produce a more professional effect, but will be more expensive. In each case, attention should be paid to the possibility and method of integrating the platform with solutions for dropshipping.

Choosing wholesalers for dropshipping

Subsequently, you can choose a key partner for your dropshipping business, i.e. wholesalers. There are currently many possibilities in this regard. However, be careful as not every wholesaler offers the same conditions to its partners. What to pay attention to? What to ask? The most important issues that should interest you are:

– shipping costs,
– available forms of delivery,
– the possibility of linking product categories between the wholesaler and the store,
– automatic updating of inventory and availability,
– additional fees for providing photos or product descriptions,
– method of packing goods for shipment,
– the ability to attach personalized extras to shipments – e.g. advertising materials, discount codes, gifts,
– minimum order amount,
– the company’s return and complaint policy (including the cost of returning the goods by the customer),
– first orders must be paid in advance (some wholesalers have to do so).

It’s a good idea to check the reviews of the company before deciding on their services or, if possible, try the advice of other shop owners on dropshipping. It is especially worth checking forums, blogs and groups on Facebook, where you can often find a lot of useful information.

When signing a contract with a wholesaler, make sure that all the previously discussed issues are included in it. If you use a special platform, read its terms and conditions. This is because creating an account means its acceptance.

Dropshipping – is it worth it?

Summarizing: is it worth “playing” in dropshipping? The answer, of course, is not clear cut. However, you should bear in mind that, contrary to what you may read in some articles or websites, this is certainly not a “golden deal” that will help you get rich effortlessly. Running a store is always a job that requires time, knowledge and often sacrifice. It should be remembered that due to the nature of the dropshipping model, obtaining high earnings is possible only if you achieve very good sales results. This, in turn, most often means the need to actively acquire customers, conduct advanced marketing activities and care for the highest level of service, including communication with consumers. You will probably need to invest in positioning (so that customers can reach your store at all), marketing or creating an attractive and functional website. It all takes resources.

It is worth noting, however, that dropshipping is an opportunity to create a business from almost nothing and helps to significantly minimize the risk of starting a store. The model also allows you to easily examine the demand for specific products. If used properly, it can turn out to be very effective, as proven by numerous stores operating in this way. Is this a solution for you? You have to judge for yourself!

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