What is dropshipping business and how does it work?
What is dropshipping business?
Dropshipping has been around for a long time. However, unlike most people's opinion, this is not a way to make a quick money.
In the Dropshipping mode, you don’t need to stock up or overstock. You only need to purchase products from the source of a third party platform, ex. AliExpress, and let them ship directly to your customers. And you don’t need to deal with logistics and transportation by yourself. This is also the biggest difference between dropshipping and other e-commerce.
Compare this to a supermarket like Walmart. The customer came to Walmart and wanted to buy a new smart TV. After the selection, the customer paid to complete the transaction. Among them, Walmart is responsible for the TV inventory, display and distribution.
Why choose AliExpress as the supplier of Dropshipping？
AliExpress is founded in 2010, who is available in 220 different countries and regions, enable payment in local currency in 51 countries. Since 2015, Dropshipping began to rise, and AliExpress has played an important role in it. AliExpress will give priority to the interests of buyers, that is, you, whether it is payment or return.
What is the difference between dropshipping and traditional sales?
If it is dropshipping, the retailer is responsible for the storage of the TV. But after receiving the customer’s order, the dropshipper orders to his supplier. The supplier completes the shipment and transportation, and delivers the product to the customer.
Because dropshipping does not require a lot of money and resources, the threshold is very low. So now more and more people are joining dropshipping.
From a commercial point of view, this is also a very friendly model for you: you don't need to be responsible for any inventory, and you don't need to worry about packaging and transportation. Other people will help you complete these tasks. You just need to choose the right product and marketing it to make a considerable profit.
How does it work on DropShipMan?
Let's briefly describe how does it work:
Step 1: As a partner of AliExpress and shopify, you first need an AliExpress account and shopify shop
Step 2: Select the product you need on AliExpress. This part can be quickly completed through the Chrome extension of DropShipMan.
Step 3: Modify the product information and push it to your shopify store. We don't advocate direct copying of the images in the product description of AliExpress. These images have been included by search engines, which will affect the SEO of your store's images. The best way is to upload a picture through shopify's settings> files and then edit the corresponding product description. All images of the products can be downloaded through DropShipman.
Step 4: Promote your products online through the Internet. Social media or search engines are all good solutions.
Step 5: Attract customers to place orders.
Step 6: When placing an order on the platform, fill in the customer's requirements and delivery address. Dropshipman can automatically fill this to your order.
Step 7: Suppliers deliver products to customers under the brand of dropshipper.
A long-term dropshipping shop requires trust and long-term partnerships between multiple stakeholders such as suppliers.
Benefits of dropshipping
Dropshipping is a great business model for aspiring entrepreneurs to start with because it’s accessible. With only a small amount of money, anyone can start their dropshipping business. And you can quickly test different business ideas with limit downside. Here are some advantages of starting a transportation business:
1. Very low startup cost.
Unlike physical stores or regular e-commerce businesses, you don’t need physical warehouses to store products. You only need to pay for the domain name and hosting.There is no inventory, you don't have to worry about excess inventory and inventory costs.
2. Low order execution cost.
Because there is no need to package and deliver the product, there is no need to worry about additional costs. You only need to forward customer requests to vendors like AliExpress. Professional suppliers will be responsible for the flow of products in the supply chain. And you just need to make sure that the customer receives the product.
3. Low risk and flexibility.
There is no risk of handling inventory. The most important thing is that you have a lot of products to choose from, there is more then 38 millions products available on AliExpress, it make easier to expand your income. If a product cannot make money, then you can delete it in your store immediately without much loss. You can also easily cooperate with multiple wholesalers, distributors and suppliers to increase business flexibility.
4. Easier to scale
With a traditional retail business, if you receive three times the number of orders, you’ll usually need to do three times as much work. However, in the dropshipping model, the delivery work can be directly handed over to your supplier. Use good tools to help you do more with less.
Disadvantages of dropshipping
No business model can be 100% perfect. Dropshipping is no exception. Here are some of the most common disadvantages of the dropshipping model:
1. Almost no control over the delivery of orders.
Since you don’t actually have a product, you must always rely on your partners to supply them, and you can only pray that their inventory is always sufficient. In the dropshipping model, you are not responsible for the entire supply chain process, including packaging, warehousing, and distribution. Everything is managed by your partner. So, if they make mistakes, you will not be able to give feedback with them. Then you can only appease the client yourself.
2. Limited customization and branding
Unlike custom-made products orprint on demand, dropshipping doesn’t give you a lot of control over the product itself. Usually, the product dropshipped is designed and branded by the supplier. Some suppliers can accommodate your business’s product changes, but even then, the supplier has the most control over the product itself, Including product quality and shipping time. Any changes or additions to the product itself usually require a minimum order quantity to make it viable and affordable for the manufacturer.
3. Low margins
Compared with factory-produced and sold products, the revenue of dropshipping may be lower. In dropshipping, if you want to make the same profit as other ways of selling, then you have to set the price slightly higher. Generally speaking, your expected profit margin is about 20-30%, and the conversion rate is about 2-3%. These data will vary depending on the products you sell. AliExpress has a dropshipping center plan that can help you reduce cost, but it needs to reach a certain amount of sales.
All in all, dropshipping has its pros and cons. For novice entrepreneurs and people with limited budgets, this is a good choice, dropshipping is also a very safe mode. Even if you fail, you will not lose a lot of money. At the same time, this process can help you gain valuable business experience and market knowledge.
Hope this article can help you start your dropshipping business.