Dropshipping: Is it a business model worth considering?

Welcome back, folks! In this week's edition of Plugged In with Themehigh, we discuss yet another topic that will pique the interest of all e-commerce enthusiasts - Dropshipping. You might have noticed this term in other blogs and articles, but we are here to simplify things for you. So let's get started!

So, what does it mean when an e-commerce store is dropshipping its items? In a consumer’s head, an e-commerce store is an online platform that sells and delivers products to their doorstep. However, an e-commerce store can also function by just providing a storefront while storing and shipping products will be taken care of by a third-party seller. How? The answer is - using dropshipping.

What is dropshipping?

Dropshipping is a business model in which you don't stock the inventory or handle the shipping. You just run the online store which the customer interacts with. The products you sell are stored by a supplier you enter into an agreement with. This can be a wholesaler or even a manufacturer. They manage the inventory and ship orders on your behalf. After shipping, they share the tracking information with you, which you can share with the customer.

The seller remains invisible to the customer despite managing the mammoth task of handling the products. The product package will only contain the address of the store owner. The payment made by the customer goes to the store owner's account. Then what's in it for the supplier? Based on a prior agreement, they charge the store owner a certain percentage of the product's money for their services.

Are there any real benefits in choosing this model?

If you are good at selling and marketing your products, but you don't want to go through the hassle of managing the inventory and shipping your orders, this model is suitable for you.

The overhead cost is meager as you don't need a space to store your products, nor do you need employees to handle the inventory. You can scale up your business as and when you want without scrambling for a space. You can manage your store from any part of the world. All you need is a laptop, and you are good to go.

If you are convinced about the benefits of dropshipping, here are a few things to keep in mind before you start.

Choose a niche

There will be other merchants selling the same product as you do. So, if you want to stay ahead of the competition, it's better to identify a niche group to sell. You can rely on Facebook Insights, Google Keywords Planner, and Google Trends to find out what’s trending.

Learn from competitors

Analyze your competitors well. Understand their marketing and social media strategies. Run a simple Google search to find out top competitors in the niche you have chosen. You can also get help from third-party tools like Ahrefs or Semrush for country-specific details. You can also analyze the social media handles of your competitors to find out how they interact with their customers and adopt similar techniques.

Get hold of suppliers

Many suppliers offer drop shipping services, but not all of them might be legitimate. So, it's important to research your products well and compare the prices of different sellers before entering into any form of agreement. To make things easier, e-commerce platforms like WooCommerce and Shopify come with plugins and apps that connect you to suppliers around the world to help you run your business effortlessly.

Once you have ticked all the boxes, you can identify an e-commerce platform and start your business. However, a small caveat before signing off: dropshipping is not as rosy as it seems. It has a lot of cons, like, lack of control over the supply chain, low profit margin, and challenging customer support, among others. But if you keep your eyes and ears open, it is indeed an avenue where you can flourish.

That’s all for this week, but we will be back real soon with more buzzwords and fuzzwords from the world of e-commerce. Keep following the page for more!