What is dropshipping and how does it works

What is Dropshipping? How Does Dropshipping Work? {Step-by-step Guide}

Hey, guys, are you willing to start a dropshipping store but don’t know What is Dropshipping and how it works? If yes, so, you have landed at the perfect place! Here @Dropshippedia.com you’ll get step by step guide on How does dropshipping work actually.

Well, An Online Marketplaces and eCommerce Business or we can say that dropshipping business these days is a great way to make 7 figures by just working from home.

But..

I know my friend a lot of queries are moving in your mind and stopping you to start your own dropshipping website i.e. how does that work? What kind of website do we need to make 7 figures with very few investments? What kind of drop shipping products we can sell? from where we will get the products? Right?

Here, Dropshipping can be the right answer for all the questions mentioned above. Dropshipping Business model is the most recommended and Easiest way to make the 7 figures with less investment without any kind of physical effort. Anyone can start dropshipping by becoming their own Leader.

So, without any further ado!…Let’s start with the complete guide on What is Drop shipping and How does Dropshipping Works ๐Ÿ™‚

What is Dropshipping?

Dropshipping is the process where you can sell products to the customers directly from the manufactures without any physical interaction. In Drop shipping Business you donโ€™t need to buy or keep the inventory with your self, You just have to become a mediator between customers and manufacturers. All you need to do is make an online dropshipping store with the right product selections.

What is dropshipping
Is dropshipping profitable in 2020

The best part of starting a Dropshipping store is you can start with a Limited budget. Whether we donโ€™t need to keep the products with ourselves in dropshipping, but the decisions we need to take should be very careful in every step of Dropshipping in terms of Drop Shipped Products Product, Niche, Shipping, etc. 

Check this out- Best shopify apps for 2020

How Does Dropshipping Work [3 simple steps]

Guys here I’m going to tell you really amazing 3 steps which will help you to know about how does dropshipping work actually…So, Have a quick look at the following image you’ll get a little bit idea about how dropshipping works. ๐Ÿ™‚

How Does Dropshipping Works
How Does Dropshipping Works
  • The customer places an order on your Dropshipping websites.
  • The drop shipper needs to forward the customer and order details to the manufacturer.
  • And then the retailer will ship the product directly to the customer.

What are the Benefits Of Drop shipping?

What are the benefits of dropshipping

1. We can start with a limited budget:-  In every business, Investment is the main key which keeps us within the boundaries, While we are in drop shipping, we just need to put efforts into making a good Dropshipping store by choosing the right company or platform which fulfills the order through drop shipping. We are not going to invest in buying any raw material, or even product. And We are not traveling anywhere to meet retailers or manufacturers. All we have to do the right selection of dropshipping aspects over the internet.

2. Dropshipping is easy to get started:- Starting a dropshipping eCommerce business does not require much effort and experience like other businesses. As we just need to find the right supplier of the products, Creating an online Dropshipping website, and start selling to the customers. All the efforts need to be put only virtually, not physically. It is easy to understand all the drop shipping processes and procedures of dropshipping over the internet.

3. No Limits while choosing the product to sell:- As we are not going to be the manufacturer or owner of the inventory, there is no limits or boundaries while selling dropshipping products to your customers. You can either start with one product or can mix the several products that are totally up to you. We can sell anything to everything on our website, all we have to do is find the right supplier of the products that it!

4. Dropshipping business can be run from Anywhere:- While we are in dropshipping, our physical relationship going to be with the computer only. It can be at your home or even in the office if we are doing dropshipping in a side business with an ongoing Job. We don’t need an office for this Dropshipping business, no employee, no warehouse, almost nothing! We just need a good Internet connection to make our virtual activity smooth.

5. Less risk of Losses:- As we work as a mediator only, we always have a huge opportunity to choose the products from anywhere. If any of the products are not selling well, we always do have a choice to start selling another product. No burden to be stick with a single product.

6. Easy Growth:- Drop shipping is the place where you can start with less budget as well, which means there is no rule to involve high capital like other businesses. There are many reasons for which you can easily start growing. We can start with small and once will start getting a good number of orders, you can scale with the profit amount.

