Dropshipping Overview: Is This Still Worth It?

 

Dropshipping has been around for a while. A lot of people want to try this but not all worked. Most people are aware of it but it’s only now that the idea of operating as a dropshipper is being taken seriously by eCommerce retailers. Fast track to 2022, with people hooked to their phones, computers, and other gadgets, online purchasing is on the tip of our fingers, and ordering online is very easy. And now, dropshipping has become one of the best business models for offering products and fulfilling orders. 

It may sound easy as 1-2-3, but you need to learn the ropes of operating this kind of business model in order for you to harness its benefits. You may be a beginner or want to increase your online sales in dropshipping, I have compiled a complete guide for you. These are the things you should follow before making the plunge into dropshipping to make sure your business will be a success. 

What is Dropshipping? 

Dropshipping is a business model that enables retailers to sell products without having to carry inventory or store products themselves. In this model, the retailer, who serves as the dropshipper, will provide a website where their customer orders the product from a manufacturer. In effect, they order from the retailer’s online site but a third-party supplier or the manufacturer will ship the product directly to the customer after they have been paid for it.  

This method of selling has become increasingly popular as it allows you to have your own store and sell products without having to worry about stocks, storage, and shipping. With this, you can enjoy the convenience of being able to satisfy your customers and earn without even the need to physically handle the fulfillment of orders.

What are the Benefits of Dropshipping?

Dropshipping has been on the rise over the last few years and it continues to grow since then. If you are wondering why this business model is so popular in the eCommerce industry, here’s why:

Expertise is Not Required

Aspiring entrepreneurs need not be intimidated in starting up a dropshipping store. There is no specific expertise required in dropshipping. You can be a complete novice and learn the ropes on your own while managing your online store. You don’t need extensive knowledge of business operations such as manufacturing, inventory management, and distribution. What you need is an idea for a product or line of products, some marketing skills, and access to the internet where you can find suppliers who are willing to dropship and set up your eCommerce platform where the links to the products are accessible. 

Low Capital Requirement

Selling online is convenient and hassle-free. It saves the dropshipper from having to invest in new inventory, warehouse space, tools for packing items, etc. With dropshipping, it is possible to start with minimal capital and build it into something big. It does not need to spend a large amount of money on marketing campaigns. Another advantage is that you can also save on shipping costs as your products will be delivered by your supplier even if those are from overseas vendors. 

Low Risk

If the products do not sell, the risk is low as compared to traditional retailing where you can lose money if sales fall. You don’t have to worry about any losses from stock, theft, or damage. Since you do not need to store the products you sell, you do not physically need to secure the products because they are with your partner suppliers or manufacturers.

Similar to any start-up business, dropshipping also has some risks, yet our risk of not earning enough to cover your minimal costs is still manageable. If your products are not moving, you can replace them with various in-demand items or improve your marketing approach. 

Low Overhead Cost

If you are doing a dropshipping business, you do not need to spend for storage, shipping, and even salaries for warehouse personnel. Since product inventory and delivery are not on your hands, you do not incur these expenses.  

Better Cash Flow

In this business model, you will have a better cash flow because you do not buy your stocks ahead of your customers’ orders. Since you do not need inventory on hand, you will not shell out money for your products. Plus, you don’t have to pay for warehousing, storage, or shipping costs. 

How Does Dropshipping Work?

Dropshipping is an order fulfillment method. The idea behind this eCommerce venture is that you sell goods even though you do not have the actual inventory in your place. This allows you to make money without having to worry about purchasing, storing, and fulfilling orders. Through this process, you earn from the mark-up you added to the supplier’s price. As a retailer, it helps you earn without having their own inventory to compete with larger companies in terms of price, quality, and speed of delivery. To sum up, how this works, there are three parties involved: Retailer, Manufacturer, and Customer. 

Retailer

The retailer who is the owner of the online business manages the site by posting and receiving orders. These orders from the customers are then forwarded to the manufacturer, who ships the items to them. 

