In the lucrative world of e-commerce activities and opportunities, a recent trend that's become quite popular is dropshipping.
The concept of dropshipping may sound familiar if you’ve spent any amount of time on e-commerce forums as a software developer or freelance expert looking for ways to earn money online. But you might still be confused about what dropshipping exactly is, what it entails, and what you should expect if you’re interested in starting with it.
Continue reading to learn the answers to these questions.
So what exactly is dropshipping?
Dropshipping is essentially just an order fulfillment method where you, the seller, become the middleman between the supplier or wholesaler and the customer. It doesn't require the seller to handle the stock, hold on to it directly, or even own inventory. You typically just handle the front-end customer interactions and order placement. Following that you place your order with the supplier, who then packages, prepares, and ships it directly to your customer.
So instead of having to purchase certain stock or inventory, you can introduce products from multiple manufacturers and suppliers across the world, and create a stream for order placement and fulfillment. You handle customer care and service as part and parcel of that and ensure that your clients receive what they’re paying for.
How can I get started on dropshipping?
Dropshipping is a great place to start as an entrepreneur or make your way through the world of e-commerce. It allows you to start with very little capital, requires very little monetary investment if at all, doesn't require you to purchase or hold on to the stock, and you're not left behind with deadstock either.
It's possible to connect with suppliers and customers practically anywhere in the world because what matters is the logistics and order fulfillment process. Video ads are one of the ways to market your brand and get more suppliers and customers.
Other than that, it's fairly easy to get started on and you're not worrying about warehousing, inventory management, handling returns, or even packing and shipping. All you need is an order fulfillment platform or channel that allows you to connect with customers, share products from your suppliers, and process orders.
What are some of the dos and don’ts of dropshipping?
It may seem simple, but there is a learning curve with dropshipping and you will need to figure out what works for you. However, before starting, you should know more about and understand some dos and don'ts of dropshipping to make things easier for yourself.
Let’s get right into it.
1. Don’t underestimate how time-consuming and challenging it can be
You need to understand that while simple, dropshipping is not easy. Don’t fall into the trap of thinking it’s going to be a walk through the park, or that you’ll be making hundreds of thousands of dollars overnight — just like everything, dropshipping isn't risk-free.
It can take months to break into the market, find your footing, build a clientele, and even work things out with suppliers you trust.
2. Do remain patient but stay realistic about the returns
For all that to happen, you need to remain patient and continue building your business, while also recognizing that dropshipping isn’t a get-rich-quick scheme.
Often profit margins are low and you’re making a small fraction of the sales, which, in turn, means that you need to bring in more business and orders. It takes time but eventually you do start breaking even and churning out steady profits.
3. Don’t get caught up in too much theory and extensive research about it
Dropshipping is a very hands-on type of business model, and extensive research, reading, and theory can only get you so far.
You may learn valuable insights, tips, and tricks to pulling it off, but what’s important is to stay focused on the actual work. Don’t get sucked into all the courses and slew of content that aims to train you — it won’t get you as far as practical experience will.
4. Do look into what the market trends are showing and implement that
With that being said, however, it is important to do market research and find products that will do well.
Examine current trends, look at competitors and understand that the market is more than saturated with dropshipping experts, and you will need to carve out your place or maybe even use an SEO agency to bump your search ranking.
As mentioned above, dropshipping tends to have low-profit margins, and selling items that aren't really in demand will lead to an even lower return on your effort.
5. Don't sell everything and anything you come across through your store
Building upon that, it’s also important to remember that while dropshipping allows you to sell a wide range of products across various industries, you shouldn't do that. It may be off-putting for customers, it takes away from your branding and marketing strategy (who'd really trust a store that sells kids' clothes and tech accessories simultaneously?) and keeps you from finding return clients.
There is a lot of flexibility when it comes to the type of products that you can offer and sell, but remember not to go so broad that it becomes erratic.
6. Do find your niche and specialize your marketing strategy for that
Instead, what you should do is work on finding your niche. Through market research, your interests, trial, and error, you should develop a direction that you want to focus on.
Your niche will help your business stand out, build a stronger brand identity and presence, and attract clients who are specifically interested in what you’re offering. So if you’re selling women’s clothing, you can stick to a wide array and variety within that niche — and take advantage of the flexibility you have — and tune out men's clothing, children's clothing, etc.
A niche will also allow you to be more aggressive and direct with your marketing strategies, focusing heavily on a particular fragment or demographic rather than everyone and anyone. The more specialized you are, the better.
7. Don’t put all your eggs in one supplier’s basket—diversify your sources
Last but not least, don't become too dependent on a single supplier. Stay open and flexible, build professional working relationships with multiple suppliers who can fulfill your orders, and be prepared.
Suppliers may cause problems such as delayed shipment, price hikes, backlogs, and even ghosting you and leaving your clients hanging. That puts you in a tough spot as the middleman, especially if you’re working remotely.
Another issue is quality control, and suppliers may take advantage of your inability to keep a close eye on that. Again, you may want to test out some products or try different suppliers before settling on a few that you can depend on.
Dropshipping is very lucrative and although the market is becoming increasingly saturated with businesses and individuals following this model, it remains one of the top e-commerce business models.
It’s all about figuring out what works for you in particular, factoring in logistics, industry trends, product demand, supplier availability, and your target market. Eventually, as you find your footing, you’ll also learn to expand your business and increase outreach and have steadier branding.
Just be sure to keep these simple dos and don’ts in mind and remember that there is a learning curve involved — don’t let it hold you back.
This is a guest post by Rameez Hassan.
Rameez is a content creative and digital marketing analyst. He has been an active learner who is ready to do the impossible. He is keen on learning and taking over new challenges every day.