What is dropshipping? You have probably heard that it is a great way to make a bit of cash online, but you aren't aware of the specifics of it, right? Don't worry. Plenty of people are in the same boat as you. Thankfully, you have us. On this page, we are going to run you through the basics of dropshipping. This will allow you to understand what the business model entails and, perhaps more importantly, whether it is right for you. So, without further ado, let's jump in and answer the question 'dropshipping what does it mean?'.
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What's dropshipping?
Before we dive into the benefits and downsides to dropshipping, it is probably worth answering the question 'what is the meaning of dropshipping?'. By knowing this, you will automatically know how everything works. You may be able to establish a few of the pros and cons of the business model too.
Dropshipping is an eCommerce business model. However, it is wildly different from other forms of eCommerce. Traditionally, if you wanted to sell products online, you would need to hold the products in stock. This means a lot of 'upfront' expenses. Granted, the profit margins were high, but there was always that barrier to entry in terms of costs.
With dropshipping, you won't be holding the products in stock at all. You will be selling them, but shipping the products out won't be your responsibility. Instead, when an order is placed on your website, you will contact the supplier you are working with, and ask them to ship it out for you. This will be sent completely 'white label', so your end-customer won't know that you are a dropshipping business. Of course, you will only pay for the product at the point that you are shipping it too. This means that the upfront costs are kept to the absolute minimum.
What is the dropshipping business process? Well, this is each and every step of the process. Yes. We have simplified it a little, but there isn't that much that you need to think about:
1. You list the products on your website
2. You drive traffic to your website
3. Somebody purchases the product
4. You contact the supplier you are working with for dropshipping
5. You pay the supplier (using the money gained from somebody purchasing the product)
6. The supplier sends out the product
In theory, with dropshipping, the only thing you really need to do to keep your business ticking over is to list the products from the supplier that you are working with, and then send traffic to your website. If you can do that, then the whole business model is pretty much 'hands-off'. You are probably never going to make the same amount of money that you would with a typical eCommerce site, but it is going to require a whole lot less effort on your part.
Who is dropshipping for?
Dropshipping is a great business model. However, it is not for everybody.
Dropshipping will suit those who want to get into the world of eCommerce but do not have a whopping amount of funds available. It will also suit those who want to be fairly hands-off with their business but still want the potential to make a little bit of cash.
If you are not interested in eCommerce, and you are not willing to pay for adverts (perhaps because you don't have the funds available), then it could be dreadfully difficult to set up a successful dropshipping store. Even though it is one of the 'easiest' methods to make money from eCommerce, it is still going to require a little bit of commitment on your end.
So to sum it up; 'what is dropshipping business?'. Well; it is an eCommerce business where you do not have to hold any stock. Instead, you take orders, and then these orders can be given to your supplier who will ship the product out on your behalf.
Now that you understand what is the meaning of dropshipping, we can start to dive into the benefits and downsides of this business model. This way you can understand whether it is the right way for you to make money.
The Benefits of Dropshipping
In order to help you to determine whether dropshipping is the right business model for you, we thought it would be wise to run you through the benefits of dropshipping. Although, by knowing the answer to the question 'what is dropshipping?', you probably already have a sound idea about some of the pros and cons.
Startup costs are minimal
Once you realize what dropship means, you start to realize some of the bigger benefits of dropshipping. For example; the fact that start-up costs are minimal. You do not need to invest in the stock at all. You will need to invest in adverts (more on that soon), but those adverts will barely cost anything compared to the cost of bringing in a ton of stock and storing it...somewhere. This makes this business model incredibly accessible.
Growth potential is huge
A lot of people who are asking 'what's dropshipping' fail to realize the potential that dropshipping has....if you put your mind to it. The growth potential is absolutely huge.
While dropshipping will probably never deliver the same amount of profit as standard eCommerce, there is still a lot of growth potential. There are people who are making serious bank with dropshipping. Since you do not need to worry about storing the stock, you can pretty much constantly expand your business. See a niche that looks decent? Jump into it. Find a new supplier to work with and have fun. There is nothing stopping you. You really can start up as many websites as you want and constantly see the amount of profit you are making a rise.
Location independent
Are you located in a smaller country that doesn't have that many people sell to? Well, don't worry. Dropshipping has you covered. With this business model, you do not need to be located in the same country you are shipping your products to. SaleYee dropshipping platform, for example, a professional cross-border E-commerce dropshipping platform, with overseas warehouses in US, UK, German and other countries, aims to provide dropshipping service for online sellers on Amazon, eBay and other platforms, as well as to help to expand the overseas market for factories and brand product suppliers. With SaleYee dropshipping platform, for example; somebody in Switzerland could easily start a business up in the United States. This opens up a ton of new markets.
