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What is Dropshipping? The Dropship Business Model Explained

What is Dropshipping

What is Dropshipping? The Dropship Business Model Explained

With the advent of new innovative ways to make cash online, people are now, more than ever, curious to know the best online business niches they can venture into and make quick cash. And with dropshipping featuring as one of the most trendy and profitable online business models, questions such as “is dropshipping a good niche to venture into?” keep surging across the internet.

In this post, we’re going to take you through everything you need to know about drop shipping to help you decide whether you should try it or not. But first, what is dropshipping?

What Is Dropshipping?

Dropshipping refers to an order fulfillment process where the supplier does not stock or produce the products they sell. Instead, the seller buys the product from a third-party party—typically from a manufacturer or wholesaler—when the demand arises.

The most significant distinction between dropshipping and traditional retail is that dropshippers don’t stock or own goods. Instead, they function as intermediaries.

How Does Dropshipping Work?

One of the most used strategies when looking for suppliers is to search supplier databases to find a supplier’s location and contact. Alternatively, you can use some apps to connect with thousands of suppliers.

If you prefer using an app, we suggest the DSers app (for those using Shopify). With this Shopify app, business owners can easily find suppliers across the globe. DSers app is user-friendly, and even newbies can easily use it. For example, you could use it to explore AliExpress and purchase goods that catch your eye with a single click.

What’s more, you can fulfill customers’ orders in the DSers app once they pay for the product. As a store owner, you must double-check the information and press the order button. The goods are then shipped straight from the supplier (AliExpress, for example) to the customer—DSers automate the entire transaction process.

Often, people perceive dropshipping as a no-hassle and get-rich-quick strategy. But like any other online business model, dropshipping takes dedication and resource commitment to succeed. And if done correctly, dropshipping business models present endless opportunities for success.

Tips on How To Start A Dropshipping Business


1.   Find Items To Sell

While you can get many resources on the internet that recommend ways to identify the best niche for your dropshipping business, most are merely a fashionable phrase for product-market fit.

Your products will only sell if they are in high demand.

You can study groups or audiences who share interests or needs, for example, animal lovers, football fanatics, fashion enthusiast parents, and so on. Sorting potential customers into such groups will help you know who among them will be more profitable to supply to.

Proceed by researching what is trending on social media platforms.

Conduct quick research for keywords such as “Buy now” or “Quick delivery” and watch videos of items for sale that receive traction. This will give you a glimpse of what most people are currently interested in.

Search for videos with high views within a short period, and look for the items from dropshipping suppliers such as AliExpress.

Confirm the item’s prices and the assets you can develop for it. Can you reproduce the items, or better yet, improve the products you’ve seen in the videos? If yes, you might have something worth dropshipping.

The following are the ultimate selling guides you should always observe:

  • Don’t sell anything harmful or protected by copyright
  • Examine the supplier’s feedback and place an order for a trial product
  • Approach a supplier directly and establish a dropshipping arrangement with them

2.   Nail The Basics

Spend time searching for a decent and appealing domain name. A domain name is an integral aspect of the success of any online business.

After listing a few domain names, confirm their availability and set up your website.

Many dropshippers choose the Shopify Brooklyn theme, which has an excellent font selection. But there are tons of eCommerce options that you can explore. You can also set up a logo for your website or get a professional one at a moderate fee from expert logo designers.

Also, make sure your dropshipping website has a business email address, not a personal email. Most buyers will ignore emails with personal addresses. So, it’s a good idea to use your domain name, for example, support@bambistores or sales@bambistores.

Here are some more critical factors to consider while planning and setting up your business:

  • Send strong trust signals to your customers
  • Set realistic delivery timelines
  • Put money aside to pay your taxes

3.   Be Unique

The best way to stand out in a competitive niche is to make your store listing and promotion campaigns unique.

Bear in mind that if you can swiftly process a dropshipping order for a particular good, other companies would most likely be able to do it as well. Therefore, you’ll need to establish a competitive advantage; give customers a better reason to order from you and not your competitors.

First, ensure people know about your business. You can do this by word of mouth, social media, influencer programs, newsletters, and SEO.

