Did you research about business model anytime? If the answer is Yes, then I think you have at least little idea about what is dropshipping business model. Today we will discuss about dropshipping business in depth. So let’s move to the topic.
What is a dropshipping business?
Dropshipping means selling products which are created and owned by the other people through a website without having any stock of this product. If we say more easily, then we can say that you are selling products without maintaining any inventory. Dropshipping is a very profitable business model in today’s world. And it is so easy that many people are choosing it to start their business with a small amount of capital. Though some people will say that it requires no money, I will say it requires some startup capital which is very low compared to the other business.
How does it work?
It works like the supply chain management process. Suppose you are a dropship business owner and you have found sources from where you will collect the product. You have listed some products which are cost about $15 per unit but in your store, you are reselling these products for $35. If an order is placed at your website, then you will place the order in the marketplace (AliExpress) mentioning the shipping address of your customer (Keep in mind that at the time of placing an order you have to mention the shipping address of your customer, not yours). And the producer or seller from whom you placed the order will send the products to your customer directly. You are buying a product for $15 and reselling for $35. So you are making $20 profit. That is all, how this business model works.
Does it work?
It is a great question buying products for $15 and selling it for $35, will people buy it from you? The answer is yes people will buy it from you. Because there are few people who know about the marketplace you are sourcing products. But truth is that most of the people do not know about the marketplace where the products are selling more cheaply. That’s why the dropshipping model works very well. But at the time of choosing products, you have to be careful. So product research is very important in this case. There are many successful people and you can follow them.
Way of doing Dropshipping
Dropshipping’s main theme is to sell products through an e-commerce platform. So you can do dropshipping business by creating a website. And this website can be built through Shopify, Alidropship, WordPress, Wix or other platforms. If you use Shopify, you have to pay monthly (after trial version), if you use WordPress platform to build a website then you have to buy domain & hosting. But you will get many premium themes & software (for example Oberlo ) in Shopify which you have to buy if you use WordPress (for example AliDropship Plugin). Or you can order for the dropshipping store in Alidropship, they will do all things for you and will charge you for one time.
Popular Niche for Dropshipping business
“Product” is a very important thing in the dropshipping business. If you fail to choose correct products, then you will also fail in the dropshipping business. That’s why product research is very important. You can research products in multiple ways. At first, you have to determine who are the target buyer and where(Country) you will sell products. From the previous experience, we have seen that Women are the best buyers. So you can select the fashion & beauty niche to do your business. There are many more niches by which you can be successful in your business. I have listed some niche which is always become successful
# Minimalist Wallet
# Special Tea
# Men Fashion
# Craft Supplies
# Enamel Pins
# Per products
# Fashion Accessories
# Mobile Accessories
# Mother & Kids
But at the time choosing products from the above niche you have to keep in mind that people won’t buy products from you if you sell products which are found in Amazon, Walmart, Rakuten or etc. big company. You have to select special and trending products which are not found in these big companies.
Where you can find products
I have listed some websites where you can find trending products
# Image in Google search Engine
# Aliexpress most selling products
# Amazon bestseller
# Etsy best seller
Before finding any specific product at these marketplaces, you have to find out that the product/niche you are searching for is trending or not through Google trends. If you find these product is trending in google trend then you can proceed.
From where you can collect products
It is another important thing in the dropshipping business. You have to find out the source of the products which you want to sell in your store. And for sourcing products, AliExpress is the best place. And most of the dropshippers use this marketplace for their product sourcing. At first, they try to find out the products which they want to sell in their store on AliExpress. Checking all things (cost, shipping time, store feedback, product feedback) they list the products in their store. If the product costs about $5 in AliExpress, the dropshippers resell this product in their store for $10-$15. So AliExpress is the main place to source products very cheaply. Some marketplace from where you can collect products are
# Megagoods etc.
Pros & Cons of Dropshipping
# Lower startup capital: Dropshipping required very low startup capital compared to other businesses. You can start your business with $100-$500 capital only.
# No inventory in stock: Dropshipping business model is very popular for this option. It requires no stock of inventory. After getting an order, you order it to your supplier. So there is no need for keeping inventory in stock.
