To begin with, it would be wise to clarify a few misconceptions regarding the term “dropshipping”. There are many entrepreneurs who make the statement that they want to start a dropship business, when in fact, what they mean is they want to become a retailer who uses the best priced dropshipping products and beat competitors. 1
With dropshipping, you save on setting-up and other built-in costs because you do not have concerns and responsibility about the shipping or stocking of products. The process is simplified: when you receive a customer‟s order, you contact the wholesaler, and they arrange the delivery on your behalf.
Therefore, as a retailer, you are able to sell a wide variety of products without carrying any stock whatsoever. Dropshipping2 offers a potential that makes it an extremely attractive financial proposition for new, home-based online businesses with limited funds available!
Sales and profit As in any retail business, retailers generally make their profit on the difference between the wholesale and final selling price of the product, making sourcing your products a crucial step. Dropshipping from China ensures you gain the best opportunity to make more profit with better priced products. It is also wise for retailers or agents to receive a percentage of the sales commission paid by a wholesaler.
There are different ways in which a retailer can display their products to the marketplace. These include keeping product samples for displaying to customers, or showing their range of products on a website. 1 Wholesale Dropship Electronics Direct From China. Chinavasion. 2014 2 Drop shipping. Wikipedia. Modified 13 January 2014
It is important that a dropshipping retailer does not reveal the origin of their wholesale source, because then the customer could contact the wholesaler directly. Therefore, it is in your interest that you find a wholesaler who you can trust and do not reveal this source to customers.
This is achievable by what is known as “blind-shipping”.3 It is a procedure whereby merchandise is shipped without a return address, or displaying a customized label with the address of the retailer. It is also possible for the wholesaler to include a packing slip with the same and retailer contact information.
Wholesaler and products Two of the most important aspects regarding dropshipping are choosing the type of product(s) and the wholesaler for whom you would like to sell as a retailer. Basically, the way to do this is either by working directly with a wholesale organization, or registering with an inventory sourcing company, or agency, that gives you access to a variety of wholesale outlets. If however, you prefer the easier and more convenient method, then operate by way of an inventory sourcing company, which saves you time in researching the various sourcing options.
In general, receiving your products directly from the wholesaler can result in a higher profit margin, because there will not be any membership fees payable. It will further help you, by finding a wholesaler that not only offers a wide range of products, but also specializes in the types of products that you want to sell!
Marketing and promoting your products This is an exciting and creative stage in your business as a highly competitive dropshipping retailer, because having committed yourself to a wholesaler and products that you want to sell – it is now the time for action!
If you receive your products directly from a reliable wholesaler, then you will have a higher profit margain because you will not have to pay any membership fees.
If, however, you prefer an easier and more convenient method of operating, then working with an inventory sourcing company could save you valuable time. In this case you will not need to research the various product options.4
When dealing with China dropshipping wholesalers, you are given the opportunity of being able to compete in the market with the best products at the best prices. You could, however, receive a minimum listing price, meaning that you cannot sell below this price. There are a variety of reasons for this, including making the product too cheap and reducing its value appeal and inherent cost factors.
On the other hand, you are permitted to sell your products for as much over the listed price as you wish!
2: Advantages & Disadvantages
As with any type of business enterprise or investment in your life, there are various advantages and disadvantages5 to consider with dropshipping. However, the main influencing factor is the opportunity you have for immediately making an impression on the market with highly competitive prices. You will find that the business of dropshipping is relatively simple, as are the advantages associated with it.
Primarily, if you utilize a wholesaler as a dropshipping source, it means that you do not have to invest and carry a stock inventory of your own! Therefore, there is not the potential for you to be left holding stock that cannot be sold for whatever reason. In addition, the setting-up costs for your enterprise are considerably reduced and accordingly, so are any financial risk factors. Source of investment and income The business of dropshipping could be compared to making an investment in your future,6 as it can provide the opportunity for you to establish a source of income,
by working from home and using the Internet as your marketing and sales medium. Like any other occupation, the more you know, the better your results are!
With dropshipping you are able to focus on making a profit by doing what you do best, which is marketing your products. As you do not have to concern yourself with getting added storage space for stock, or maintaining inventory records, you can sell a variety of products without the usual time consuming and financial burdens.
Awareness of dropshipping If there are advantages with dropshipping, then it follows that there are also disadvantages. However, if you are made aware of the potential pitfalls, you are prepared and able to anticipate them. As a retailer, you would probably not hold any physical stock of the products. This means that your customers do not have the opportunity to see the items they are purchasing, which can result in a high percentage of returns. A good wholesaler, such as Chinavasion, will provide you with product images and descriptions that you can use on your website, in brochures or any other advertising media.
A customer who is not satisfied with a product will contact you as the retailer and the source they dealt with originally. However, this type of control is a particular aspect that you do not have, in the event of faulty products being delivered. This is the responsibility of the wholesaler or manufacturer, but it is possible for the wholesaler to make a mistake when shipping products, and in this respect it will be you who the customer will hold accountable. Therefore, it is essential that you find a dropshipper who offers you certain warranties on their products. More pros and cons Competition, in the high pressured business world of today is a significant factor and it possible that there will be other retailers selling the same products as you. The main factor of dropshipping is to be prepared and ensure that the wholesaler(s) you deal with are established and reliable. Determine your profit margins, as they can vary with the total amount of the orders you submit. The Internet is an amazing and potentially lucrative business medium, but your website must be designed to both attract an audience and hold their attention.
Therefore, when selecting your products, check and research their features and benefits before targeting your market!