Dropshipping – what is it and how does it work?
The Internet today makes it possible for anyone who wants to start a business without investment. This is especially suitable for young mothers, students, pensioners, because there is nothing particularly complicated here. Now we will talk about dropshipping and selling goods through an online store.
What is dropshipping?
Dropshipping is a sales scheme based on dropshipping. A businessman (he is also an intermediary and a dropshipper) is the link between the manufacturer and the buyer. There are 3 parties involved in the deal:
- supplier (manufacturer of goods);
- dropshipper (you);
The bottom line is that an intermediary is engaged in attracting buyers. As a rule, after the intermediary determines what to sell in an online store, he creates it, “fills" it with goods and sells it.
Speaking very simply, it looks something like this: grandfather Foma wants to sell his "Cossack" for 1,000 rubles. The cunning neighbor Arkady found out about this and said that he knew where to sell the car. After that, he went to another neighbor, Peter, and said that he knew where to buy a Cossack for 1,200🪙 Peter was delighted and gave him money, because he wanted to buy a car. Arkady returned to grandfather Foma, gave him 1,000 rubles. and told him to drive the car to Petru.
How does the direct selling scheme work in practice?
Before you create an online store, you need to find a supplier and agree on cooperation with him. After that, as already mentioned, you should create an online store to attract customers and sell goods.
dropshipper decided to trade in sneakers. A shopper visits his online store website, finds sneakers, and buys them. The dropshipper immediately orders these sneakers (the same model, size, design) from the supplier, who then sends the goods to the buyer. And the whole “trick” is that the price of sneakers from the supplier is 2,500 rubles, and their cost in the dropshipper’s online store is 3,000 rubles.
Suppliers are satisfied with such cooperation, since for them it is an additional sales channel, and they do not lose profit. Many manufacturers themselves attract people who could become intermediaries.
There are special sites where suppliers themselves offer cooperation. You just need to find your niche: what will be in demand. Among the large sites where reliable suppliers are found, we can distinguish:
- AliExpress (editor’s note: we recommend that you immediately familiarize yourself with the information on how to start a business with China );
- Ali Baba.
- there is no need to purchase goods;
- no need to rent a commercial space;
- no need to have a warehouse for storing goods;
- there is no need to deal with the delivery of goods;
- no reference to the region: the buyer can be a person from anywhere in the country;
- you can quickly change your niche: if sneakers don’t work, then you can quickly redesign the store and sell, for example, accessories.
Difficulties and disadvantages of dropshipping
There are some problems with this business:
- First, you need to create the most powerful advertising to convey information about the store to Internet users.
- Secondly, there should be a good site with an attractive design. This is important, since the site should already be visually credible.
- Thirdly, you need to constantly monitor the availability of goods in the supplier’s warehouse. Otherwise, it will turn out that the buyer will pay for goods in the online store that simply do not exist.
There are also domestic problems. For example, the buyer paid for the goods, but he did not arrive to the addressee for a long time, or was damaged. Stones in this case will fly on the head of the dropshipper. The main difficulty is the distrust of buyers. Many people are afraid to make an advance payment for the goods, preferring to pay for it upon receipt. Of course, you can take an order for goods through your store, pay for it from the supplier, receive it to your address, and then send it to the buyer and receive payment. But this may be too long a process. And no one is immune from the fact that the buyer does not change his mind to purchase the goods while he goes to him.
Although there is a slightly different scheme of cooperation. The intermediary finds a buyer, sells the goods, and then notifies his supplier of the price at which he sold the goods. The supplier sends the goods to the buyer, receives payment from him, and then transfers the difference to the dropshipper. There is, of course, something risky here, so you should choose only reliable suppliers.