Drop shipping business explained
Drop Shipping Business explained. Early warning, It can be bitter for some of you. But, no matter how bitter the fact is, it's better to know the truth rather than sorry afterward.
Drop shipping is a supply chain management technique in which the retailer does not keep goods in stock but instead transfers customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer - Wikipedia.
It is a retail fulfillment method where a store doesn't keep the products it sells in stock. It's a business model where you link the supplier store to customers through your store.
There are many ways to build your drop shipping business, you can choose to use an e-commerce platform like Shopify, PrestaShop, WooCommerce, and many others. You can also drop shipping from a marketplace like eBay, Amazon, or any other marketplaces. You can even drop shipping from a marketplace to another marketplace, like from Amazon to eBay or the other way around. Drop shipping is definitively an easy way to start an online business. You can start to build your dream online business with a very low cost.
Is Drop shipping Legal?
That’s an excellent question because some people think that there’s something “shady” about it. Not true!!! And I’ll prove it to you.
Drop-shipping is legal according to any law-book. For every item in the market, there’s a wide range of prices and most of the retailers are buying it from other suppliers. Nobody can tell you how much profit you can demand and nobody forces the customer to buy specifically from you. It’s their free choice to do research on other sites or not. You are buying the item honestly from your supplier, paying your fees and taxes and it’s the customer’s choice to buy it from you and not from your supplier.
Even a marketplace like eBay allows drop shipping as your sourcing method. They do not require the seller to reveal where he sourced the product as long as it’s purchased in a legal manner and as long as the seller can guarantee that the item will be delivered to the buyer within 30 days of the end of the listing (eBay policy on Drop Shipping). A lot of big wholesale marketplace like AliExpress even support drop shipping.
Just because you don’t keep the products in your own warehouse, but rather have your supplier ship it directly to the customer doesn’t make it illegal. On the contrary, you are providing a better service to the customers by finding excellent products for them.
Drop shipping is a supply chain management technique in which the retailer does not keep goods in stock but instead transfers customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.WikiPedia
Why Drop shipping?
If you are in one of the situations below.
- You have a passion to be an internet entrepreneur.
- Until now, you can only dream to have an online business.
- You are an employee that works from 9-5 and eager to make your life better.
- You are a homestay mother or a single parent that want to make money from your home and stay close to your children.
- You are a student and you want to start your online business to make extra money for your dream life.
- You already have an online business and are stuck trying to expand your business niche.
- You are selling items online but your market is static and it already takes most of your time.
- You are tired of all the internet advertising about making quick money online and never get it works.
Whatever your background is and whatever your life goal is, drop shipping is a viable option. It's legal, easy to manage, and with low starter cost.
Advantages and Disadvantages of Drop Shipping?
Like any other businesses, drop shipping also has its advantages and disadvantages. Let's see each more closely.
- The Advantages.
- Super Low Costs.
Depending on what sites you are using for drop shipping you can start your business at a very low or even at zero cost. You can sell hundreds or even thousands of items with absolutely ZERO stock in your house or warehouse!!
- Easy to Implement.
Since you don’t need inventory, you only need a supplier store. Then a platform like a website or a marketplace site where you will put your items for sale. That's all and you are ready to go.
- Very small risk.
Since you don’t have to invest in stocking the item, there is a very little risk in the drop shipping business. You don't need to worry about warehouse cost, broken stocks, and even returned items
- Work from wherever you want.
The only thing that you need is an internet connection, as simple as that. Actually, if you use the correct software for automation you can even get most of the work done for you! Therefore you can work from home in pajamas!
- Super Low Costs.
- The Disadvantages.
- Since you don’t hold or control the stock (which is a cost-advantage), you need to constantly monitor your suppliers for stock availability and price changes.
As mentioned above in the disadvantages section. One of the things you need to worry is the stock availability and price movement. Price movement and stock availability can be very dynamic. To handle that problem you need to use tools that will automate everything and make the business less human error.
Can I fail in drop shipping?
During the time I am drop shipping, I often meet these stories by drop shippers that think they're failing and find it hard to make money from their business.
- First, they can't get enough traffic to their store and end up not making any sales.
- Second, they already spent a lot of money on FB ads so when they actually get orders the profit margin is too low to grow the business.
- Last but not least, they often follow the books and words from "the so-called Gurus" that they copycat the whole steps and methods in the hope it will make them enough money to stay survive.
I can't talk here as if I am already a master on drop shipping. There are still a lot of things I have to learn, and I can be considered lucky to be able to make an average of $4,000 USD per month with a steady pace. Below I'll explain the steps I am using. But, please keep in mind that these steps are not rocked solid and can't be implemented as it is without any additional modifications to your needs. You should learn your market and adapt the examples given below.
First 2 steps.
- Determine the market that you want to enter.
Chose a product category that you really know and think has a potential market. When deciding what to sell in your store, bare this in mind. Don't make it too narrow but also don't make it too broad. The narrower your store products, the narrower the market. On the contrary, the broader your products variations, the harder your potential buyers find the right product for them and buy the product from you.
- Pick the right platform(s) for your store.
As mentioned earlier, there are many ways you can start your store(s). I am using use 2 ways. A WooCommerce store and an eBay seller page. I use them to cover both market types. I will explain this in more details in another article. Bottom line is a platform should at least have these conditions: low maintenance cost, expandable, and has tools to support my sales.
I have written my experience on how I finally end up using WooCommerce over Shopify here.
Killing the game in style.
- Make an awesome marketing campaign.
NEVER START A FACEBOOK ADS YET! Don't, if you don't know what you're facing and understand what you're doing.
An awesome marketing campaign is "a campaign that can assure people that you're a real deal". Customers need to be sure they can safely shop in your store. If you can get to this position with your campaign, then you can think to start using ads. This combination will be a killer weapon for you, and this should start your store running.
- Use the right tool.
Chose tools that will cost you just enough to make your sales. I personally chose tools that are a SAAS or a subscription-based service. Because I know my business will evolve but I don't know when, and I need good support (most one-time pay tools don't provide good support). Nevertheless, chose what you think is right and support your business.
- My personal recommendation tools.
1. Dropshix for WooCommerce drop shipping tool,
2. Dshopit for eBay drop shipping tool,
3. Jivo chat for the messaging system.
I am using these tools for my business, so if you need help I will be able to help (even connect you with the dev team). These tools will make you run your business better, I can guarantee that!
The end of the journey
Those are what I am doing until now, and if you're reading this article then you know that it's working. Even for a product like DROPSHIX, so it should works for your store too. Just remember that those steps are only the basic points, you need to modify them to support your store. But, if you follow those steps correctly. I can promise you that you will see a significant improvement within the first month.
Thank you for reading, I wish you a very successful life and hope that I have made a fine explanation about drop shipping business. I am sharing this knowledge in a hope that you will share this with others too. Let's live to achieve our life's dreams and not others!
See you next time! 🙂 🙂 🙂