Dropshipping

The seller fulfills orders by purchasing goods from a third party and instead of having them ship the goods to the seller's warehouse or storage facility, the supplier ships them directly to the customer. Dropshipping businesses do not store inventory or ship items directly.

The benefits of dropshipping

For many businesses, dropshipping is an appealing choice during the infancy of a company. Even eCommerce giants like Amazon used dropshipping models during their early years. There are some distinct advantages to adopting a dropshipping model.

What attracts most businesses to this model is not having to carry an inventory. This saves businesses a lot of time and money and provides business owners with the chance to focus on other important areas of running a business. For example, working on attracting new customers to the business and also scaling up its operations.

The setup costs of a dropshipping business are extremely low. There is no upfront investment required for an inventory nor are there any costs associated with warehousing. As such, there is almost no overhead to start a dropshipping business, aside from web hosting costs, that is.

Dropshipping comes with a very low risk for the seller. Operating without an inventory means there's no pressure to meet strict sales targets as there is no overhead to keep up with, so businesses can have a more relaxed approach to operations. There are also no limits to the kind of items your eCommerce can stock as you do not have to find the space to store it all.

Dropshipping in eBay and Amazon

There are several different inventory management techniques that eCommerce businesses can use. Dropshipping is a good way to start out on eBay and Amazon and many sellers continue to use this method long after setting up their business.

There are millions upon millions of different products that are listed on eBay and Amazon and most of the sellers on those platforms don't actually handle them. To keep customers satisfied, businesses should ensure that they use accurate descriptions that are provided by their suppliers.

Anybody with an eBay or Amazon seller account can start to dropship. Once deciding on what products they're going to sell, it's important to source them from a wholesaler that can be trusted. Working with a supplier that guarantees quality products and quick shipping is a vital part of building a dropshipping business.

Dropshipping Best Practices

There are many things you can do to ensure that your dropshipping store thrives. A common mistake that people new to dropshipping often make is not editing the descriptions that the distributor provides.

• Create your own write-up for the product, really make it your own, and you're more likely to make the sale.
• Marketing is arguably the most important aspect of growing your dropshipping store. As such, make an effort to connect with customers and keep them thinking of your business and the products that you can provide to them.
• Don't limit yourself to a single supplier. Doing this will only cause you problems in the long run. There are countless issues that can arise from doing this, such as products being discontinued or selling out for prolonged periods of time. The best way to combat this is by sourcing your products from numerous suppliers. Another benefit of doing this means that you can shop around and choose the supplier that provides the best products.

• If possible, you should consider keeping products on hand for simple but original photoshoots. Unique photographs can help to set your brand apart from countless other stores that are all using the same tired stock photos that are posted all over the web. By adding a personal twist to your dropshipping store, you stand out from the crowd and strengthen your brand identity with customers.

The Downsides of Dropshipping

Every business model comes with its own unique drawbacks and dropshipping is no different. One of the biggest downsides of dropshipping is the inability to access wholesale pricing that other businesses leverage to reduce costs. Dropshipping distributors are doing all of the work and their prices generally reflect this.

Despite the fact that you are not actually shipping the items, it's still your responsibility to deal with customers and their inquiries. Depending on your setup with the manufacturer or shipper, it can fall why don you to answer all the questions and manage the complaints if orders don't arrive on time or arrive damaged - which has the potential to take up a lot of your time. When using many different distributors, as most dropshipping businesses do, getting the order to the customer can be particularly challenging. Every distributor will have different shipping times and will almost certainly be shipping from different locations.

Customer service is important for every business. Getting things right must be done every single transaction or you could find yourself with a ruined reputation. Maintaining a great image is essential for all eCommerce stores. Unfortunately, when a business is dropshipping, it has little control of the customer's experience. As another business is responsible for product fulfillment, it's out of your control when a customer will receive what they have paid for.

As Dropshippers do not manage the warehouses or inventory directly, TradeGecko's best-in-class inventory management software is not supportable for a dropshipping business model, but for those multichannel merchants who sell direct to consumer and wholesale.