If you are thinking of creating an electronic commerce, you should know that there are different business models that you can start up. Dropshipping is one of them. And in this article I will explain what it is, what its advantages are and where you should start an online e-commerce business.
AliExpress could be a representative example. However, it is not necessary to follow their steps. It is possible to create an ecommerce of this type on any product theme you want, as well as for any sector and market size. What's more, the more specialized you are in a niche, the greater the probability of positioning and success.
Dropshipping: what is it?
Before moving on to more strategic topics, let's take a look at what dropshipping is and how it works. I'm sure it's a term you've heard before and seen on blogs numerous times.
Dropshipping stores are usually one of the preferred options for those who do not have their own products. And the reason is that, as we were commenting, it is a business model for e-commerce in which it acts as an intermediary between the end customer and the supplier of the products.
Dropshipping Definition
To be more exact, dropshipping business could be defined as a method that sells products from a third party to the final consumer without the need to have stock in their warehouses.
These types of online stores sell the products of others in exchange for a commission or percentage of profit. These profit margins will depend on the policies or agreements reached by the ecommerce dropshipping and the manufacturer of the products.
Ultimately, what happens is that the online store itself never sees or handles customer orders. It only manages and processes the shipment and the relationship between the final consumer and the supplier to make sure that both receive what corresponds to them.
How does Dropshipping work?
In summary, to understand how dropshipping works, we must imagine a relationship of three:
- On the one hand, there is the customer, who is the one who enters the e-commerce, looks at the catalogue, analyzes the products and makes the purchase.
- When this happens, the dropshipping stores receive the order and automatically notify the supplier so that it can be prepared and shipped to the consumer.
- The supplier is the one who has the stock and sends the product directly to the ecommerce customer.
So the dropshipping store is left with a profit for the management, processing and marketing of the offer. And, for its part, the supplier receives payment for the product.
How and why to dropship
Starting to sell dropshipping products is very simple. Keep in mind that you will not have to take charge of the most complex processes of an e-commerce, such as preparing and shipping orders, stock control or returns.
Those who choose this business model do not have to worry about the problems derived from the management of physical products. And this makes the initial investment easy to take on as well.
If all this sounds appealing to you and you're wondering how to get started with dropshipping, you should know that there are even more advantages. We mention them below.
Why start your ecommerce with Dropshipping?
Having an online business is full of advantages. The simple fact of not having to have a physical location means that the owner or manager does not have to be present at a specific location. Not to mention that they can be selling any day and at any time without interruption. You just need a well-defined strategy.
But more specifically, those who consider studying how to dropship do so for benefits such as the following:
- It requires little initial investment. By not having to invest in stock, the start-up costs are much more affordable by anyone.
- You avoid logistical problems. The person in charge of making the shipments is the supplier, so it will be he who has to have all the associated logistics.
- Fixed costs are much lower. Nor do you need a place to serve your customers. Only a well-prepared website to process online sales.
- You can have a very wide catalog. The volume of your catalog will not compromise your investment, nor will it force you to expand the warehouse. You can include as many as you want without multiplying effort.
- It is easily scalable. Once you have the system set up and automated, it will be valid as other examples of scalable businesses, both to sell 10 products and to sell 100,000.
How to sell your products with Dropshipping?
When making the sale, dropshipping stores have an ecommerce platform like the ones used by the rest of the online stores that are active. An example of them could be Shopify. This is essential to start selling.
On the other hand, you will need to learn to manage the inventory of your suppliers. Because, in case they have a product out of stock, you should know so as not to sell it.
If you have several suppliers for the same type of product, you can solve this type of problem quickly. If not, synchronizing the inventory with your provider can also be a solution.
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