I hope you guys are getting amazing information in this amazing guide from What is Dropshipping to How does dropshipping work. Now, Let’s start with the Drawbacks of dropshipping which are given below…So, have a quick look at the drawbacks ๐Ÿ™‚

What are the Drawbacks Of Dropshipping?

Drawbacks of dropshipping
Drawbacks of dropshipping

1. Less profit margins in comparison to dropshipping Wholesalers or Manufacturers:- Profit margin remains less in comparison to the manufacturer of dropshipping wholesalers as we work as a mediator. Products you will sell to won’t be at the cost of the products, your retailer will set his margin of profit on the product cost, and then you will sell the products to your customers with your profit margins, so we cant higher the price of products too much because no one will prefer to buy them. As in dropshipping advertisement, cost needs to be maintained so overall profit remains less in comparison to manufacturers. what you can do, Always try to sell as much as products you can so that you will be able to maintain a good profit by the number of quantity.

2. Competition is Relatively High:- As you know these days Dropshipping business is very popular with a low barrier to entry as it allows a wide area of product options with fewer investments, Anyone can enter into the market, No idea how many dropshipping stores open in a day, Many people sell the same products. If your supplier offers drop shipping to you, they are likely to offer to drop ship to anyone. You can still keep yourself a few steps back from the competition by choosing the right or less competitive niche.

3. Less control over the Quality and Quantity of Products:- As we are working in the business as a third party, We can’t control the quality of the products and also cant track the quantities, It might lead to Cancellation or Backorders sometimes. Any issue raised by the customers will be your responsibility only whether it can be related to the product, shipping time, packaging, etc.

4. Shipping delays:– Retailers offer dropshipping to many drop shippers like you, because of the high number of order or inventory management, there can be delays in the shipping time, which can be a huge issue for the customers of not placing the order, or maybe when they placed it, it can leads to cancellation as well. Also when someone places the order for multiple products at your drop shipping store, and you will have a different supplier for all the products, which means all the products need to be sent in separate shipments with separate shipping costs. So no customer would like to pay to ship for each product. This means you need to lower your margin and have to adjust the shipping charges in your profit margins.

5. All the liabilities to the customers will be on Drop shippers head:- As your customers will place the order on the drop shipper’s website, which means drop shipper will be accountable to the customers when it comes to product quality, damage, returns, refunds, shipping delays, etc.

How to Start Dropshipping Business?

Creating a dropshipping website is not difficult but the research over the niche, products, good suppliers for dropshipping, and the most important thing is marketing those products on the right platform is a little bit hard. So, here we make it easy for you guys so that you can easily gather information and start your own dropshipping website asap ๐Ÿ™‚

How to start Dropshipping Business
How to start Dropshipping Business

So, basically in this we’ll cover up 4 points so that you can easily go through them and gain more knowledge before stating a store.

  • Select the right niche
  • Choose the right Supplier
  • Choose the right selling platform to make your website
  • Start marketing your products on Social media

Here below we listed a few simple steps for beginners to get start an e-Commerce Dropshipping websites. So, without wasting much more time in talks let’s get started with “How To Start Dropshipping”

1- Select the right niche:- After being well aware of what is dropshipping, the very first step to getting started a dropshipping website you need to do good research over the products and categories to choose what kind of products are good for dropshipping which you can sell to your customers. This is one of the most important steps or elements of the dropshipping success, most of the people search here and there How to find a good dropshipping niche, right?

I know my friend choosing the right niche not be taken lightly ever because that’s going to be a pillar of the website. But…don’t worry, Here below we mentioned some factors which you can keep in mind while choosing the right niche or product.

How to find a Dropshipping Niche?