Find the best ways to promote your products and tell people why they should buy from you. Write blogs on your website, or hire expert freelancers. You can also upload catchy short videos on your social media platforms. Furthermore, you may add reviews from satisfied clients on different platforms and your website.

Offering free shipment can also be an effective strategy. But you have to consider the cost and its impact on your profit margin.

4.   Track The Performance

You may use ads to collect data and test strategies. If you run ads for your products, use the data to see what works best for you. Increase your stake in what generates the most traction and discard what does not work.

This may inspire you to change your ad strategy, goods suppliers, or target audience. Following early traction entails focusing on effectiveness and avoiding the efforts that are not bearing fruit.

Analyzing your sales patterns is equally vital for the growth of your business. What’s flying off the shelves? What exactly isn’t selling? Is there a common thread running across the items? Put an end to what isn’t performing and revamp your strategy to pivot into what’s working.

Benefits Of Dropshipping

A $15 billion market dropshipping can be an excellent business model for many budding entrepreneurs. It allows you to swiftly test several online business concepts with little risk, enabling you to learn how to choose and promote in-demand goods.

Here are more reasons why dropshipping can be an ideal business model for small and large businesses.

1. Less Upfront Capital Is Required

The most apparent benefit of dropshipping is that it allows you to start a business without investing hefty amounts of inventory upfront. On the other hand, most traditional companies often have to tie large sums of cash into their stock.

In the dropshipping business model, you don’t need to buy goods until you’ve made a sale and the customer has paid. This makes it possible to begin procuring products and becoming a successful business with minimal capital input.

Unlike regular retailers, dropshippers are immune to losing money from risks and expenses associated with holding stocks. The risks include price declines, theft, carrying costs, and obsolescence.

2. Easy To Start

Managing an online business can be significantly easy to start because you don’t have to handle the physical products directly. Dropshipping saves you from worrying about:

  • Running a warehouse or renting one
  • Packing or transporting orders
  • Keeping inventory books
  • Inbound and return shipments
  • Inventory management

3. Low Overheads

Since you don’t have to buy and store goods, your overhead cost will be pretty low. Most successful dropshipping businesses are managed from home, which only needs a laptop and a few recurrent expenses to run. While these costs will rise as your business expands, they’ll still be lower than those of traditional brick-and-mortar businesses.

4. Work From Anywhere

You can manage a dropshipping company from almost anywhere as long as you have access to the internet. You can run your business as long as you interact effectively with suppliers and customers.

5. Wide Range Of Products To Sell

Since you only purchase goods after an order has been paid for, you can provide your potential clients with a wide range of trendy products. You can post an item for sale on your online shop for free if your suppliers have it in stock.

6. Easier To Test

Dropshipping is an excellent way to establish a new store and test customers’ hunger for additional product categories. The opportunity to list and potentially sell items before committing to purchasing a substantial volume of inventory is the primary advantage of dropshipping.

7. Easier To Scale

If you receive the number of orders thrice in a typical retail firm, you’ll typically need to accomplish three times the amount of work. In the dropshipping business model, most of the labor required to handle more orders is transferred to the suppliers, enabling you to expand your business with fewer growing pains and less effort.

Typically, as sales grow, so does the need for extra labor. However, dropshipping firms scale extremely effectively compared to typical eCommerce enterprises as they are not involved in the bulk of the fulfillment process.

Cons Of Dropshipping

Dropshipping is a desirable business model for most entrepreneurs who want to start an online business or those who wish to expand their current business offers. However, like any other strategy, the dropshipping business model has drawbacks.

Below are a few drawbacks of dropshipping.

1. Low-Profit Margins

The most obvious downside of operating in a hypercompetitive dropshipping niche is low-profit margins. This is because it requires minimal capital to start, and many competing businesses will open up shop and offer products at the lowest rates to increase revenue.

However, most sellers have low-quality sites and offer minimum customer care, leaving gaps you can fill with standing out. But it won’t stop buyers from comparing their rates to yours. This increase in the intense rivalry will soon help minimize the profit margins. Fortunately, you can alleviate a lot of these problems by picking a dropshipping-friendly niche and unique, in-demand products.

