An ecommerce store that does dropshipping looks identical to a conventional ecommerce store. Customers mostly care about the quality of the product, the price of it and the store’s reputation and don’t care much about how the products were sourced and who does the shipping for them. Dropshipping is the way forward for a majority of online commerce stores.
To put it simply, “dropshipping” is a business model in which the retailer doesn’t have to keep an inventory of their own and not have to process the orders themselves. All the orders are fulfilled and then shipped directly from a wholesaler. The retailer focuses mainly on the marketing and branding of the business alone, not worrying about the actual logistics of it.
Dropshipping is nothing new. Huge names in the e-commerce sector like Amazon and Zappos started out with drop shipping only. As of now, there are billion-dollar dropshipping online retailers in the market. This includes Wayfair and Blinds.com. These are good case studies for anyone who needs inspiration to start.
Let’s see four reasons why dropshipping is a good business model and is appealing for both startups and experience entrepreneurs alike. The issues that have been a regular problem in traditional e-commerce can be solved with the help of the dropshipping model.
#1 Sourcing of Products
Traditional e-commerce shops source their products directly from the wholesale suppliers, located across the globe in different countries. They order the required items in bulk to reduce costs, and then they are delivered to a physical warehouse before they can be promoted and sold. The whole process needs a lot of time, effort, money and then resources. It needs a lot of costly intermediaries, such as the help of banks, cargo shipment providers and then expensive export-import agents.
However, with a dropshipping model, retailers are able to sell products without worrying about product sourcing at all. With the help of a turn-key online storefront like Shopify and a dropshipping app like Oberlo, the whole process is simplified. The interested retailers can now contact wholesalers just by email and then notify them that their products are being sold at the store. The remainder of the process, which includes importing product photos, changing prices and order tracking, is easily tracked from the dashboard.
#2 Storage Requirements
For a traditional e-commerce store large storage spaces are a compulsory requirement, especially when you are selling numerous items. If you are planning to store a small inventory of 10 to 100 items, then it’s feasible. More than that would cost a lot of money, which is not a possibility for many retailers. Dropshipping solves this warehouse issue, as products are kept either in the manufacturer or wholesale supplier’s warehouse, til it’s purchased.
#3 Order fulfillment
Many e-commerce founders, when they are starting out, don’t expect to spend a good chunk of their time on picking, packing and shipping orders. That’s the reality thought. However, with a dropshipping model in place, it allows for a hands-free fulfillment of the whole process. The packing and shipping is dealt by the wholesaler and the manufacturer.
Scalability isn’t an issue when it comes to dropshipping. The retailer will have to focus only on the marketing and customer service component of their business. They don’t have to worry about the increasing warehouse costs and other logistics costs. You can scale without having to worry about all the other costs associated with it.
To put it simply, the drop shipping model provides small startups with little resources, an important opportunity to compete effectively with medium and large-sized online ecommerce shops, thus making the world of e-commerce an equal playground for all players. With that being said, you can see more and more e-commerce stores adopting the dropshipping model in the future.
I hope this article was useful for you to learn about the advantages of using a dropshipping model to run an online shop. If you have any doubts with regards to this, let us know through the comments and we will be glad to help you out. If you have any suggestions regarding how we can improve the article, let us know them through the comments as well for us to improve.