Chances are you’ve heard of dropshipping if you’re looking for an online business opportunity. The aspiring ecommerce entrepreneur can generate high returns from dropshipping. Dropshipping is possible with a small amount of startup capital and some sweat equity. As you begin to see success, you can scale your business by allocating more resources to advertising and brand building. What is dropshipping, and why should you use it to realize your entrepreneurial dreams?
Let’s start off by answering the question: “What is dropshipping?”
What is Dropshipping?
A Dropshipping method of e-commerce fulfillment is one in which merchants buy products from third-party suppliers as customers place orders, rather than storing inventory. After that, the products are shipped directly to the consumer. So, the seller doesn’t have to handle the product directly. Do you recognize this?
Shipment and order fulfillment are largely hands-off processes for retail store managers. The merchant doesn’t have to stock products, order inventory in bulk, or physically fulfill orders. Instead, the third-party supplier will ship products on behalf of the merchant.
Dropshipping is great for entrepreneurs since running a store doesn’t require as much capital as the traditional retail model. You don’t need to open a brick-and-mortar store, hire employees, pay overhead, or stock products. You open an online storefront and buy wholesale from vendors who already have products and warehouse space.
What is a Dropshipper?
A Dropshipper is a manufacturer or supplier who manages inventory for a retailer and ships orders to customers. You will serve as a middleman between the merchant and customers by driving traffic to the store and processing orders. In spite of this, you will reap the lion’s share of the profit by marking up your products. It’s a simple business model that can be very rewarding.
Dropshipping attracts millions of entrepreneurs since it has low barriers to entry and requires little money to launch. I think that’s why you’re interested! The best news of all? With dropshipping, you can build a long-term business right from your laptop.
It’s important to look at both the advantages and disadvantages of this business model before you decide to start your own dropshipping ecommerce company. Learning how to dropship effectively, however, will be a breeze once you understand the advantages and disadvantages of this strategy – especially with the resources Oberlo provides to aspiring entrepreneurs!
Benefits of Dropshipping
1. Dropshipping is an easy business to start
Dropshipping does not require previous business experience. By learning the basics, you can launch a business quickly and learn the rest as you go.
Dropshipping is easy to start because start-up costs are low — especially when compared to other types of retail businesses. You don’t need a warehouse to store products or a team to assist you. In addition, you don’t have to worry about stocking or shipping. After you get started, it’s surprisingly hands-off.
As a result, you can start your business today. Everything can be up and running within a few hours.
We have created this guide to provide you with some fundamental knowledge and the right tools and resources. After you finish it, you’ll have all the knowledge you need to start your own dropshipping business.
2. Dropshipping allows for scalability
Your business model doesn’t need to change much as you scale up. As your business grows, you’ll have to put more effort into sales and marketing, but your day-to-day will stay the same, aside from processing more orders.
Dropshipping has the advantage of not skyrocketing infrastructure costs when you scale. As a result, you have more time to devote to your marketing efforts. You’ll be better off if you concentrate on marketing your business and providing great customer service.
3. Dropshipping requires no office space
Your laptop can run your entire business, and you don’t need to make high-level investments. As your store gains traction, you can scale your advertising budget as it grows. Even as your business grows, your costs will be low – especially when compared to traditional business expenses.
4. Dropshipping offers flexibility
One of its greatest advantages is this. You can be your own boss and set your own rules. By far, it’s one of the most flexible careers anyone can choose.
You can work from home with little more than a laptop and at the times that are most convenient for you. Entrepreneurs who want a business that works for them will find this ideal. You won’t need to bend over backward to get things done. You set your own pace instead.
Additionally, dropshipping is flexible in that it lets you make decisions that are right for you. You can add new products whenever you want, and you can adjust your strategies as you go. While you’re away, you can automate everything to generate passive income. You get the idea – the possibilities are endless.
5. Dropshipping is easier to manage
You don’t need to hire staff or rent warehouse space, so you can manage everything with little hassle. As soon as you’ve found suppliers and set everything up, you’re only responsible for managing your online storefront.
Disadvantages of Dropshipping
1. Dropshipping has slim profit margins
Dropshipping has the disadvantage of having low margins at first. This is not to say it can’t be profitable, but you should be aware that the margin on some products in some niches may be below.
