What is dropshipping?
Dropshipping is a model where you can sell a product without keeping them physically in your stock or store. When a retailer or an online store sells a product then orders are directly shipped to the customer via a third party(eg, manufacturer or wholesaler).
The main difference between dropshipping and the retail model is that the selling merchant doesn’t stock, they act as the supplier to the customer.
How does dropshipping work?
Dropshipping work like a chain. Someone is creating a product and then selling it to the customer by a third-party resource. A chain is a network of manufacturers, suppliers, wholesalers, distributor, retailer, and end with the customer(who is purchasing the product).
Manufacturers are the creation of the product. After manufacture, the product they directly sell to the supplier or wholesaler. Usually, Manufacturers are not directly sold to the end consumer.
A wholesaler directly purchases the product from manufacturers and stocks them. After that wholesaler set a margin for him and sells the product to retailers.
Retailers sell the product directly to customers or get a direct order from consumers.
Benefits of dropshipping?
Easy to start: Dropshipping is super easy to start and low risky for beginners. It's more flexible to enter in e-commerce world with no knowledge. You just need one supplier and an online store to start your journey in the e-commerce world.
Flexible for location: It's a big benefit of dropshipping is flexibility with location. You can start anywhere in the world and sell to any country customer that you like to sell because you don't need to store physical inventory(for eg, If you sitting in the Us and you want to sell something in Australia you can easily sell with this business).
Less investment: You don't store, manage and create an inventory so your investment in that is zero. you can stay with trends and quickly add new products to your site whenever you want to switch.
Part-time: Because of its flexibility you can do this business part-time also. dropshipping can be done by working, in the evening, or on weekends as per your choice.
Cons of dropshipping
- Low margins
- High competition
- Inventory issues
- Less control over brand
- Supplier issues
- Limited customization
- Lack of quality control
- Fulfillment errors
Q.How to overcome shipping and customs cost variations in a dropshipping business?
Ans. If you don't know about how to overcome shipping and customs cost variations then read the complete guide here.
Q.How to always set at a fixed profit margin on a Shopify dropshipping store?
Ans. In dropshipping, setting a profit margin as per our choice is quite difficult but with the help of konigle you easily solve this problem and fixed the profit margin. If you want a tutorial for the fixed profit margin on Shopify then read this.