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What’s Dropshipment and How Does it Work?

What’s Dropshipment and How Does it Work?

These days’ e-commerce store is in vogue, and a lot of consumers tends to be more biased, preferring to order products online than visiting various stores or website. However, this is well understood based on the fact that there is an increasing number of internet users on a daily basis, and the world is already a global village. Also the ease of accessibility of this product online from consumer’s home I also a factor that has influenced e-commerce business positively. In some cases, the product will even be delivered to the doorstep of the consumer, making the entire process a stress free one.

For e-commerce store owners, this serves an s business opportunity to them, and in this case, they do not even have to make a large investment to start this up. as a matter of fact, a store owner does not even need to have affiliations with any product manufacturer before they can deliver goods and make money. The simple idea behind this is enabled by dropshipment. With dropshipments, a store owner simply just needs to have the contact of a producer or dealers of the product. As we go along, we are going to shed more light into all you need to know about the concept of dropshipments in the e-commerce world.

Pros and cons of dropshipment

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Dropshipment is an online marketing method or procedure in which the product that is ordered is shipped directly to the consumer from a store that deals in such product. Basically, the idea of dropshipping is that the store owner or retailer would not have any contact whatsoever with the product. It is done in such a way that the retailer or online store owner just serves as a middleman between the seller and the customer.

Pros of dropshipment

● Requires Less Capital

One of the major advantages of dropshipment is that the store owner or an online retailer does not need a large capital to own an e-commerce store, or start up an e-commerce business. the conventional notion about retailers is that they need a huge amount of capital to kick-start the business, but dropshipment defies this notion.

● Ease of Starting

There is ease in starting up the business because as an e-commerce store owner, you do not have to deal with physical product thanks to dropshipping. Normal retailers usually have to deal with an issue like managing or paying for store or warehouse where the products will be kept, the packing and logistics of the products, tracking of the product and constant ordering of various product. With dropshipment, you do not have to deal with all of these.

Cons of dropshipment

● Low Margins

The disadvantage of low margin is the biggest disadvantage of dropshipment. This is because since it is easy to set up an e-commerce store to start the business; a lot of people tend to invest in it thereby increasing competition and reducing income.

● Complexities in Shipping

For store owners that deal with various products, they will have to work with a lot of shippers, and this can complicate dropshipments especially with the price accrued on shipping cost.

● Is Dropshipment Worth it

Dropshipment has its pros and cons, but it is safe to say that the advantages somehow outweigh the disadvantages. Also, there are also workable solutions to the problems involved in dropshipment. For example, you can still make a profit from dealing with a competitive product by having a quality store with standard designs, as well as convincing prospective customers through reviews and feedbacks.

How does dropshipment works?

First of all, it is imperative that you own an online store before you start thinking on how dropshipments work or how to make money from dropshipment. You can sign up with one of the various leading e-commerce websites online to open your own shop and start benefiting from dropshipments. Since the main aim of online store and dropshipment is to make money, we will talk about you have to be aware of the fees that dropshippers charge for their various products, some of them include the following:

Dropshipping fees

Every dropshippers have a certain service fee, according to the business they engage it. Some of the fees include:

● Per Item Fee

This fee will be levied on every item that is being shipped. Some may even be higher for certain products, depending on size or other factors.

● Monthly Fee

This is not preferable for new online store owners, only for those who have been making large sales, as they can afford to pay dropshippers ahead.

● Purchasing Minimums

Some suppliers charge fees based on purchasing minimums, and this is most common to wholesalers. Sometimes they offer this on initial purchases that are made, or on monthly basis. The disadvantage of this is that when you are unable to reach the required milestone for sales, you will have to pay the fee.

Profit margins for dropshipment businesses

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This is dependent on the product type that you are selling. For very expensive products like gadgets, you can make up to 5% to 15% on sales. For cheap products, however, it is very possible for you to make a profit of 100%. However, all things being equal, it is possible for you no earn gross margins of about 10% to 20%.

Finally, it is important to have a good business plan for you to benefit from dropshipment.