How To Find Best Dropshipping Niche
How To Find Best Dropshipping Niche
  • Research on Competition:-  While in dropshipping, we always need to differentiate our website from other drop shippers. Selecting a niche should be the next step after doing good research over the competition in the market, for example, niches like beauty and pets are highly competitive niches and we can’t imagine how many drop shippers enter into dropshipping every day. So Vitamins or organic products can be a good niche in terms of competition. But that does not mean you can’t sell those kinds of products, as your website won’t have limitations to list any kind of products, for giving your customers more options to explore, you can do give them competitive niches products too, but target more on less competitive niches.
  • Ensure profit Margin:– As we are not going to be a manufacturer of the products, profit margins are always less comparatively. Always choose the product in which you can maintain a good margin of profit. Always try to keep your prices lower than your competitor’s website, always analyze how they are listing the products, also try to give some more benefits to your customers to grab their attention, For example:- Give them a discount code for first purchases, Offer them free shipping as free shipping compels them to make a purchase.
  • Ensure about Shipping cost:- If products will be larger and heavier, then the shipping cost will be higher as well. Higher shipping costs will always lower your profit margins. So always go for trendy and handy products which will remain light in weight and can ship easily with low shipping cost. You can consider jewelry, Makeup, Supplements for such kind of lightweight items.
  • Research on product reviews in the market:-  Customer reviews and their experiences with the product is a great way to be aware of the pros and cons so that you can give good customer services at your website. Do as much as research you can do over the social media. Try to refine as much as cons you can to reduce the possibility of returns.
  • Always stay involved with trends and demands:- In the dropshipping business, there is much competition, if your products will be old, it will be too difficult to sell as well. So always try to keep yourself with trends and demand in the market. Keep adding always new products on the website so that customers can stay connected to your website and will be your returnable customer. To give new products to your customers, you will always be need to constant with changing products in several periods which will engage your customers to be excited about new arrivals.

2 – Choose the right Supplier:- Once your niche or products are researched, we need to take the next step on how to find dropshipping suppliers of the products, which is a very important element in dropshipping. Product availability, product quality, shipping time, etc all depends on your supplier, so finding the right supplier is the hardest part while entering into dropshipping.

How to find Dropshipping Suppliers?

Here below I’ll tell you few factors to keep in mind while choosing the right suppliers. So, without any further ado let’s get started with How to choose dropshipping suppliers and wholesaler.

How to find good dropshippers suppliers
How to find good drop shipping suppliers
  • Analyze product Quality:- In dropshipping we always depend on our supplier in terms of product availability, quality, and quantity, etc. To engage your customers with your website, we always have to make them satisfied with the purchases they are making at your store, so to ensure their satisfaction we need to be ensured about product quality, so while choosing the supplier, the very first thing we need to ensure it should be product quality.
  • Shipping Time:- Many Dropshippers take too much time when they receive many orders, so in this case shipping delays can happen. The customers always place the orders after being aware of their delivery date, so taking too long for the product shipments can give you many cancellations or less orders as well, so always choose the supplier who guarantees fast shipping to your customers.
  • Ensure about Return and Refund Policy:- In case of returns, the customers will place the request on your website, then before choosing the right supplier, always make sure about the return policy, many Retailers does not accept products back, in this case, the liabilities will be yours, So make sure to be agreed upon Return policy of your supplier.
  • Must not charge a Huge fee on orders:- It is normal if drop shippers charge some fee on several orders, but make sure they do not charge more amount of fee, If they charge more then $5 from you, you should leave him and look for another good supplier.

3 – Choose the right selling platform to make your website:- Once the product or niche has been chosen and the right supplier has been found, the next step is going to choose the right platform where you can upload the products and can show to your customers, But the question is, there are many platforms to do this drop shipping process, how can we choose the Best Dropshipping Platform now?

How to find Best Drop shipping Platform?

How to choose best dropshipping platform (Shopify/aliexpress/amazon dropshipping)
(Shopify/aliexpress/amazon dropshipping) Pros and cons

You can either sell the products on pre-established platforms for example drop shipping amazon service, eBay, etc, or You can make your own Shopify Dropshipping platform to sell your products. Have a look at the advantages and disadvantages of both the platforms:-

Selling products on Pre-established Platforms (Drop Shipping on Amazon, Ebay, etc)

Pros

  • Easy to set up accounts on their platform and selling products there.
  • As they are already having huge goodwill, they will have already have engaging traffic to their platforms.
  • Customers trust their goodwill and branding a lot, we do not have to do anything to grab their attention as they will trust the platforms already.
  • You can make money easily from those websites.

Cons:-

  • As they are giving too many pros but they will charge the commission or fee on every purchase you will get.
  • Controls over the branding, services to your customers, layouts, and other customization will be limited, in comparison to your own website.
  • You will need to complete with your competitors on the same platform, which you can easily ignore while using your own website for Dropshipping.
  • As anyone can easily sell on their platforms, then customers will have many choices almost for every product on the same platform, Differentiating yourself can be too difficult in this case.