Most niches covered
Back when dropshipping wasn't that popular (a few years ago), you would only be able to find suppliers in the most popular niches. That isn't the case nowadays. If you have a niche in mind, then we are confident you will be able to find a supplier to work with. You may even find a few untapped niches where you could make a sizeable sum of cash. New suppliers are waking up to the benefits of dropshipping all of the time.
Minimal effort
We are not going to lie and say dropshipping takes no effort. It does. However, it is going to be nowhere near as much effort as a typical eCommerce business. In fact, you could easily run a dropshipping company as a decent 'side business'. Head to your full-time job in the morning, and spend a few hours on your dropshipping business in the evening. Once you have the traffic and orders flowing in, dropshipping business isn't really something that will take up more than a few hours per day. A lot of the work can be outsourced too, although do bear in mind that this will cut into your profits.
Minimal risk
This can somewhat tie into the benefit of 'low startup costs', but we believe that this requires a headline all on its own. Not every eCommerce business is going to be successful, sadly. Try as you might, you may never make it big. If you have a standard eCommerce store, you may end up with a ton of stock that you simply can't sell. This will be sunk expenses. Running a dropshipping business? This won't be an issue! You have not sunk any costs beyond your advertising. This means that you can easily jump into another niche...or just close your business down if you really want.
It is still a new business model
Dropshipping is still a fairly new business model. In fact, you will be surprised at how many people haven't heard of it, and even more surprised that many of those who have are still Googling 'what is dropshipping business'. This means that if you take action now, then you may be able to get an edge on competitors that will enter your niche later on. This benefit will be somewhat eradicated once more and more people wake up to the benefits of dropshipping.
You could start selling today
Honestly, there is no business model that is as quick to start selling products and making cash as dropshipping. If you have the following:
1. A website
2. A supplier to work with
3. A good set of adverts to send traffic
Then you could literally be making money within hours. Of course, it is always wise to plan any business that you are going to be running, but if you really want, you could be making some cash with dropshipping by the end of today. There is nothing stopping you. This is impossible to do with standard eCommerce (and affiliate marketing, or those other ways to make money online)
The disadvantages of dropshipping
There is no such thing as a perfect business model, and dropshipping is absolutely no exception to that rule. We thought it would only be fair to you to run you through some of the downsides of dropshipping. That way you will be fully informed before you jump into making a decision about whether it is right for you or not.
Competition is high
Dropshipping suppliers are working with a lot of dropshippers. All of these dropshippers will (likely) be buying products at exactly the same price. This means that if you jump into dropshipping, no matter which supplier you work with, you will have a ton of competition. For many, it can be difficult to differentiate themselves from every other business selling the same product. It is possible, but it is going to take a little bit of effort on your part.
The profits per product are minimal
You are never going to be able to buy products from a supplier at the same price somebody buying the products wholesale will be able to buy them. In addition to this, there will be additional fees associated with dropshipping (companies will charge for their time to send out your product). This means that if you want to compete, you are barely going to be able to make much profit on the items you are sending out. Dropshipping success comes from selling quantity.
It can be slow to get started if you are not willing to invest cash
The real secret to making fast money with dropshipping is to invest in paid adverts. If you don't do that, then it can take many, many months to see any sales, let alone profit. So, while the overheads for a dropshipping business are lower than a typical eCommerce business, you are still going to need to have some money set aside for marketing.
The order processing can be more difficult
Although dropshipping seems simple: the customer purchases, you process, and your supplier fulfills the order. Nevertheless, if you source products from different suppliers, you're likely to have problems. Their shipping solutions might differ, which is problematic for both you and your customers. What's more, the costs may go higher.
You have less control
You don't have much control over the dropshipping process, including stocking products, shipping, and delivery. You have to reply to your dropshipping suppliers to fulfill the orders perfectly. If everything goes well, it's great. However, if anything goes wrong, you have to wait until the problems get resolved. This also poses huge challenges to customer service. Sometimes, it might be quite difficult for you to retain customers without the right damage control.
Conclusion
So, what does dropshipping mean? Is it the right business model for you? Well, hopefully, we have given you a bit of an idea on this page. This will allow you to make a decision as to whether dropshipping is right for you or not. Remember; it is not a business model for everybody. Despite what some people claim; it is going to require a lot of work on your part. However, if you are willing to put in the work, you will start to make money from it. Lots of money. Who knows? You may be making enough that your friends and family start to ask 'what's dropshipping?' because they want to know how you are making all of your cash!
