Is the Dropshipping Business Model Right for you?

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:

  1. Someone orders a physical product from you (through your website,  facebook page) or anywhere you have a presence on the internet
  2. Your customer pays you for the goods they purchase
  3. You then place an order with the warehouse or manufacturer (supplier or drop shipper)
  4. The supplier then ships the product DIRECTLY to the customer
  5. 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.

Pros

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

Cons

  • 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

http://www.worldwidebrands.com

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

http://www.aliexpress.com

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

Shopify gives you the opportunity to setup your own store using the Shopify platform

You can checkout their platform at 

https://shopify.com

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

https://www.oberlo.com/

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

https://help.shopify.com/manual/intro-to-shopify

Wholesale2b

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

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