Dropshipping: The Shortcut to Starting Your Business
Selling products online is one of the hottest business models right now. Everyone is discovering the benefits of shopping online, from grandmothers to preteens. Savvy entrepreneurs are picking up on this trend quickly and creating businesses to cater to every demographic. The smartest entrepreneurs are taking advantage of dropshipping to help them build their business and save money at the same time.
Dropshipping Secrets of Online Marketing: Buy low, Sell high
Problems with selling online
After your market analysis and business plan, you have to pick your products. You’ll soon begin to realize what challenges are created.
- “What about storage? I don’t have space in my house to store a ton of inventory.”
- “Wholesalers might not sell to me if I don’t have a retail outlet or warehouse… and what about minimum order amounts?”
- “The shipping costs are going to be outrageous. I’ll have to pay to have stock shipped to me, and then pay to ship them to the customers.”
- “Fulfilling orders is going to take a long time… finding products, packaging them (oh, there’s an extra expense), shipping them out individually, and making sure they get there fine.”
- “What if the products never even sell in the first place?!”
Dropshipping solves all these problems and more at the same time.
How dropshipping works
Whenever a customer orders, you contact the distributor who dropships for you. You pay wholesale price for the goods, and the dropshipper will include your invoice and shipping label when they ship the products, just like it came from you directly!
Using dropshipping will eliminate the costs of purchasing inventory upfront and holding it until you sell, particularly if it never sells! You will pay some costs such as storage space and accounting fees, but the dropshipper will handle day-to-day operations that would take up valuable time and money if you did it yourself.
Also, if you took care of obtaining, storing, and managing inventory, shipping, and other aspects of order fulfillment yourself, you’d be paying whether or not you sell anything. With dropshipping, you’ll only pay if you do make a sale.
Problems with dropshipping
Some problems do crop up when you use a dropshipper, but you can avoid them if you’re careful.
A few dropshippers claim to be selling at wholesale prices, but they actually charge closer to retail prices. Look into the average wholesale price for an item before agreeing to pay a dropshipper for it, or you could end up really cutting into your profit margin.
Another problem is that margins aren’t very good in some markets, such as consumer electronics, so you probably shouldn’t get into those areas unless you have previous experience and a solid budget. Research your area thoroughly before committing, including the expected profit margins and experience necessary to succeed in it.
Overall, dropshipping is a perfect solution to reducing inventory and overhead costs associated with selling products online. It also helps you save time so you can do what’s important, like attracting customers and researching new niches to sell to.