What is Dropshipping?
What is dropshipping, and how does it work? A reference guide to get started and make money with dropshipping. We make it easy for you.
We hear a lot about dropshipping on the internet and social networks, such as Youtube, Instagram and Facebook. Many of you have contacted us to ask Ohma to help you sell online. Dropshipping is a topic we regularly cover when meeting with our clients. In this article, we will help you to understand what is dropshipping and how does it work.
What is dropshipping?
Dropshipping is a simplified form of e-commerce sales. The seller Website does not hold any stock, and its supplier takes care of delivering directly to the end customer.
How does it work?
When you do dropshipping, you become a distributor. You are the intermediary between a supplier and a customer. Your role is to find, select and promote the products of your choice to potential consumers.
In a classic mode of operation, the company controls the entire production and sales chain. The seller website is also the product creator and distributor. It ensures quality and production deadlines, puts the product on sale via its physical or online distribution channels and then manages its stocks and after-sales service. The brand or business carries the entire production/sales chain.
Unlike the traditional approach, dropshipping allows an entrepreneur to work as a team with a supplier. The production and logistic functions are separated from the front office of e-commerce, and the dropshipper focuses on Communication and Marketing.
As an online retailer with Dropshipping, your single objective is to achieve maximum sales and generate turnover.
The Dropshipping in four simple steps
Dropshipping works in 4 simple steps:
- Your customers place an order from your online shop.
- The website automatically transmits the order to your partner supplier.
- Your partner supplier prepares the order.
- The supplier takes care of shipping the customer order.
Why should I choose Dropshipping?
Dropshipping is a win-win situation for both the online retailer and the supplier. The supplier takes care of stock management and logistics.
They become partners by focusing on their core business and niche expertise for an excellent customer side.
I am a local business, is dropshipping for me?
If you want to make a transition to online sales exclusively or complementarily on different products, dropshipping is the solution for you.
Indeed, this method allows you to sell products online that are mostly unavailable in physical shops and responds to different marketing and sales cycles than the management of a physical shop.
I am a supplier; how can I use dropshipping?
It can be interesting for a supplier to use Dropshipping for several reasons. First of all, Dropshipping allows the supplier to focus on its core business: product logistics and distribution. Another advantage is that the supplier does not have to invest time and money in an e-commerce site in marketing and communication since the distributor takes care of it directly and promotes the products you sell.
Ordering many products with the uncertainty of selling them is a risk that individual traders often carry. Dropshipping works on a just-in-time basis with zero stock. The entrepreneur limits his costs and risk-taking while increasing his margins.
Dropshipping is a practice that has been around for a long time!
It is not new; if we look around us, many e-commerce sites use this strategy.
Dropshipping pros and cons
To understand if Dropshipping is for you, we have listed the strengths and weaknesses of this technique. This sales approach has many advantages but also some points to consider before you take the plunge.
Easy to set up
Getting started is pretty quick.
A small financial investment
You avoid extra costs with Dropshipping from not having stock to manage.
They usually represent a high cost for most retailers.
Dropshipping allows you to choose products from your supplier’s catalogue and add them directly to your website without the stock’s financial responsibility.
Among the great benefit that Dropshipping offers, there is, of course, the logistics.
The logistics, including stock management, package preparation, box packing and shipping, are not done by you. It is your supplier who takes care of this.
Not having to worry about logistics will allow you to focus on the communication and marketing of the products you will offer on your online shop.
Despite its many advantages, Dropshipping also has its drawbacks.
Most Dropshipping suppliers locate themselves in Asia. The fact that you can benefit from low commercial margins forces you to find suppliers among the cheapest on the market.
These suppliers are not subject to the same constraints as those applied in Europe and, more specifically, product quality and conformity.
With Dropshipping, in most cases, you do not have control over your product’s packaging, which makes the personalization of your package shipment limited.
Keep in mind that you are an intermediary, your customer orders from your online shop, but the item they receive is constructed and made by your supplier.
With Dropshipping, you do not have to worry about logistics or delivery because you are working with a supplier. Still, they have their shipping policies and their delivery times.
Today, with the expansion of express delivery and e-commerce sites offering faster deliveries, being dependent on a supplier with longer delivery times can complicate Dropshipping.
Complicated management of returns
Today in France, one in five products sold online is returned. A product that does not exactly match the picture or doesn’t correctly meet the customer’s expectations has a very high chance of being sent back. Managing these returns with a Dropshipping shop is not easy to manage.
Therefore, it is imperative to choose a good supplier who has good management of returns and complaints.
Suppose you enjoyed this content and want to continue the Dropshipping adventure for your business. In that case, you may be interested in these articles on SEO (Search Engine Optimization) and Niche Marketing for your project’s success.