2. Inventory problem

It’s easy to keep track of items coming in and out of the store if you handle all of your inventory. However, it can be challenging if your products are handled from different warehouses that simultaneously fulfill orders for other sellers.

Fortunately, software and applications such as DSers allow you to connect with suppliers faster. Dropshippers must be able to “pass along” client orders to suppliers with just a few clicks and should be able to monitor how much stock the vendor is holding in real-time.

DSers also enable retailers to take automatic steps when a supplier’s inventory is depleted. For instance, if a commodity is no longer available, you may either immediately unpublish it from your store or keep it posted but adjust the availability to “Out of Stock” or “Currently Unavailable.”

3. Complications in Shipping

If you are working with multiple suppliers, like most drop shippers, the items you sell online will come from various dropshippers, which may pose a big challenge.

Even if these expenditures make sense, automating these calculations can be challenging. For example, a customer orders three different items, each exclusively available from a different supplier. To get the items to the customer, you’ll have to pay for the three distinct shipping charges. While you can pass the expenses to the customer, the additional cost might repel potential buyers.

4. Supplier Mistakes

Even the best dropshipping companies make errors with order fulfillment, which you must take full responsibility for and apologize to the customer. Furthermore, poor suppliers can continuously lose items, botch deliveries, and package items poorly, all of which can damage your brand’s reputation.

If you’re new to dropshipping, do some research on different dropshipping suppliers—many people over-promise and under-deliver. To grow your business, clients must be satisfied, which necessitates using a reliable dropshipper.

5. Highly Competitive

Most people are optimistic about online businesses as they always excessively focus on the “low overhead cost” while overlooking apparent factors such as high competition.

While starting a dropshipping store requires very little cash, the low entry barrier is a recipe for tough competition.

Basically, the bigger a business is, the lesser its markups may be to offer the best pricing.

Worse, you most likely will not get an exclusive deal from your supplier as a newbie.

If you own a small company that’s just getting started, you’ll be competing with bigger firms with years of experience, and they can have the edge over you. For example, they can significantly reduce commodity prices, rendering you irrelevant in the market.

6. Modification and Branding Limitations

Unlike custom-made or manufactured on-order products, dropshipping does not permit you to white label the product. Typically, the dropshipped products are designed and marketed by the provider.

While some vendors can accept your product adjustment requests, most retain exclusive control of the product cycle. Any adjustments to the product can only be ideal for a minimum order number for the supplier to be viable and economical.

7. Legal Liability Issues

While this isn’t a prevalent issue among dropshippers, it’s an issue you should take note of. Some businesses aren’t as genuine as they claim to be, and you’ll never be sure enough where your goods are sourced from.

Worse still, some vendors often use a trademark logo or the intellectual property of other companies without authorization.

Fortunately, you can solve this potential danger through a comprehensive Dropshipping Agreement Contract, but most dropshippers, especially newcomers, are unfamiliar with this strategy.

8. Difficult To Build A Brand

Dropshippers, like copywriters or behind-the-scenes composers, must recognize that the credit for their work belongs to someone else.

If the goods you’re offering are fantastic, your buyers will focus solely on the brand and ignore the shopping experience.

After all, that’s not your company’s branding on the package.

That is another reason why dropshipping makes more sense for established firms than new ones.

How to Choose the Best Dropshipping Suppliers

You’re forming a commercial partnership with the supplier if you integrate dropshipping into your marketing plan.

As previously mentioned, your business is frequently at the whim of your dropshipper in terms of quality, timely distribution, and even regulatory requirements as a seller. That explains why you need to select them with extreme caution.

For starters, you should ensure that the items are as described and check to see whether they match your requirements.

Aside from the product’s quality, there are still a lot of questions concerning how your provider runs the business.

Whenever you want to conduct business with anyone, the following are some questions you need to ask yourself:

  • Do they allow the return of products?
  • How long do they take to deliver a product?
  • What is the status of their customer service?
  • Do they provide insurance for orders?
  • Is there any protection against fraud?
  • Is it possible to find reviews and references on the internet?

