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What is Dropshipping?Updated 2 years ago

What is Dropshipping?

Dropshipping is a low-risk e-commerce business model in which you, as a drop shipper, act as a middle man between suppliers and consumers. It's that simple. You go online and find a product that you like, you then put that product on your website and start marketing the product. When sales come in, they are sent straight to your suppliers. The suppliers package and ship the product to your buyers for you. By using a nice markup from your purchase price to your retail price, you can make a large profit.

Image Credit: greendropship.com

How to Get Started

The process starts by finding a product online that you want to sell. You can use services such as AliExpress and Oberlo to help connect you to suppliers. After you have a product selected, most drop shippers create an online store through e-commerce websites such as Shopify. A common strategy is to create a new website with a different domain name for each product or category of product you are selling. This is because if one product doesn't end up working out, the failure of that product doesn't have to reflect badly on the rest of the products you are selling. Once your store is set up and you've secured connections with your suppliers, you can start marketing your products and watch as sales start to come in.

Pros of Dropshipping

  • Dropshipping is an easy way to make money online.
  • Low Startup Costs. Many drop shippers have started their businesses with only a few hundred dollars of starting cash.
  • No Wasted Inventory. With dropshipping you never see your product, meaning there are no upfront inventory costs and you'll never be stuck with hundreds of unsold and unwanted items.
  • Minimal Risk. You will never run into the large expenses that a large wholesaler will.
  • Versatility. There are thousands of unique products to choose from. If one product isn't working for you, there is no commitment to that product or supplier. You can jump from one product to the next, with minimal work.
  • More Time for Marketing. When you are dropshipping you don't have to worry about packaging, shipping, or inventory. This will free up a lot of your time to focus on marketing.

Cons of Dropshipping

  • The Learning Curve. While dropshipping doesn't have as steep a learning curve as other business strategies you can still expect to fail at a few products before finding the ones that work for you and your customers.
  • Slow Shipping Times. Many dropshipped products are shipped from China and can take roughly 6 weeks to arrive.
  • Low-Quality Product. Because you never see the product you're selling, you may try selling a product that is lower quality than the online images would suggest.
  • No Control. When product issues arise, your customers will come to you expecting solutions but because you aren't involved in the distribution process there won't be much you can do.
    • Though on the bright side you can easily stop selling that product in favor of another one under a different domain name.
  • High Fail Rate. Most people who start a dropshipping company never gain a footing in the market.
  • Time Consuming. Dropshipping is a great idea for a side hustle because it doesn't take as much time to start and become successful as other businesses. However, it is still a business and it will take a lot of your time to maintain profitability.
  • Unsustainable. Dropshipping is an unsustainable business model for long-term profits. This is because, in typical dropshipping, there is no effort put towards building a brand out of your store by satisfying customers and attaining a long-term reputation for quality and timeliness.

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