# Avoidance of logistic complexity: In this business model, the business owner doesn’t need to worry about shipment to send the product to the customer. Your supplier will send the product to your customer. So it is a great advantage of the dropshipping business model
# Variations of products: Business owner can add more variations in their products because he or she doesn’t have to buy anything before selling. So it provides a great opportunity for this business.
# Low risk: Dropshipper doesn’t need to keep inventory, so there is no risk. He can update inventory at any time.
# Product Testing: Product testing is very easy in dropshipping business as nothing has to buy. So business owners can test products through a time period.
# High Competition: Dropshipping business required a very low amount of capital so a huge number of people are doing this business. As a result, there exist high competition.
# Right Products Selection: It is another problem of dropshipping. If you can’t select products according to customer needs, then you are going to fail your business.
# No control in product delivery: Timely product delivery is a very important thing for any kind of business. And dropshippers can’t control this because products are sent by another supplier which is a great problem of this business.
# Low-Profit Margin: After paying all charges dropshippers make low-profit margin compared to other businesses.
# No legal entity: Dropshipping business doesn’t have any legal entity. That’s why many people don’t like it.
# Poor Customer Service: The customer service in this business is poor as the product is delivered by other suppliers. Most of the time the dropshippers can’t provide accurate information to the customer.
5 Steps you should follow to start a dropshipping business
# Niche selection: At first, you have to select a niche. I have mentioned many niches before which are historically successful. You can choose anyone according to your preference. At the time of selecting a niche, you have to keep in mind the demand of this niche (you can use Google trend), its competitiveness and variations of products in this niche. Try to choose a niche that is profitable and less competitive.
# Finding Supplier: You have to find out suppliers for your niche. You can find out your supplier in AliExpress, DHGate, Light in the box (Aliexpress mostly used). Please choose the supplier very carefully. You should check the review of the supplier and try to select them whose positive seller rating is more than 97%. The products you want to sell should have a positive rating of more than 4.7 out of 5.
# Product listing: In this step, you have to list the products you want to sell on your website. You can use Alidropship if you use Woocommerce. Or you can use Oberlo if you use Shopify for listing products. You have to customize the price and size very carefully.
# Traffic Generation: If you don’t drive traffic to your store then you are not making any revenue. So you have to send traffic. You use either free or paid or both. You can promote your website on Facebook, Instagram or you can rank your website on Google 1st page through SEO to get auto traffic continuously. You can run PPC campaign also through google ads
These are the five steps of building a profitable dropship store. Anyone can follow it.
Some mistakes should avoid starting the business
# Picking Wrong Niche: If you peak the wrong niche, which has no demand then you are going to fail in your business. To peak, the perfect niche, trend analysis, and keyword research are very important. You can perform trend analysis through google trends and can keyword research through Google keyword planner, Ubersuggest, etc.
#Lack of Proper planning: Try to make a plan for all the steps I have mentioned. Many people fail because of proper planning.
#Picking wrong suppliers and products: If you fail to choose the wrong products and wrong supplier then you will fail also. You should check the feedback very carefully before choosing these. If you want to sell in the U.S.A then you should choose those products which have an ePacket shipping option. At the time of choosing products, you have to check shipping cost also.
#Products descriptions: You should customize your products descripti0n very carefully, otherwise people won’t buy it.
#Wrong or no marketing strategy: Most of the dropshippers found that they spend all time building store and listing products but they don’t concentrate on marketing. You have to make planning for marketing properly. You should make your marketing planning before creating your store. A proper marketing system is very important.
#Lack of patience: It is a great problem for many people. If you don’t have patience, then the business is not for you. Please don’t give up, success will come one day. Most people leave the business after failing in the first attempt. If you do the same then you will fail also. So patience is very important.
#Very low Budget: If your budget is very low you should not start this business. So please start this business when you have $100-$500
Finale Comment: If you read the whole article carefully, then I can say you have acquired at least minimum knowledge about the dropshipping business model. In summary, I can say, It is a business model in which you can start with the minimum amount of capital without facing any complexity.
Some Store on the Shopify platform which doing business successfully