What is Dropshipping?, If this question comes to your mind or you are looking to start some online Business than just read this article completely.

Dropshipping is such a great business model for new and seasoned entrepreneurs. because it lets you get started with a small investment, generate passive income and work from anywhere.

By the end of this blog you will learn everything you need to know to begin building your first Dropshipping Business.

And all you need to get started is a computer, an online store and some basic marketing.

Now, if you’ve heard of about dropshipping, you may have come across one of those sketchy video ads selling an incredibly expensive course promising to show you how to get rich overnight.  And that’s exactly why I am writing this blog!

There’s a lot of information going around on the internet about Dropshipping, and as the world’s most trusted e-commerce platform. I think it’s incredibly important to set entrepreneurs up for success.

So today I am going to arm you with drop shipping knowledge and strategies that you can trust.

Then I am going to take you step by step on how to set up your first dropshipping business in my next article.

Let’s understand what is dropshipping?

Dropshipping is a fulfillment model that allows you to buy directly from suppliers and manufacturers who will then ship the products directly to your customers.

This let’s dropshippers, focus on marketing and customer service instead of warehousing and the logistical challenges. Which are traditionally associated with running a drop shipping business.

Dropshipping Benefits

• Less capital is required for Dropshipping Business

And without the need to spend thousands of dollars upfront on inventory, dropshipping is a really accessible and less risky way to get into the world of e-commerce.

• Don’t have to worry about E-Commerce functions

It’s also a lot easier, since you don’t have to deal with packing and shipping, tracking inventory or paying for a warehouse, there’s a lot less to worry about than other forms of e-commerce. Because you don’t have to worry about these functions, it’s also easier to scale.

• Easier to test the market

A lot of dropshippers will actually list and sell an item to test the market before buying it in large amounts. And as any seasoned entrepreneur will attest to, validating your idea will save you a lot of heartbreak later, the biggest risk is building and selling something that no one wants.

• Less Work More Order

Traditionally with retail businesses, if you were to receive three times the number of orders, you would have to do three times the amount of work. And that’s just not the case with dropshipping.

• Lastly, in today’s economy, the ability to work from anywhere is really attractive.

Dropshipping Challenges

• The first is competition

Not having your own copyrighted branded products does leave you open to competition.

• Supplier Errors

supplier errors will happen, leaving you to take responsibility for mistakes that you didn’t make.

• Lower Profit Margins

Since dropshipping products aren’t exclusive, it can be hard to command sizable profit margins.

• Little To No Customization

With dropshipping what you see on the suppliers site is often what you get.

• Longer Shipping Times

With Dropshipping don’t expect two day shipping. While it can widely vary, shipping can take anywhere from 19 to 35 days.

How a Dropshipping Model Works

Let’s start by defining the roles throughout the supply chain

First, we have manufacturers and they’re the ones that actually create the product.

Then they sell it in bulk to wholesalers and sometimes to retailers.

Then we have the wholesalers, who buy the products in bulk from the manufacturers, mark them up slightly and sell them to the retailers.

Lastly, we have retailers. And they are anyone who sell products directly to the public at a mark-up.

Notice how a Dropshipper isn’t listed in the supply chain. That’s because Dropshipping is an invisible service.

Dropshipping works like this. You as the retailer, choose the product, set the price,

put it in your online store and run advertisements to attract customers. Soon enough, a customer sees your product and pays you retail price.

Once that happens, you notify your supplier, pay them a wholesale price and they ship the product directly to your customer.

Here’s an example.

Let’s say you’re selling resistance bands. You find a supplier that sells them for $15 with shipping included. Then you put them on your online store for $40 with free shipping.

Now, when a customer places, an order, you pay the supplier $15 and they’ll ship the product directly to your customer. Using the information that you’ve collected, then you get to keep the $25 in profit.

Now you might be wondering why won’t your customer turn around and just go buy from your supplier.

Well, there are a few reasons.

The first is that manufacturers, wholesalers typically what is known as minimum order quantities, meaning they only sell in bulk. Also, they will typically only sell to legitimate businesses and not give wholesale prices to the public.

Secondly, people aren’t just buying your product. They’re buying your marketing, the trustworthiness of your site, and typically the lifestyle that your brand represents.

Thirdly, most suppliers don’t focus on marketing and will typically require more effort to find than the average shopper is willing to expend.

Now, that you understand the basics of the drop shipping model and want to start your own Dropshipping Business go and read another article on How to Start a Dropshipping business where I have explained every in and out of this business.

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