This article will explain a little bit about the dropshipping business model and (hopefully) 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 you open a physical store
You would have to keep stock (in your garage) as well as be responsible for inventory, shipping, returns and the whole suite of things that a bricks and mortar online business needs to consider
So an online store might be the answer, but where on earth would you source inventory and where would you store it?
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)
2) Consider dropshipping your products – which is the purpose 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 etc)
- Your customer pays you
- You then place an order with the warehouse or manufacturer (supplier/dropshipper)
- They ship 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 this business model is that it means that you do not keep any stock 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 Dropshipping 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 or 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 dropshipping as their business model – indeed if you have 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 – 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.