The Best Dropshipping Platforms in 2022


1. WooCommerce

With a market share of over 29% in total eCommerce stores, WooCommerce is the most popular dropshipping platform globally. The main reason it’s popular is that its software is free and straightforward to install. WooCommerce enables its users to install their software with just one click, making it an ideal platform for beginners.

2. Shopify

With a 20% market share, Shopify is the second most popular dropshipping platform. It hosts over 500,000 eCommerce and dropshipping websites. In 2016, Shopify bought Oberlo, a dropshipping software that helps traders import and fulfill orders. This software saw Shopify significantly increase its customer base.

3. Magento

Magento is popular among many dropshippers. Despite its popularity, this platform is complex and is not ideal for newbies. Instead, Magento is a developer-friendly online business platform as it needs one to be knowledgeable of some basic programming principles. Alternatively, some dropshippers hire developers to help them manage their accounts.

5. BigCommerce

BigCommerce hosts over 150,000 businesses, both large and small. It is reputable for its user-friendly layout and speedy online setup. BigCommerce is a less expensive platform than Shopify since it doesn’t impose a transaction fee and gives unlimited employee accounts, among other benefits.

6. OpenCart

OpenCart is free and straightforward to use. Anyone with a basic understanding of technology can quickly set up an OpenCart store. Dropshipping is also supported by some free and commercial plugins and themes available on the marketplace.

Dropshipping FAQ For Beginners

Let’s now answer some of the questions that the novice frequently asks about dropshipping:

Is Dropshipping Legal?

Dropshipping is a fulfillment strategy that many worldwide businesses utilize, and it’s legal.

This question typically arises due to a misunderstanding of the dropshipping process. Most retail establishments do not sell things that they create themselves. Dropshipping transforms this handpicked method into a fulfillment mechanism appropriate for an online store.

There are more essential things you must accomplish to operate your business lawfully. Seek legal advice from experts specializing in these areas to guarantee that your venture is lawful.

How Do I Integrate Dropshipping Into My Business?

You can use dropshipping to improve the success of your online business. Furthermore, If you are already in online marketing, implementing drop shipping is like launching a new commodity.

Below is a step-by-step guide on how to incorporate dropshipping into your business:

  • Investigate which items might be a good fit for your plan, market, and customers
  • Examine how your rivals are selling the goods, particularly in terms of pricing
  • Find the most suitable vendor
  • Complete a beneficial fulfillment procedure and implement it into your program.
  • Make a list of your products and advertise them. Any unusual constraints, such as shipment timings or location modifications, should be included

Can I Dropship on Amazon?

Yes, one approach to run an online business is to use Amazon for dropshipping. Dropshipping costs range from 10% to 15%, depending on a product’s category. On Amazon, the margins are substantially smaller. Amazon also has multiple administrative guidelines that every dropshipper needs to follow.

Can I Dropship on eBay?

Yes, eBay allows dropshipping. Nevertheless, you’re not permitted to post merchandise on eBay and subsequently purchase it from a retailer or platform that delivers the customer’s order.

Is Dropshipping Profitable?

Yes, dropshipping is profitable; it is a limited-risk business concept that enables you to provide items to your consumers without the high overhead of a wholesaler or manufacturer. And because of the decreased expenses, dropshipping allows you to become successful quicker than other business methods.

What Are Some Dropshipping Product Ideas?

If you want to undertake dropshipping but aren’t sure where to begin, below are some product ideas to get you started.

  • Tote bags with a message on them
  • Bookmarks with motivational messages
  • Affordable watches or jewelry
  • Promote products with your logo

Can Dropshippers Ship Internationally?

International shipments may rapidly become costly, and obtaining precise estimates for shipping fees, taxes, and levies for lots of countries can be difficult. Some levy a surcharge, while others do not. Furthermore, foreign orders also take longer for a dropshipper to process due to the additional documentation.

The Final Word

Although dropshipping is an excellent strategy to develop a successful online business, you must be committed to the cause. The approach offers many benefits, but it also has a lot of complexity that you’ll have to deal with.

Fortunately, you can overcome most of these obstacles with adequate preparation and research, and they don’t have to stop you from launching and running a successful dropshipping business.

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