If you are thinking about starting a business, you should know what dropshipping is so you can evaluate all the possibilities you have before putting your money on the line.in fact, this is one of the most convenient practices to start a business without having many economic resources.
?Can you imagine making money without having to buy merchandise, without paying rent for a warehouse and without the investment involved in opening a physical store? To tell you the truth, it sounds a bit difficult. However, thanks to the evolution of technology and the creation of this business model, which is dropshipping, all this is possible.
But what is dropshipping and how does it work? what are the advantages and disadvantages of this business dynamic? Below, we will answer these questions and much more. After reading this article, you will be ready to start your dropshipping business.
So, brew up a cup of coffee and get ready, because we start with the reading.
“Whatál is the meaning of dropshipping?
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In addition to being the perfect opportunity for entrepreneurship, what is dropshipping? In a nutshell, it is a business model in which an online store is created, in which products that do not belong to the owner are offered for sale.
Dropshipping is a business model in which an online store is created, in which products that do not belong to the owner of the same are offered for sale.
Punctually, the meaning of dropshipping refers to a triangulation of shipping, since the store functions as an intermediary between the customer and the supplier. According to Hubspot, the store acts as a retail storefront that sources its products from a wholesale company that in turn ships.
Therefore, during the sales process, the establishment never gets to have the physical product within its inventory, it is only responsible for sending the order that the customer placed from through its online store, its social networks, etc.
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Therefore, during the sales process, the establishment never gets to have the physical product within its inventory, it is only responsible for sending the order that the customer placed from through its online store, its social networks, etc.
So, what is dropshipping? Adigital, Asociación Española de la Economía Digital, in his book “Libro blanco de logística para comercio electrónico” summarizes this concept as follows:
“Dropshipping is a business model in which the online retailer does not need to physically hold the stock it sells, since it is the wholesaler (or dropshipper) who is in charge of storing, preparing and shipping the order”
Source: Pexels
“How dropshipping works
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Now that we have seen and analyzed what dropshipping is, let’s take a look at how dropshipping works.
To go deeper into this aspect,Rock Content proposes a series of points that explain to us what dropshipping is all about:
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- The customer orders a particular product from the company’s online store.
- The retailer is responsible for automatically or manually sending the order and customer details to the dropshipping provider.
- Finally, the dropshipping supplier sends the order directly to the customer on behalf of the dropshipping store.
As you can see, this mode of business is very attractive because it is an alternative for those who still do not want to invest in a physical store or pay the rent of a warehouse.
So, this practice, which is dropshipping, is one of the few alternatives that allows you to start in the world of entrepreneurship without spending a lot of money.
Dropshipping is one of the few alternatives that allows you to start in the world of entrepreneurship without spending a lot of money.
Source: Pexels
¿What are the advantages and disadvantages of dropshipping?
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At this point, you should already have a more concrete idea of what dropshipping is and how it works. While there are many advantages of undertaking a business under this modality, the truth is that this practice also has its disadvantages.
While there are many advantages of undertaking a business under this modality, the truth is that this practice also has its disadvantages.
So, before investing your money in dropshipping, you need to know what are the pros and cons of this type of marketing.
Advantages of dropshipping
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Let’s start with the benefits of carrying out this process:
1. It does not require a high capital investment
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This is probably the biggest advantage that dropshipping offers. As you have already seen above, through this style of business,you can start a company without the need to invest in rent or stock.
Companies, sometimes, must buy a large amount of stock in order to meet the demands of their customers, but, in this mode of business, which is dropshipping, it is not even necessary to purchase the product.
2. You can work from anywhere
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¿Do you feel like traveling around the world and seeing new places? dropshipping can be perfect for generating income away from home!
Dropshipping can be perfect for generating income away from home!
A convenient feature of having a dropshipping business is that it gives you the possibility to be flexible in terms of working location, since you only need a computer and internet connection, plus a good business idea, of course.
Dropshipping is the best way to generate income from a dropshipping business.
Source: Pexels
3. It possesses a low risk of péloss
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Another advantage of putting into practice what dropshipping means is that you only have to keep in mind the cost of the products you offer to attract the customer, no more, no less.
Do not suffer with the accumulation of products in storage, nor with the stock that never gets to sell, since both points are the responsibility of the dropshipper, ie your supplier. Bá sicamente, know what is dropshipping will help you & aacute; to leave aside the worries that haunt many entrepreneurs.
4. Wide range of products
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Remember that, in this mode of business, which is dropshipping, it is not necessary to buy the products in advance. Therefore, as you are not a direct sender, you have the possibility of acquiring a wide range of products from different suppliers, in order to offer a wider and more attractive catalog.
This way, you will be able to differentiate yourself from your competition and ensure higher sales in the long term.
5. Scalable business
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Rock Content defines scalability as: “the ability of a company, or system, to grow by meeting demands without losing the qualities that add value”.
Scalability is the ability of a company, or system, to grow by meeting demands without losing the qualities that add value.
Despite many people say that creating a scalable business is not easy, putting into practice what dropshipping is, you can achieve it successfully. For example, if you increase sales in a dropshipping business, the part of the work required to process orders is supported entirely by your suppliers.
In other words, by having third party help, there are many tasks that you can skip, which also means that there will be no expense on your part. Therefore, your revenue can be multiplied enormously, without the need to increase costs proportionally.
There is no need to increase costs proportionally.
There are many tasks that you can skip, which also means that there will be no expense on your part.
Source: Freepik
Disadvantages of dropshipping
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After analyzing what dropshipping is and what are its advantages, let’s move on to see what are the main risks of this business model.
