This article will explain a little bit about the dropshipping business model
I hope that by the end of it you will know enough to determine whether it is a model which you could run with as a home business
Have you ever thought about setting up your very own online e-commerce store but genuinely don’t know where to start?
Maybe you want to sell watches,
Or pet supplies
Or golf clubs
But there is no way that you could set up and open a physical store
In the absence of a physical store, you could still do it (just about)
But you would have to keep any stock in your own home or garage
Or pay for a storage unit or an office somewhere
You would also be responsible for inventory and shipping
Plus any returns
As well as the whole suite of other things that a bricks and mortar online business needs to consider
So an online store might be the answer, but you still have the problem of sourcing inventory and then storing that inventory when it arrives
The Options For Your Business
If this is your predicament you really have 2 options
1) Setup an affiliate store (where you get paid a commission on any goods you refer to the supplier – check out affiliate marketing as a business model here )
2) Or consider the dropshipping business model – which is further explained during the course of this article
The Dropshipping Business Model
Dropshipping is actually quite a simple business model.
The basic setup idea is:
- Someone orders a physical product from you (through your website, facebook page) or anywhere you have a presence on the internet
- Your customer pays you for the goods they purchase
- You then place an order with the warehouse or manufacturer (supplier or drop shipper)
- The supplier then ships the product DIRECTLY to the customer
- You keep the difference between what the customer pays you and what the supplier charges you
The beauty of the dropshipping business model is that it means that you do not keep any stock at all
And the supplier (be it a warehouse or the manufacturer) handles all of the fulfillment
Therefore if you have an urge or ambition to sell physical products (unless you are making them yourself) then the dropshipping business model is a really good solution
And even if you do make your own physical products then you could include dropshipping as an option for other products you might want to sell
For instance, let’s say you are an artist and want to sell your pictures online
You could sell your pictures online but you could also sell paintbrushes, paints, easels, crayons, pencils through dropshipping
Or indeed you could expand your business and sell anything to do with art through a dropshipping agreement with a wholesaler
It’s a win-win because your margins will be much greater than if you were acting as an affiliate
Many eBay sellers use the dropshipping model as their main business model
Indeed have you ever bought a phone charger or laptop battery really cheaply from an eBay shop in the UK and find that the delivery is from China ?
If so, then chances are that seller has a dropshipping agreement with a Chinese supplier
Dropshipping is actually a really simple and elegant business model, and if it piques your interest I have a free guide waiting for you if you complete the form below.
The Pros and Cons of The Dropshipping Business Model
Like any business the dropshipping business model has it’s pros and cons.
I have already covered a lot of the “Pros” during the introduction in this article but it is worth summarising again
- No investment needed for stock “upfront”
- No requirement to store the stock you need
- The wholesaler will deal with packaging your product (there are often options to rebrand the packaging with your brand)
- The wholesaler will handle shipping
- The wholesaler will handle inventory levels
- Finding a quality wholesaler -It may take time and some trial and error to find a quality wholesaler
- The learning curve to setup an online store can be big (note: keep reading this article as there are online solutions available to simplify the whole process)
Products out of stock – even with a quality wholesaler products can go out of stock and you (as the seller) still have them in stock in your store
Handling returns and refunds – probably the biggest problem facing online store owners. It is a problem you will face, but there are solutions available to help you with it
So How Do I Get Started With Dropshipping?
There are a number of ways you can get started with dropshipping, including a number of “all in one” solutions which I will cover
Option 1 – Do It Yourself
Option 1 is of course to do it yourself – setting up your own e-commerce website and finding a dropshipper who will supply the products you need
The e-commerce website piece is actually quite easy to setup using WordPress and an e-commerce plugin like WooCommerce
On the product front, there are a number of online directories of suppliers, the two most popular being Worldwide Brands and Ali Express
It is also worth a quick internet search to see if there are any specific industry aligned suppliers which you could use
World Wide Brands
Worldwide Brands has a HUGE directory of wholesalers and dropshipping companies. It’s a bit expensive, but all companies go through an initial vetting process before they are added, so you can be relatively certain they are legitimate.
Of course, it can be a pain to have to go through dozens of companies that have the same products to find the one with the best prices, best shipping terms, best reputation so an alternative is aliexpress
AliExpress is not a single company, rather it is a platform that thousands of sellers use to make their products available to stores and even individuals.
There are no minimum orders, so if someone orders and many companies ship for free with ePacket shipping,
Just be aware that most products ship from China, so it can take several weeks to arrive, so be sure to make that clear to your customers before they order
Option 2 – All In One Solutions
There are a couple of “all in one” solutions that I would strongly urge that you consider before taking the plunge into dropshipping
Two good examples are Shopify and Wholesale2B
Shopify gives you the opportunity to setup your own store using the Shopify platform
You can checkout their platform at
What sets Shopify apart is that they have teamed up with Oberlo and provided a Shopify extension that you can use to help find products to sell via AliExpress
Not only that, it will monitor your store to make sure the products listed are still in stock.
And it will let you order the products and ship them to customers in just a few clicks!
It really doesn’t get any better or easier than that!
There are millions of products to choose from at a wide range of prices that are at or near wholesale prices, unlike a lot of other so-called drop shippers that actually sell at retail prices!
You can have a Shopify website up and running with products through Oberlo and AliExpress in a weekend!
Best of all, Shopify has all the step-by-step instructions
for setting up your site right on their website
Wholesale2b is actually my favorite dropshipping solution and is
Alternative Business Models
I hope you have found this article informative but if the dropshipping business model is not for you, then you may want to explore another business model before taking the plunge on your home business