Having your own website (WordPress, Shopify Dropshipping, etc)

Pros:

  • Controls over Branding, Photos of the products, services to customers like offering them free shipping, Discounts, etc will be easier, Control over the layout of the website will completely on you, And many more advantages.
  • You will be the owner of the website on a third-party platform with your branding.
  • You don’t have to give any fee or commission on the purchases, so it will higher your profit margins mostly people use aliexpress dropshipping for selling products online.
  • The marketing of the website will be handed to you, it will depend on your limits how much marketing you can do, which will disregard the limitations.
  • As you will target the customers separately by doing marketing, there will be no direct competition with your competitors on the same platform.

Cons:-

  • There will be expenses such as for setting up the website. hosting etc, like Shopify dropshipping you need to spend $29 for a monthly subscription which does not occur while selling on pre-established platforms.
  • As the website is going to be yours, the traffic you will always need to be invited, it won’t come automatically like pre-established platforms.
  • For crawling your website on google, you will need to work on SEO and marketing, pre-established platforms come on top already on google because of their good investments and branding.

4- Start marketing your products on Social media:- Once the website is set up with the right products and suppliers, the next and last and the main step will be to get the actual success is getting traffic at the store. There are several ways to get the Traffic at the store, Here they are:-

Best Ways for Marketing Drop shipping Business

How to market dropshipping products?
How to market dropshipping products?

Characterize the objective market for your outsourcing business

Having an unmistakable thought regarding your objective market assists with taking a shot at the remainder of the showcasing techniques for your outsourcing business.

Utilize web-based media promoting

Web-based media has an enormous potential to direct people to any business. With a legitimate crowd building methodology, you can utilize online media promoting as a development hack for your business.

Go through selling and Cross-selling

Up-selling and Cross-selling is a fundamental piece of promoting for an outsourcing business. With legitimate up-selling and strategically pitching methodologies, you can twofold your deals.

Start email promoting for outsourcing

Email promoting is an extraordinary method to get returning clients for your outsourcing business.

Run Facebook Ads to accomplish your advertising objectives

Facebook advertisements are the fastest and most straightforward approach to begin with promoting for an outsourcing business.

Start content advertising for your outsourcing business

Content advertising causes you to pull in new clients into your business channel in the beginning phases of their buying venture.

Use text informing to advertise your outsourcing items

Text informing is one of the most underestimated promoting strategies. In any case, we found that it is more compelling even than email showcasing.

Prepared for an effective Dropshipping business?

  • Run Facebook Ads to suit your advertising objective and financial plan
  • Catch guests into supporters with convincing email pop-ups
  • Identify where your niche hangs around online and then join their group
  • Start a blog that drives natural traffic to your outsourcing business

Just expanding your advertising spend isn’t the most ideal approach to scale your outsourcing business. It’s not how much cash you spend but rather how you go through your cash that is important.

Dispensing assets to pay per click promoting is a more astute move for the outsourcing plan of action. You can purchase PPC promotions on pretty much every web-based media stage conceivable from Facebook to Instagram to Twitter and Pinterest.

While PPC promotions may appear to be clear, it tends to be precarious to realize where to put away your cash. You would prefer not to put resources into an inappropriate sort of promotion just to understand that they aren’t acquiring the traffic that you need or need. Like with everything else: Do your examination, particularly with regards to showcasing and publicizing online.

Outsourcing can be an extraordinary methodology for eCommerce vendors who need to minimize their overhead. In any case, with the outsourcing market filling constantly lately, there are more contenders than any time in recent memory. Moreover, eCommerce traders who embrace an outsourcing approach must fight with lower net revenues while picking the privilege eCommerce stage to help their outsourcing technique.

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SOME FINAL THOUGHTS – Internet business has made great open doors for both of all shapes and sizes organizations. It has changed the retail world by associating retailers with clients around the world. A virtual shop would now be able to be just as productive as a physical store. What’s more, with the notoriety and simple expectation to absorb information of outsourcing, anybody can attempt itโ€“you don’t require a ton of funding to get ready for action. The most significant thing is to arm yourself with information.