What Is Dropshipping And How Does It Work In Practice?

Understanding what dropshipping is just the starting point for e-commerces wondering if this is a good selling alternative. It is necessary to analyze in-depth the aspects of this concept in order to be sure that its use is beneficial to the business.

In Google Trends, you can see that interest in this model has been growing worldwide:

Dropshipping Google Trend

Here you will know everything you need to keep an eye on this business opportunity and avoid serious mistakes that could hurt your venture.

What is Dropshipping

Generally, dropshipping is geared towards individual marketplaces, e-commerces, and entrepreneurs. The process consists of receiving sales orders online and forwarding them to the supplier, that is, the dropship partner, which in turn sends the product to your customer on behalf of your company.

As a result, you do not have to manipulate or have access to the product, you only do the intermediate for sale. The profit from this process comes from the price difference between the amount you disclose in your online store and what your dropshipping partner charges.

How Dropshipping Works

In general, it is a relatively simple process as shown in the image below:

Dropshipping Work Process Diagram

Step 1: A visitor arrives at your online store and makes a purchase.

Step 2: You receive the sales order and manually or automatically passes this information to your dropshipping partner.

Step 3: Your partner is responsible for sorting orders and sending them directly to your customer.

Benefits of Using Dropshipping in Your Business

There are many benefits to using dropshipping to sell on the internet. Below we list the main ones:

Fewer expenses: Without having to invest in the stock of products, you can start a successful dropshipping business with little money.

Few fixed costs: Since you do not have to deal with the purchase and management of the catalog and stock, the fixed costs are quite low. In fact, all over the world, many successful dropshipping companies operate from a home office with a laptop shelling out less than $ 100 a month. As they grow, these costs are likely to increase but remain low compared to those of a traditional business.

Flexibility: A dropshipping business allows you to operate virtually from anywhere, just have an internet connection. Since you can communicate with suppliers and customers, you can easily operate and manage your business.

Variety of products: Since you do not have to buy items in advance to sell, you can offer a wide variety of products to your customers and increase the catalog as convenient as long as your dropshipping supplier has the items in stock.

No bent work: With a traditional business, if you get three times more orders than usual, usually this requires triple the work. Having dropshipping suppliers, the part of order processing will be done by them, allowing your business to expand with less expense and less work, so it will be almost the same if you sell 5 or 500 products.

Disadvantages of Dropshipping

Some of the most notable drawbacks of this business model include:

High competition: One of the biggest challenges is that you cannot stand out from the crowd, as dropshipping does not allow you to have exclusive product varieties. You will have great competition among people who also use this medium for sale.

Low Margins: Another major drawback is the low margin, since usually with dropshipping your profit will be around 20%. That’s why however tempting it is to sell products at exorbitant prices for maximum profit – many entrepreneurs go to the pot and end up with no success at all – you have to take high competition into account. Having low margins means you have to sell a significant volume to get considerable benefits.

Catalog sync (not available): If you have all the products you sell in stock, it is relatively easy to control which items are available or not. But when you’re working with third-party products, while there are ways to improve the synchronization of your store’s catalog with your suppliers, these solutions do not always work perfectly and providers do not always have the technology they need. Because you are entrusting the catalog to someone, there may be times when a shipping request is passed to dropshipping, and the product has already been sold. The effect of this is very great since it ends up reflecting on the delivery deadline and causing other damages.

Step by Step to Ensure Dropshipping Works Perfectly

eCommerce: What Is Dropshipping And How Does It Work In Practice?

To stand out from the competition and ensure success with this sales model you must follow some indispensable steps. Check out:

1. Choose products to send via dropshipping

Once you have chosen a dropshipping partner, check out the products offered and see if there are any reviews before you offer the product to your customers.

2. Try products according to the calendar

Try products that you feel are on the rise right now. For example, during the summer you can try out for your virtual store tops and swimwear, while in winter you can try sweaters and hats. The advantage is that you can dare and be eclectic as per the needs of the business.

3. Ask your customers what vision they have of your business.

After a time of operation, communicate with your customers and ask for feedback. Ask them what they think of a product before releasing it. Try asking some product-related questions after a purchase as well. Do research through social networks.

Once you’ve chosen a product to try out and it’s all set with the dropshipper of your choice, it’s time to start selling. After publishing the products in your store, focus on selling a lot using well- crafted marketing tactics to stand out.

Conclusion on the use of Dropshipping

Is dropshipping the way to instant success in e-commerce? Of course not. Like any successful online store, you should invest time in a website that offers a good experience, as well as marketing and customer service strategies.

But, yes, using dropshipping is an easy way to sell without having to spend on too many processes.

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