Dropshipping is a type of business model which enables a company to operate without maintaining inventory, owning a warehouse to store their products, or even having to ship their products to their customers themselves. How it works is that the retailer partners up with a dropship supplier that manufactures and/or warehouses products, packages the products, and ships them directly to the retailer’s customer, on the retailer’s behalf.

In short, this is how dropshipping works: 

1. Your customer visits your store and places an order for a product you sell.
2. You as the seller automatically or manually forward the order to the supplier.
3. The supplier packages and ships the order directly to your customer.

The biggest advantage of this business model is that you don’t have to shell out a single dollar to process the order. How so? When the customer places an order, you can use the payment made to place an order with your supplier. 

This then eliminates the need for a physical store to run this business. All you need is a computer and an internet connection. 

Dropshipping Step-by-Step Guide

One of the most important things in this dropshipping guide is how to put up your dropshipping business with as little expense as possible.

Here are the articles that will guide you through starting your dropshipping business.

1. Find the best product to sell

Do comprehensive marketing research on the best dropshipping product to sell.

2. Choosing the Supplier

Get a trusted supplier to ship products to your customers. Find out how to get the most reliable supplier to meet your business needs.

Finding the Right Supplier

3. Plan your Business

Create a step-by-step action plan to build your business. Start by choosing the name, and designing the website and social media platforms to market your products.

Dropshipping Business Plan

4. Know your customers and how to reach them

Find out how to market your products to your niche by learning about their demographics, the social media platforms they use, and strategies to make them loyal followers.

Complete Guide to Identifying Your Customer Persona

5. How to use social media to drive website traffic to your store

Find out how you can drive traffic to your website and convert them into sales!

How to use Social Media to Drive Website Traffic

Advantages of Dropshipping

There are many benefits of running a dropshipping business as opposed to having an actual store location. Here are some of the benefits you will enjoy:

1. Easy to Set Up 

It is so easy to set up this business that all you need to do is find a supplier, set up your website, and sell! If you have the knowledge of creating a website that’s definitely a plus! Don’t worry though if you don’t, there are websites such as Shopify and some WordPress themes which are drag and drop so you won’t have to hire a web developer to build your online store. This eliminates a big cost in setting up your business! 

2. Low Capital Required

There is literally very minimal to zero expense needed to put up a dropshipping business. The only basic expenses you will need to incur are hosting fees for your store domain and dropshipping service. You do not need to buy and store the products you’re going to sell but let the supplier do this job for you. 

If you have knowledge of customer service, you also do not need to hire a customer service representative to take care of your customers because you can actually do it on your own. There are so many tools and apps that can help you simplify and automate your customer support system.

3. Minimal Risk

What I like about dropshipping is that you have very minimal risk. If the products on your store don’t sell, then you lose nothing! There is no pressure to sell these products because you’re not paying for a stall or warehouse rent. All you need to do is wait for the sales to come in! 

4. Flexible Location

Just like freelancing, you can run your store anywhere you want. As mentioned earlier, all you need is a computer and an internet connection to make sure orders are fulfilled and customers are emailed with updates on their orders. 

There are also tools and apps that can help you do things automatically even if you don’t touch your laptop. Email automation can do this job for you.

5. Wide Variety of Products to Sell

There are thousands of products from thousands of suppliers for almost anything that you would like to sell. You can even choose the lowest price from hundreds of suppliers that sell the same product. 

6. Easy to Scale

It’s very easy to scale compared to a traditional business. With a traditional business, the more sales you get the more work you do, but with dropshipping, your supplier will do all the work from packaging to shipping!

Disadvantages of Dropshipping

Just like any other business, there are downsides to dropshipping too. Here are some of the disadvantages of dropshipping you need to know.

1. Slightly Lower Profit Margin

Depending on your niche, there may be too many merchants selling the same items as yours at a very low price. This is because it is very easy to set up a store and has very minimal costs to start up. 

This doesn’t mean you can’t sell at a higher price than your competitor. Some of those who sell at very low prices have very poorly built websites and poor customer service. It is also a very huge advantage to be able to give value to your customers whilst selling products to them.

2. Shipping Issues

Because you are shipping from global suppliers, shipping can take longer than usual. If your supplier is from Asia such as Aliexpress which most dropshippers use, shipping time can take from two weeks to more than a month. 

Depending on supplier location, type of product, etc. they can have different costs of shipping. Some businesses tend to overprice their products to cover this but can have a negative effect on your business!  

3. Supplier Errors

Since the customer orders directly from your website, without any knowledge that you are not the direct supplier of the product, you have full responsibility for any product issues. So when the supplier messes up, you take full responsibility for it. 

But don’t worry, based on my experience both from working as a VA and as dropshipper, suppliers are very amenable to solving these kinds of issues. All you need to do is send them a message and let them know about the issue to have it resolved.

Also read: How I Earned 10k USD in Dropshipping Business: Without spending a single cent on ads

Depending on the niche this business can actually earn you a fortune. Yes, it may have a low-profit margin but depending on the niche, the product you sell, and the value you give to your customers, this can give you a pretty good income. 

If you are planning to venture into dropshipping, I suggest you make this a side hustle when you start out. Once you feel the income is good and steady, and it needs more time from you than working for someone else’s business, by all means, focus on this alone. 

Dropshipping isn’t perfect and isn’t stress-free and there are so many complexities that come with it. But with careful planning and consideration, this can be a thriving and profitable business to have.