Manufacturer

The manufacturer or the supplier has the products on inventory and available for delivery once the order is forwarded by the retailer. The manufacturer handles the fulfillment of the orders from the packaging and dropshipping of the products to the final destination, which is the customer. 

Customer

Through the online platform of the retailers, the customer browses, orders, and pays for products. The dropship product that he/she will be receiving is directly from the manufacturer. 

Different Types of Dropshipping

There are several types of dropshipping which you can choose from when you start this kind of eCommerce business. You may consider these types pending on your chosen niche, network, and your preference. 

• Product Reselling

In this type of dropshipping business, the owner creates a site where products from different suppliers are promoted with product descriptions and reviews. The site becomes a one-stop-shop online store for different items. Among the different types of dropshipping business, this is the most common.

• Business Extensions

As a business extension, a dropshipping company partners with a retailer business. The company serves as the online partner of the retailer and promotes the products exclusively through their site. Upon order of the customer, the retailer becomes the dropshipping supplier and will deliver the products. 

For example, in SeniorCare we use dropshipping as an extension to our business to offer high value products that we can’t offer to stock up on, and also to offer a wider variety of products without taking up our warehouse space. In PetFoodCare, we run the business solely through dropshipping as we have a reliable supplier that could ship out these products on time, and it’s just additional revenue for us, without any capital in inventory. With an inventory source near a customer, the delivery is more efficient and shipping costs will be lower for the customer.

• Product Creation

This is an innovative product offering through dropshipping. The dropshipping company groups several items to be sold as a new product bundle. And the suppliers of each item deliver them accordingly. If the items were sourced out from multiple suppliers, the items will be received by the customer on different schedules. It would be best if the items comprising the product creation or bundle come from one inventory source so that the customer will receive the whole group at one time. The usual examples here are cosmetics bundles and skincare routine sets. 

• Print-on-Demand

Print-on-demand businesses are ideal for dropshipping promo materials and souvenir items. In this type of business, suppliers produce and dropship items such as shirts, mugs, calendars, key chains, etc., upon receiving the forwarded orders.

What are the Challenges of Dropshipping and How to Overcome It?

Same as any other business, engaging into a business capitalizing on doing dropship will still have its challenges. These are the things you need to prepare for in selling products from your online store fulfilled by the manufacturer:

1. Finding the Product

Your products are the life-blood of your business. If your products are not selling, your business will not profit. This is the reason why you need to be careful in choosing the products promoted on your site. You need to find a product that is in demand, have great marketing material, and be easy to ship. To find the best product for dropshipping, there are many ways in which you can go about doing this. 

• Look at the trending products on social media platforms like Facebook and Instagram. The best time to do this is when new items are being released so that you get access to them first before they hit the market.
• Look at the popular review websites such as YouTube, Amazon, and Google Reviews where customers will be reviewing their favorite products. 
• Find products that are highly rated by existing customers on retail sites like Amazon and eBay so that you know what people are buying.
• It is also easy to find products in Shopify as it has an online product database where you may narrow down your search through the available filters. It even has a list of trending products you can choose from based on the top-selling items in their categories. 

2. Finding a Reputable Supplier

You also need to find a reputable supplier that can produce high-quality products 

for your target market. Since they will be the ones to fulfill the order and ship the product you need a supplier that has a good reputation or good reviews. 

There are many ways of finding a reputable supplier. One way is to check the reviews left by other customers on the website. Another way is to search online for companies with good reputations and who have been in business for a long time.

3. No Control Over Delivery Performance

Since you are relying on your supplier’s ability to fulfill the orders, you do not have control over their way of handling the orders for delivery such as safe packaging of items, delivery lead time, and accuracy of items delivered versus the order. If the supplier committed errors, you will be at the other end for the complaints. 

So it is really important to work with trusted suppliers and monitor your customers’ feedback on their purchases so that you can immediately let go of suppliers that are problematic. 

4. Establishing a Brand

In dropshipping, you are selling products produced by others, and they ship the orders directly to your customers. With this, you are not able to customize the products’ packaging to include your brand or your business name. If you will find a supplier which can accommodate your request for customization it will be best. 

