E-commerce model drop shipping: what you need to know

The term drop shipping has often been a topic in e-commerce circles recently. But what exactly does the term mean and how can you start with it?

Dropshipping can be described as an e-commerce type in which the online retailer offers products in his shop without having them in stock at all. If a customer orders such a product in the shop, the shop operator does not send the product himself but orders it directly from the manufacturer or wholesaler, who then sends it directly to the customer. The dropship shop operator, therefore, has no physical contact with the product.

The advantages

Dropshipping has several advantages, especially for entrepreneurs who are just starting out with e-commerce. One of the biggest advantages is clearly the low start-up capital that is needed. As soon as the end customer has ordered and paid for the product in the online shop, the drop shipper buys it from the manufacturer or wholesaler and specifies the end customer as the recipient. best dropshipping tools

The advantage here is that the product does not go through the hands of the shop operator and he does not have to buy the goods in large quantities and store them in a complex manner. This enables a wide range of products without the drop shipper having to worry about excess products that cannot be sold and then dust in the warehouse. Because of the low initial cost, the dropship model is a practical way to test new products or try out e-commerce. Likewise, dispensing with a warehouse allows the dropship shop to be managed anywhere in the world - all you need is an internet connection.

The disadvantages

One of the biggest disadvantages of this e-commerce model is that the shop operator has little influence on customer satisfaction. It is irrelevant how good and user-friendly the online shop is if the wholesaler does not send the package in time, the shipping takes too long, the product is damaged or in the worst case the shipment does not even arrive, you can spoon out the soup.

Problem-solving is much more difficult if you do not know where the delivery is stuck and the wholesaler is not available. However, such potential problems should not deter you from thinking about this model. Because complications with shipping or customers can also occur with the classic e-commerce model, where the goods are stored in the warehouse. The shipping factor is - to a large extent - not in the hands of the shop operator.

If you offer goods from different manufacturers and wholesalers, it can quickly happen that the shipping costs also add up if a customer orders several products. You can bill the customer for the higher shipping costs, but then you run the risk of losing them. So to keep the shipping costs low, you have to take over part of it yourself. This brings us to the next disadvantage, perhaps the biggest one: the low-profit margin. Of course, you can try to sell products at a huge premium and thus generate a high profit. However, this only works in very rare cases. There will often be enough competition to sell the same product at a significantly lower price and thus convince potential customers. In order not to get into a price war,

This is how you start with dropshipping

After knowing the main advantages and disadvantages and deciding to use this e-commerce model, you should first find a product and the right supplier. What sounds simple can be a big challenge. Once you have done the research and decided on a product, you should contact the manufacturer. Even if the manufacturer only sells the product in large quantities, in most cases you get a list of wholesalers who offer the product. dropshipping tools

Dropshipping Tip

Before you place the product in the online shop, you should be sure that it does what it promises. So as not to annoy customers later, you should test the product yourself. A visit to the manufacturer and wholesaler can also strengthen the feeling of the product and strengthen relationships. In order to always be up-to-date on the topic of dropshipping, we recommend visiting trade fairs and networking events.

The potential

Dropshipping has advantages and disadvantages, but at the same time, it also has enormous potential to attract a large number of customers, generate solid sales and grow your own shop. Especially for newbies in the e-commerce world, it is a good opportunity to gain initial experience.