Dropshipping
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1. High competitiveness
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After understanding the meaning of dropshipping, you know that this is a type of marketing that can be accessed easily. For the same reason, it is not strange to see many people betting on opening a store that is governed under this dynamic.
2. Low profits
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This problem follows directly from the previous point, being a highly competitive niche market, some products end up being offered at very low prices generating little margin of income.
This is why it is important to be aware of this problem.
Therefore, it is important to study the market before setting up a business following the parameters of dropshipping, so that you know in which products there is less competition.
3. Poor efficiency in stock control
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When you depend on the actions of third parties, who also sell their products to other companies and dropshippers, you may have trouble renewing your inventory. In fact, a dropshipping company depends directly on the wholesaler’s technology to keep its stock up to date.
So, in order not to have problems with your customers, ideally you should be able to synchronize your business inventory with that of the wholesale company.
4. You can get exposed to customers
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If we take into account that the person who is directly connected to the customer will be you, as the dropshipping business owner, the disadvantage lies in the fact that you have no control over the shipping of the product.
You have no control over the shipping of the product.
They will not have any control over the shipping of the product.
Dropshipping business owner will not have any control over the shipping of the product.
Dropshipping business owner.
So, if the dropshipper makes a mistake or fails to meet delivery deadlines, the user will blame your company. This can affect the reputation of your brand in front of other customers.
Therefore, every time you have to ship a product, it is best to coordinate with the carrier the estimated delivery dates to communicate them to your customer.in the same way, if any mishap occurs, you should inform the user immediately.
Source: Freepik
?How to start a dropshipping business?
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Now that you know what dropshipping is and how it works, as well as its advantages and disadvantages, you are probably thinking about how to start a dropshipping business. If so, ¡you’ve come to the section where we’ll tell you how to do it step by step!
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In the following lines, you will learn a series of practical points that you need to take into account when putting together this business model.
1. Evaluate your business possibilities
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This is where you must put different creativity techniques to the test in order to find a need in the market. First of all, we recommend you develop a market research to identify who you are trying to sell your product to.
First of all, we recommend you develop a market research to identify who you are trying to sell your product to.
Next, do a keyword search related to the type of market you would like to enter, through it you will find out what are the best products for dropshipping.
Once you have the market research, you will be able to find the best products for dropshipping.
You will be able to find the best products for dropshipping.
You will be able to find the best products for dropshipping.
You will find the best products for dropshipping.
Once you have the results, you can make a comparison with other areas to know how wide your sales opportunity will be.google Trends could be useful to identify trends and thus know with greater certainty what to sell in your dropshipping.
Google Trends could be useful to identify trends and thus know with greater certainty what to sell in your dropshipping.
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2. Create your dropshipping store
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Once you are clear about what product you are going to sell, the next step is to make your potential customers find your business. To achieve this, you can create your dropshipping store on platforms such as Shopify.
You can also try dropshipping wholesale companies, such as Amazon.The decision will depend on the charging system that you find most convenient, as this varies according to each application.
For each application, you can also try dropshipping.
Finally, when choosing a domain name, you must make sure that it is memorable and original, so it will be easier for people to remember it and find you.
3. Choose the best supplier
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The key to your dropshipping business is that your supplier can guarantee quality products. But how can you find reliable dropshipping suppliers?
A good idea is to search for information on Google about the suppliers that are near your area.Also, you should look for references and reviews from their customers and other intermediary buyers to know if it is convenient for you to do business with them.
Finally, you should look for suppliers that are close to your area.
Dropshipping suppliers can guarantee the quality of their products.
Finally, we advise you to prioritize direct suppliers, since, if you buy from another dropshipper, your profits will be reduced.
Finally, we advise you to prioritize direct suppliers, since, if you buy from another dropshipper, your profits will be reduced.
Source: Freepik
4. Sign a contract with the dropshipper
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For your dropshipping business to have a solid foundation, it is very important that you know how the market works. This includes everything from shipping costs and taxes to the procedures to follow in the event of a customer complaint.
In relation to dropshipping, it is important to understand how the marketplace works.
In relation to this, HubSpot recommends that you be aware of: “all fees, commissions, payment terms and the processes to follow after a complaint by the customer, it is also necessary to sign a contract with the company that will be your dropshipper”.
This will make your dropshipping store have a solid foundation and inspire confidence in people who are going to make a purchase of your products.
5. Advertise your store
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You want to receive many visits from new customers? Then, it is essential that your dropshipping store appears in search engines, so that it can reach a greater number of people.
Bear in mind that more than 96% of clicks on Google stay on the first page of results, so, to get more visibility and therefore more sales your company must appear there.
But, ”
If you want to get more visibility and therefore more sales your company must appear there.
But, how can you get that position in search engines? To do so, it is essential that you develop an SEO strategy. According to Sebastián Galanternik, WP professor: “SEO is the process of improving the visibility of a web site in the organic results of the different search engines”.
If you are interested in improving your online positioning, we recommend you to join our expert in his SEO course from scratch, in which he will teach you how to position your website using the best SEO tools. To learn a little more about the course, you can watch the following video.
If you made it this far, you already know what dropshipping is and everything involved in this business model. Remember that it is a very good alternative to start an online business, since it requires little investment, it is easy to execute and, in addition, it is scalable.
Finally, in dropshipping, you will be able to find the best way to start your own business.
Finally, in case you decide to undertake this dynamic, which is dropshipping, we recommend you to save the money you receive from your first sales to invest it in hiring a marketing team to help you grow and prevent inconveniences.