Is Dropshipping Business Profitable?

Dropshipping business is an orderly retail fulfillment method where a store doesn’t require to keep the products in stock. Here the store sells the product in a dropshipping model where it purchases the items from the third party and ships it directly to the customer. This creates trouble-free work for the sellers as they don’t have to handle the product delivery. 

Dropshipping is a great business model for aspiring entrepreneurs to start with because it’s accessible without big capital requirements. A dropshipping business is ever dynamic and flexible business model, which allows you to choose your product and niche. However, before selecting either one, consider these three factors –

#1 Suppliers/ Manufacturers

The first thing you need to do is to find a wholesaler or a supplier. The supplier will be responsible for the order fulfillment and holding the product. Aliexpress is one of the most popular sources for suppliers but you can find plenty of other suppliers as well.

#2 Your company

The actual ecommerce store at which the company will place the order in order to buy the product. Either you or the supplier will just have to upload the catalogue (depending on the company’s terms and conditions) which includes clean images, item details and unique description. 

#3 Customers

After an order is placed you will get a notification and you can direct it to the supplier. The company just has to pay the supplier and when the delivery is completed, the amount is paid by the customer.

DROPSHIPPING IS NOT THE SAME AS AFFILIATE MARKETING

Affiliate marketing is a great business venture to have as you become very successful without incurring much cost. There are many advantages of the business model but the disadvantages weigh around more money and you could lose by relying on the other businesses. This is the main reason that even if you continue this affiliate marketing business model, then dropshipping is a very good idea to earn in a more profitable way. Also dropshipping business will help you to earn a steady flow of income for the business.

• Affiliate marketing tends the customers to go to the website referred to them whereas dropshipping marketing makes customers come back again and again to your website to buy more products. 
• Dropshipping market creates high margin which also allows to set affordable pricing for customers 
• Dropshipping has a better chance of getting viral as they do not advertise other websites creating more benefit in creating a brand name of their own.
• Being your own brand will help you to get bigger audience in compare to affiliate marketing 
• You do not have to work everyday in dropshipping business and thus it can be a passive income 

GETTING STARTED WITH DROPSHIPPING

Dropshipping business can be commenced in two ways:

#1 Creating Your Own Website

With this dropshipping business method you can be the owner of your own ecommerce company wherein you can start a business like amazon or ebay. This  method will help you in starting the business free of cost. Rather than putting your company’s name in some other website and doing a standard single business, you can earn from different sectors with a high margin income.

Benefits of creating your own website:

• You can have full control over the website
• You can get your own identity which will help you in creating your own brand
• There is no need in paying a single penny in the business.
• With the help of internet and some communication methods, you can easily get in touch with the sellers and the customers

Drawbacks of having your own website:

• Have to work double in order to start the website
• Takes much time to develop and start a website
• Have to invest more money if you hire someone in developing the website 

#2 Connecting With Sales Channels On eCommerce Platforms

Rather than starting your own website, you can connect with some famous websites to start the dropshipping business. Websites like Amazon, eBay give you the opportunity to start a business without having your own manufacturing industry. Here you can give your company’s name on the website and trade by having a conversation with the manufacturers. This means having your own brand name on the website but trading from some other manufacturers.

Benefits of connecting with ecommerce platform

• Ease in commencement of the business
• No need of marketing as your company is already connected with big companies
• Reach of your product will increase globally
• Time saving takes place initially as you do not have to invest time in creating your own company from scratch

Drawbacks of connecting with ecommerce platforms

• Cost increases due to high fee charges in order to connect with the ecommerce platform after a period of free trial.
• You do not have the power in controlling the website according to your needs
• Choosing the right product as you cannot enter in different sectors like that in creating your own company
• Cost increases due to high fee charges in order to connect with the ecommerce platform after a period of free trial.
• You do not have the power in controlling the website according to your needs
• Choosing the right product as you cannot enter in different sectors like that in creating your own company

HOW DROPSHIPPING BUSINESSES ARE PROFITABLE:

1. Minimum capital requirement helps achieving dropshipping business

Dropshipping business creates a possibility to introduce an eCommerce store without investing a lot of money for inventory upfront. With the help of dropshipping, one does not have to buy the product and store it in the warehouses unless the product is already sold and has been paid off by the customer. 

Significant upfront inventory investments are not required as it is possible to start sourcing products and launch a successful dropshipping business with very little money. There is a minimum risk involved in the dropshipping store as the risk of buying products does not stand.

2. Easy commencement takes place

E-Commerce is an easy, time saving and a less capital investment way of doing businesses. One does not have to deal with the physical products and they just have to make sure that the product delivery is on time without any harm on the product. 

The person has to take care of the packing and shipping of the products from the warehouses and try to keep the track of the product for the accounting reasons. They should also handle the returns and inbound shipments and also take care of the continually ordering products and managing stock levels.

3. Flexibility helps in starting the business 

Due to the flexibility of the ecommerce platforms, one can run the dropshipping business from anywhere around the globe with the help of an internet connection. As long as the person can coordinate with the customers and the suppliers easily, the business can run efficiently and in a manageable way.  

4. Innumerable products can be sold

Pre-purchasing products to sell to the customers is not a dropshipping method and it becomes difficult to offer the customers an array of trending products according to their potential. You can list the products for sale on the online store at no additional cost and this will help the suppliers to get a chance in encouraging their business globally. 

5. Measuring becomes very easy

In a dropshipping business model most of the order processing is borne by the suppliers, allowing you to expand with fewer growing pains and less incremental work. Sales growth will always bring additional work, especially related to customer support, but the businesses will utilize dropshipping scales particularly well relative to traditional eCommerce businesses.

6. Overhead expenses are bitty

Lower head expenses drop down in the dropshipping business as you don’t have to deal with purchasing inventory or managing the warehouses. Many successful dropshipping businesses run as home-based businesses as they require not more than a laptop and a few recurring expenses to operate. The cost might increase as your business grows but compared to those traditional businesses, it will be quite low.

Summing Up

Dropshipping is a wonderful online business model, if done right. It has many definite advantages, however, it is majorly miss understood as way to earn quick money online. There is a lot more to dropshipping that it seems and if done right, it could definitely be successful.