What is dropshipping?

More and more often we are online: we write friends, we shop or we do business. Innovation also extends to sales: do you know what dropshipping is? In simple words, this is a new sales system that allows sellers not to store things in warehouses, but to act as an intermediary between the supplier and the buyer.

This business model is beneficial for all parties. The supplier sells goods faster, the buyer does not waste time searching for them, and the seller earns on the service.

Pros, cons, algorithm of work

Dropshipping in sales for an online store works like this: first, the store owner receives a list from the supplier. This is a list of goods at low prices or with discounts. Then the dropshipper posts information about the products on the website or in social networks with his extra charge. Thus, the store owner does not spend money on rent and additional staff. All you need is to find partners, agree on terms and create a website. And, of course, you will need to run advertising: without it, it is difficult for new sites to get on the first page of search. The whole algorithm comes down to finding a client, getting money for a product from them, transferring it to a supplier.

The advantages of such a system:

1. Low entry threshold: the main thing is to ensure sales. You can create social networks, and then connect the site. Even if you run ads, all this can be done for 10,000 🪙.
2. Minimum time costs. You get rid of problems with tenants, you do not need to manage a large team. You do not produce anything, do not spend resources on it: time, effort and money.
3. High profit: you determine the margin yourself. You can negotiate with the supplier on the most favorable terms – the lower the price for you, the higher your income.
4. Remote work and free schedule: you can work at convenient hours from anywhere in the world. This allows you to travel and do more of what you like.

Disadvantages of dropshipping:

1. High competition in the market: it seems that now they are selling everything and everyone. It is difficult to find an unoccupied niche for goods in which there is a demand.
2. Price dumping: the real price level is often not clear, and the income from the sale of popular products can be minimal.
3. Responsibility for the quality of the goods passes to the seller. Some manufacturers take advantage of this. The buyers themselves, having received a low-quality phone or cabinet, will call you first of all.
4. You need to have a lot of skills, and most importantly, be able to sell. Everything can be learned, but it will take time.

Dropshipping: where to start?

The first thing to do is to analyze the market and choose a niche. Try to understand what is in demand. Choose a popular area in which you yourself understand. This will help you stand out from your competitors. What's next?

Supplier search

Find out all the details about suppliers. How long have they been on the market, what did they do, what are they doing now, how do they plan to develop. Look for wholesale platforms, individual entrepreneurs, etc. Be especially picky when evaluating dropshipping products: if the quality is poor, sooner or later you will have trouble.

Negotiations and signing of the contract

Check the legal information about the company, pay attention to its payment details. Read the contract carefully, ask questions and avoid vague wording in documents. If you know English well, enter the international market. If you only know the current one, it is better to hire an interpreter.

Registration of a legal entity and creation of a sales platform

When starting your own business, it is better not to take risks and save on taxes. In addition, in recent years, registering an individual entrepreneur or LLC has become easier. Also keep in mind that suppliers are more willing to enter into contracts with those who work officially.

Simultaneously with the solution of bureaucratic issues, start creating a website or profile on social networks. You can start with Instagram. The most important point at this stage: to make the service understandable and functional.

Testing and promotion

Run the store in test mode: do not invest too much money in development or advertising. Once you understand what is in demand, you can refine your service. If the initial launch was not successful, try to change the approach: methods of activity, design, assortment.

Once you understand exactly what people need and what works, run ads, set up SEO, negotiate promotion with bloggers.