It’s especially problematic when you’re dropshipping in an extremely competitive niche. When you’re competing for customers’ attention, it can be difficult to achieve the kind of profits you desire. You’re more likely to achieve wider margins if you choose the right niche, and target the right audience. You’ll also have better margins in niches with less competition, though sales may plateau at some point. The success of many dropshipping stores depends on highly optimized advertisements driving high sales volumes.
2. Dropshipping can complicate the order-processing process
The customer orders, you process it, and your supplier fulfills it. For the most part, it is simple.
Nevertheless, if you’re sourcing products from multiple suppliers, you might run into some issues. Your suppliers may use different shipping solutions, which presents a problem for both you and your customers. When shipping multiple products, the cost of shipping can be prohibitive, depending on your shipping setup.
Different suppliers will also have different billing and processing structures. Managing the interaction with your suppliers can sometimes be a challenge.
3. Dropshipping doesn’t give you much control
Dropshipping has the disadvantage that you cannot control certain aspects of the process such as ordering products, fulfilling orders, and shipping. Suppliers must do everything right and work seamlessly. Lack of control can be off-putting to some entrepreneurs, but most don’t have a problem with it.
When something goes wrong, it can be tricky to fix. Customer churn can sometimes be caused by supplier problems, but you can mitigate them with the right damage control and keep it to an absolute minimum.
4. Dropshipping makes customer service more difficult
When orders go wrong or suppliers fail, this is another problem that occurs. If you’re just the store owner and don’t have much control, it can be difficult to sort out orders and handle customer support.
Dropshipping has the unfortunate disadvantage of making you responsible when your customers complain. If your suppliers have problems, you can do everything right and still run into problems. Being responsible and absorbing the error on behalf of your suppliers is part of your business model, so don’t worry!
Dropshipping: Is it for You?
You can start and grow a dropshipping business in a variety of ways. Entrepreneur stories describe merchants who started dropshipping businesses to earn a few extra hundred dollars a month, as well as those who have grown multiple six-figure businesses. Whether you’re looking to start dropshipping as an introduction to eCommerce or as a long-term business model, you must understand how dropshipping can be profitable to you.
Dropshipping as a Side Business
What is the main appeal of dropshipping? It’s an ideal side job because it’s flexible and doesn’t take up too much time once it’s set up. While they have a main job that provides steady income, many entrepreneurs dropship on the side. You don’t have to give up your job to pursue your dreams of becoming an entrepreneur.
There is a big concern here that your employer will prevent you from pursuing a side hustle, but believe it or not, many companies are fine with it. Be sure that you are in the clear by asking about your company’s policy on side businesses and reviewing any non-compete agreements you have signed. Additionally, you should make sure there are no conflicts of interest. If everything checks out, then you’re good to go.
Dropshipping doesn’t require too much time and effort, so you’ll probably be able to handle it without a hitch. Are you worried that your side hustle will affect your performance? You don’t have to! If you work on your dropshipping business for only a couple of hours every day, you will succeed.
It’s important to know your limits, however. In the event that you work overtime at your day job and find it difficult to find time for important daily responsibilities, you might not be able to give your dropshipping business the attention it needs. Dropshipping requires a little time, but you do need to schedule it into your schedule.
It usually just takes some time management and scheduling. Dropshipping retailers manage their main and side jobs easily. It doesn’t require you to sleep three hours a night or skip meals. Find a schedule that works for you and follow it religiously.
Ecommerce Dropshipping as a Full-Time Business
Dropshipping offers flexibility as one of its benefits. You can make your business as big or as small as you want. Dropshippers typically do it on the side, but it’s also a viable career path. You can become a full-time dropshipping retailer if you wish!
You can move from dropshipping part-time to full-time after you reach customers and generate enough sales. The best part is that you can go at your own pace.
Obviously, this will take more work, but it is well worth it in the end. If you learn how to dropship effectively, you won’t have to worry about unsteady income. A well-established dropshipping eCommerce business can run like clockwork, and you may even feel like you are generating passive income.
You could even do a side hustle while still being a full-time dropshipper! It’s the sky’s the limit.
Maybe you’re still unsure about becoming a full-time dropshipper. But there are thousands of success stories of entrepreneurs who started out right where you are now. You don’t need a business degree or millions of dollars to make a living from it. Additionally, our dropshipping tutorial covers everything you need to know to get started.