Dropshipping is the business model where the retailer does not keep the goods in
stock; they sell the goods and then pass on the customer’s order to a manufacturer,
wholesaler, or a third party who then ships it to the buyer. However, they are
delivered from a supplier or manufacturer to the buyer with no intermediary
involvement. Consequently, this model enables the entrepreneur to establish an e-
commerce business with little or no capital at all.
How Dropshipping Works?
- A customer initiates a transaction by buying goods on your e-commerce store.
- All the particulars of an order are conveyed to a supplier.
- The supplier encloses the product and sends it directly to the customer.
Advantages of Dropshipping:
• Low Startup Costs: There is no need to spend money on stocked inventory or
on a warehouse.
• Flexible Location: Since all operations can be controlled through the computer
or other Internet-connected device, you can run your store from almost any
location.
• Wide Product Range: You can easily expand your product list simply because
you can partner with multiple suppliers.
• Reduced Risk: Eliminate the problem of unsold stock or inventory damages.
Challenges of Dropshipping:
• Lower Profit Margins: Due to heavy competition, pricing can sometimes be
somewhat restricted, which means that the margins available are much
smaller.
• Limited Control over Shipping: The long time taken by suppliers to deliver
goods may in a way affect the customer.
• High Competition: Because the barrier of entry is slightly low, dropshipping
stores are quite common, so the competition is quite steep.
• Quality Control Issues: Being the seller means that you depend on suppliers
for quality, so you are at the mercy of your supplier’s product quality when
marketing your brand.
Popular Platforms for Dropshipping:
• Shopify: Oberlo and Spocket come integrated with Shopify, making it
convenient to own a dropshipping enterprise.
• WooCommerce: Compatible with dropship suppliers using plugins such as
AliDropship.
• BigCommerce: recognized with the ability to scale up and be perfect for
individuals looking to expand their dropshipping enterprise.