Tips on How to Start a Dropshipping Business

Online businesses are booming. People are enjoying online shopping at the comforts of their homes, offices, or anywhere they are as long as they have the internet and at least their mobile phones with them. You want to take advantage of this opportunity and decide to venture into your own business but how do you start?

To start a dropshipping business, you might not need a big capital but you need to invest your time. These are the important steps you need to take before jumping into creating your online dropshipping business:

Conduct Market Research

Know more about your competitors, suppliers, latest trends, and best-selling products. And for this, you need to do market research. This is an important step as you start your business because this will help you find your niche, identify your reliable suppliers and profitable products as well as how you will strategize for your marketing plan. 

Build Your Online Store

Build your own store. You can do this through existing platforms such as Shopify but you can also create your own website. If you choose to take advantage of e-commerce platforms, it will already provide you with the necessary tools to sell products, process payments, and forward your orders to suppliers. And if you opt to build your own site, you will need to create your website, from design, layout, write up, payment set up, etc. Recently, using social media pages and sites has become the trend as well. You may create a business page, where you publish your items and payment options.

Look for Possible Suppliers

There are more than 100 suppliers and vendors out there that you can use for dropshipping. You need to find reliable suppliers who will provide your customers with high-quality and affordable products. It is vital to ensure that the suppliers you will partner with have the capacity to deliver the stocks and have enough inventory for possible orders. It would be helpful if you check the reviews of other clients of your target supplier so that you are confident of their reputation. Once you are able to find your supplier, closely work with them or refer to their site to get all the information about how their product should be advertised and displayed on your website. 

If you want to start an eCommerce business, check out the important tips on how to make it work here. 

9 Best Selling Dropshipping Products based on Shopify

The types of products that you should be selling are those that are related to your niche. You can also sell other types of products like books, clothes, or household items if you want but it is recommended to stick with the ones that are relevant to your niche. Remember that the best products for an online business are products that are either highly competitive or have a large demand. 

But if you are looking for ideas on what products to sell, here are the 9 best-selling dropshipping products based on Shopify’s list of most trending searches in 2021. These items are expected to be sustainable trends: 

1. Health and Personal Care

Health and personal care products are always on the top of people’s lists when it comes to making a purchase. Among the top-selling items during this pandemic are face masks, vitamins, and hygiene products such as toothbrushes, soaps, and skincare products.  

2. Wardrobe and Accessories

Examples of these items were squat-proof leggings, mom jeans, tracksuit, shirts, silk pajamas, slippers, and backpacks. 

3. Kitchen and Grocery 

Hot items for the kitchen and grocery are air fryers, portable blenders, electric kettles, and teas. 

4. Home and Bedroom

The trendy home and bedroom items are air-purifying plants, doormats, air purifiers, blackout curtains, ceiling fans, and soaps.

5. Office Products

Regular office items are also on the list. These are pencil cases, mechanical pens, blue light glasses, and podcast microphones.

6. Tools and Home Improvement

Smart lights, automatic dispensers, smart plugs, and smart locks are among the trends for tools and home improvement. 

7. Camera and Cellphone Accessories

Since most of the activities turned to home-based, including work and school, among the best-selling wiring lights, portable green screens, tripods, and mobile skins.

8. Gaming

Gaming items continue to sustain its popularity. Those items include gaming monitors, mouse pads, headsets, and ergonomic chairs also gained much demand.

9. Car Accessories

Best selling car accessories include ceramic coating, socket wrenches, digital tire-pressure gauge, and portable power station. 

Pros and Cons of Dropshipping

Final Thought 

Dropshipping can still be worth it in 2022. It is a great way to generate extra income with limited capital, especially now that eCommerce continues to bloom and people prefer the convenience of ordering online and queuing in stores.  If you are considering dropshipping for your business, the most important thing to look at is how competitive the market will be. To be ahead of your competitors, you should find your niche market. This is where your product or service can offer something unique that no one else offers, thus ensuring your profit.  If you are able to prepare by doing market research, finding reliable suppliers, targeting the most trendy products, and are able to create creative marketing campaigns on your site, you are ready for your dropshipping business.