Dropshipping is a retail method in which a store never stores the products it sells. How it works is that a store shows a product in stock, buys the product from a third party which ships directly to the customers. The third-party seller does have to get involved in the shipping and the dropshipping work store doesn’t have to keep the products in stock. The store does not own any inventory.
Some of the famous dropshipping work stores include Ali Express, SaleHoo, Wholesale2B, Worldwide Brands, Sunrise Wholesale, Wholesale Central and Shopify. Most of these stores offer a mobile app that connects shoppers to millions of customers. Dropshipping offers a great business model for people who plan to start a business with only a little investment. Dropshipping work is easily accessible and let’s be honest, it works!
When it comes to typical e-commerce stores, you usually have to buy the inventory so that when a customer orders from you, it is ready to be shipped. That means you have to store the products whether you store it in a warehouse, your home or you buy/rent a dedicated space for storing these products. If you store the products in a warehouse or a rented space, that will increase your costs such as rents, handling fees, and some additional shipping as well.
Other than that you will need to hire inventory specialists and a lot of other employees as well who will be responsible for packing and shipping the products. That will require a lot of capital. You will also need to keep fulfilling the inventory levels so that you are never out of stock. You will have to spend a lot of money on inventory while not even being sure that these products will even sell in the first place. It is definitely a huge risk.
With drop shipping, you do not have to think about having any inventory. You don’t have to store any products, you do not have to pack anything and you do not have to ship anything either. You also do not need to spend a huge investment in buying the products in the first place. All you have to do is to make sure that the customers pay the price of the products and the third party store ships the products. That’s it! You do not have to invest huge capital in this business.
You can invest and focus on your marketing strategies rather than investing in the products or supplies. Some of the advantages of dropshipping are listed below:
Only a little capital is needed: You only need a small amount of investment when it comes to the dropshipping business since you’re not owning any inventory or stock, you are not buying any products or supplies, and you are not packing or shipping any products either.
The risk is minimal: Since you are not buying products firsthand, you do not have to worry about the products that are not being sold. You will not face any direct losses. Even if your dropshipping store doesn’t become a hit, it will not be that much of a loss to you since you did not make any major monetary investments.
No need to hire a large number of employees: Since you do not own any inventory with dropshipping, you will not need to hire people who keep a record of the inventory. You are also not shipping or packing items as well so you will not need to hire people for these jobs either. That will save you from a headache of managing these things.
Easier to scale: With a traditional retail business, if you receive three times the number of orders, you’ll usually need to do three times as much work. By leveraging dropshipping suppliers, most of the work to process additional orders will be borne by the suppliers, allowing you to expand with fewer growing pains and less incremental work.
Sales growth will always bring additional work—especially related to customer support—but businesses that utilize dropshipping scale particularly well relative to traditional e-commerce businesses.
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