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What is Dropshipping?

With dropshipping, you can sell products online without them ever being in your hand.

What is Dropshipping?
Photo credit: Ujwal Sharma

Have you been thinking about opening your own business? but you don’t know where to start, what you should sell, you don’t have any money to invest in products and you don’t even have a place to store inventory. Well, that’s what Dropshipping is about! 

What is Dropshipping?

With dropshipping, you can sell products online without them ever being in your hand. All you need is a computer,  an online store, and a basic understanding of how to market and sell online.

How does Dropshipping work?
What is Dropshipping?
Photo credit: Ujwal Sharma

First, you find what you wanna sell from a supplier and list that product on your website at a price that you set. When someone places an order for that product, your customer pays you the retail price you’ve set and you make a profit. Then you’ll place the order with your supplier at their wholesale price and have it shipped directly to your customer. For example- you found this watch on a supplier’s website for $10, you would then list it ok your website for $30. When the order comes in through your website, you then place the order with your supplier using your customer information, keep a $20 profit and have the product shipped directly to your customer.

Why Dropshipping?

Dropshipping is a great business model for aspiring entrepreneurs to start with. It can help you test different business ideas with limited downside. Here are a few reasons why Dropshipping is such hype!

1. Easy to get started 

Dropshipping is an e-commerce business that is much easier to run when you don’t have to deal with physical products. You don’t have to worry about

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  • Management /payment for warehouse
  • Packing and shipment
  • Tracking inventory for accounting
  • Handling returns
  • Managing stock level  

2. Fewer capital requirements

This is the biggest advantage of Dropshipping.  You can launch a store without having to invest thousands of dollars in inventory. In this business model, you don’t have to purchase the product unless the sale has been made and you’ve received the payment from the customer. Unlike a traditional retail business, you don’t sell through any inventory purchased upfront, thus there’s very less risk involved in it. 

3. Low overhead 

Since you don’t have to deal with purchasing inventory or managing the warehouse, your overhead expense is very minimal. Many Dropshipping stores run as home-based businesses.  They just require a laptop and a few recurring expenses to operate. These costs will increase as you grow but would still be low compared to those traditional businesses. 

4. No inventory management 

You don’t have to worry about managing inventory,  packing, or tracking which means you can focus almost exclusively on marketing, promotion, and merchandising.

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5. Easy access to millions of products

You have access to millions of products instantly that suppliers are continuously researching to determine what’s trendy and what will sell.

6. Easy to scale

Dropshipping is really easy to scale. By leveraging suppliers, most of the work to process additional orders is borne by the suppliers allowing you to expand with a lesser burden.  You can also hire a virtual assistant when your business starts to grow.

Why would Dropshipping model work?

You might wonder why would this work. Why would people buy from you and not from the suppliers directly? , this is because of the following reasons-

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1. It’s a big internet 

Internet is really huge with billions of people across different platforms due to which the customers may not know about the suppliers to buy from them directly. 

2. Product isn’t everything 

When people buy things, they’re not just buying products.  They buy into the marketing, positioning, trust, brand, and lifestyle those products represent.  With Dropshipping, you can focus on marketing your products and selling the right things at the right time, providing real value to the right people because you’re not dealing with other challenges faced by traditional businesses.

Disadvantages of Dropshipping 

As much as Dropshipping is attractive,  like any other approach, it has its own downsides too, let’s take a look.

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1. Higher potential competition 

Because it’s really easy to get started,  there’s a higher potential for competition. That’s why you’ll find a lot of advice out there that recommends you to start off finding a niche audience so you can operate with less competition. 

2. Supplier errors 

Though uncommon, it is inevitable that the supplier will mistakenly ship the wrong item to your customer.  If this happens, don’t take it personally and handle the return like a professional- either order a brand new product from the supplier or offer a complete refund.

3. Shipping time is usually longer 

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Since many Dropshipping suppliers are based in China, shipping times are generally longer, turning some customers off. But if you make your shipping times clear during the buying process, many visitors appreciate the clarity. 

There are hurdles in every business but the good news is that with some careful planning and consideration, most of these hurdles can be resolved. Hard work is always required to start a business. Are you ready for it?

Written By

Tisha Malik is a News Analyst and Author at Empire Weekly. She is a self-motivated and hardworking student pursuing a BBA from IP University as well as a French-language degree from Delhi University. She was born and raised in Delhi and is an ambivert who enjoys trying new things, whether for her profession or for food! Her interests include reading books (on habit building, financial intelligence, and entrepreneurship), learning new languages, networking with others to learn new things, creating content, and so on. With an entrepreneurial mindset, she always seeks opportunities and makes the most of them. She looks forward to connecting and working with people who could appreciate her skills and help her enhance them.

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