How to start your dropshipment business?

For a successful dropshipment business, there are some things that you must pay adequate attention to, and they include the following:

● Finding the Target Market

You want to get supply orders from a lot of store owners. Therefore, you have to build your dropshipping based on the research that you have made and the product that has the highest market pull. Finding the target market will help you get orders from time to time, and you can be sure of making a lot of money.

● Knowing Your Competitors

You have to know the top Dropshippers in the business, as well as the product they deal with. As a starter in dropshipping, not having the same product as that of a dropshipper that has been around for long can be so important for the productivity of your business.

● Finding Niche Products

Dealing with a specialized product will benefit you a lot as a dropshipper. Once you have made your name with a niche product, a lot of store owners would love to deal with you.

➢ Find Suppliers

One of the major concerns about dropshipments business is how to find a supplier or company. there are various ways to go about this, and some of them are:

➢ Directories

This is done by subscribing to a directory for dropshipments. You can get access to a lot of dropshipping directories online. But it is left for you to make researches so as to know which of the suppliers have quality products, as this is very crucial to the success of your e-commerce business.

➢ Manufacturers

Another way to g about dropshipping is reaching out directly to the manufacturer of a certain product. They obviously will want to work with you, and most of them will direct you to their distributors, who will provide you with dropshipping services

➢ Using Search Engines

You can make use of Google to search for dropshipments suppliers, and most time, you will find their ads on Google. You can get their mobile number from there and communicate directly with them.

Another thing you have to know is the requirement to work with dropshippers. You will need to have an employer identification Number for any dropshipper to do business with you. the EIN is a proof that you have an established business and it is also used for taxation policies. Every individual can apply for the EIN as long as you have a business you are working with.

● What to Avoid

Dropshipment is a delicate business. once you do not satisfy the store owners in terms of quality of goods, they will never deal with you again. So you have to be sure of the suppliers you are working with, and make sure that the quality of the product meets the given requirement. An effective way to go about this is working with certified suppliers like chinabrands who are well known for top quality products and shipping services. Also, beware of fake product suppliers that are out to swindle you. make sure that you have researched about the supplier that you ware making use of.

Top 3 dropshipment suppliers

Some Dropshipping companies have been around for a long time now, and the experiences they have gathered are second to none. They are known to be very reputable due to their dealings in top quality products. Some of them include:

● Chinabrands

Chinabrands deal with a wide variety of products and are rated highly by store owners and dropshippers. Chinabrands will only supply goods from manufacturers that meet the requirements of a product. Chinabrands also deal with logistics foreign trade services, product packaging, processing of orders, distributions, inventory management etc. They also have cooperation with some of the best logistics and transportation companies like DHL EMS, UPS etc. For foreign shipping, the time scale is 24 hours at the barest minimum. 

Chinabrands also offer security measures for your products through tracking.

● Doba

Doba deals with a lot of products from only top quality suppliers, and are known around the world for quality service. One of the advantages of using Doba for dropshipments is that their platform has a very smooth interface, and can be easily operated by all and sundry. This also comes with the availability of ordering a lot of products at once. They also have good customer service awareness and you can communicate with them over the phone, email and even live chat.

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● AliExpress

Aliexpress has risen through the ranks in the past years and is now considered as one of the best dropshipping suppliers for various online businesses. Their page also gives awareness of the latest products available. AliExpress also have a lot of affiliated stores, and you can rest assured of the quality of the products you are getting from them. another major advantage is that you can order products is large quantities with AliExpress, and they will be shipped out safely with adequate efficiency.

Conclusion

As with all aspect of e-commerce Business, you have to make sure that you protect the reputability of your business as first. So it is imperative that as a store owner or dropshipper, you work only with brands and suppliers that will not harm the reputation of your business in any way. Also, make sure that you steer clear from providing consumers information you are not sure about especially with up to date products. It would be better for you to make adequate researches, or seek information from manufacturers or suppliers before ascertaining consumers. Remember that you are just the middleman in this scope of business.

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