Internet sales had a timid start in Brazil. The fear of falling into blows was quite common in people, but that has changed over time. The consolidation of e-commerce is clear when we look at the surprising numbers of the sector. According to data from Ebit | Nielsen, Brazilian e-commerce had revenues of R $ 133 billion in 2018. We are the country that sells the most on the Internet in Latin America.
Keeping an eye on profit opportunities, new virtual shopkeepers are constantly appearing on the market. A survey by PayPal showed that Brazil had more than 930 thousand e-commerce sites in operation in 2019. With so many people starting to work with e-commerce, different business models are emerging. Dropshipping is one of them … And one of the most controversial. After all, is this strategy worth it? Keep reading and find out!
What is dropshipping?
Dropshipping is a way to start selling online even without stock. Instead of having their own product warehouse, the shopkeeper who works in this model sells items stocked by a supplier. It works as follows:
- The customer places an order at your online store (which may have its own website and/or be on marketplaces )
- You forward the customer’s order to the supplier
- Your supplier sends the product directly to the customer
In practice, the shopkeeper acts as an intermediary between the end customer and the supplier. He doesn’t even have direct contact with the product, which eliminates the need for physical space for storage, in addition to reducing the initial investment to start a business. If you choose dropshipping, the entrepreneur only needs to have two things to start his sales: internet access and reliable suppliers. Interesting, isn’t it? Next, we will talk about the main advantages and disadvantages of this strategy.
What are the advantages of dropshipping?
Dropshipping can be quite advantageous for those who want to start selling on the internet, but do not have much capital to invest. Check out some benefits of adopting the strategy:
Low investment: this is probably the main advantage of dropshipping. Since there is no need to build an initial stock of products, the capital needed to start the business is much less. The model may be worth it to kick-start a virtual store.
It requires little physical space: as we said, those who work with dropshipping act only as an intermediary. There is no need to have space to store products, as they are in the possession of suppliers.
There is no problem with items that are out of stock: products with no turnover and that end up “stuck” in stock are a big headache for retailers – and this goes for both the online and offline world . Dropshipping eliminates this concern, as the retailer only forwards orders received to the supplier.
Handling and shipping are the responsibility of the supplier: the dropshipping shopkeeper does not need to get involved with the routine of shipping a product. The entire process of looking for the item in stock, sorting, packing and going to the carrier’s counter to make the postage is the supplier’s responsibility. This means that, in the dropshipping model, the eventual growth in sales is not accompanied by an increase in work for the storekeeper. This can be useful for anyone looking to manage the business on their own.
And the disadvantages?
The time has come to talk about the negative aspects of dropshipping. Come on?
There is no control over the delivery of orders: the merchant takes responsibility if the supplier delays the shipment of an order. After all, the customer bought from your store and not from your supplier. This type of situation can tarnish the reputation of e-commerce, something bad for those who want to create a sustainable business in the long run. Negative reviews and comments amaze new customers. According to the EQI survey, more than 40% of people have already given up making a purchase after reading product reviews.
It is difficult to stand out in the market: as you can imagine, a lot of people start selling on the dropshipping model because of the ease of kick-starting. But suppliers are far less numerous than sellers. The result of this is simple: several stores end up selling exactly the same items, with very similar conditions. It is difficult to stand out from the competition in this business model. Not to mention that, many times, the customer can cut their way and buy directly from their supplier.
The profit margin is small: for dropshipping to be worthwhile, the online store needs to make a high volume of sales to stay afloat.
Reverse logistics can be a headache: handle product returns often difficult for anyone who sells online, but in the dropshipping, it is even more complicated. Since suppliers can be in several places in the country (or even outside of it), returns and exchanges have the potential to create a big problem. And the Consumer Protection Code is very clear: the customer has up to 7 days to withdraw from the purchase. In such cases, the shopkeeper is obliged to bear the logistical costs of the return, that is, the reverse freight cannot be charged to the consumer. This can compromise the profit margin (already tight) of those who work with dropshipping.
Taxation: those who work with international suppliers (the most common ones are located in China) are subject to the payment of customs fees when the product arrives in Brazilian lands, another element capable of further strangling the profit margin.
Types of dropshipping: national vs. international
Dropshipping can be national – when your supplier is in Brazil – or international – when it is located in other countries. National dropshipping tends to be simpler than international, since there is no risk of customs fees and delivery times are shorter, reducing friction with customers due to delays.
In Brazil, sites like Hayamax and Squid Fácil are options for those who want to start doing national dropshipping. For international dropshipping, it is recommended to seek accounting and legal assistance before choosing a supplier. This helps to avoid problems with tax and legal issues that may arise in the process.
Dropshipping: is it worth it or not?
Anyone who has read this far has realized that dropshipping has advantages and disadvantages. And after all, is it worth selling in this modality? The answer is not as straightforward as a yes or no . The truth is that it depends on each case. Dropshipping can be quite advantageous for starting a business, as it does not require much investment.
The problems may appear in the medium / long term for reasons inherent to this business model, as a possible delay in orders, problems with returns or even customs taxation (in the case of international suppliers). Over time, the online store may face reputation problems if delivery delays are common. This makes it difficult to retain and acquire customers.
With all of this in mind, it is important to think carefully before adopting dropshipping as a strategy.
Dropshipping or not, all e-commerce needs to stay connected in shipping
All e-commerce (whether it works via dropshipping or not) needs to offer competitive freight if you want to make sales. After all, the value of delivery is responsible for more than 80% of cart abandonments. The customer ends up giving up the purchase because of the freight cost. Luckily, technologies like Best Shipment arrived to change this scenario.
The Best Shipping makes the connection between retailers and carriers (including Post Office) and helps entrepreneurs to have more competitive freight rates without the need for individual contracts. The platform allows you to run simulations, choose the most advantageous option and generate freight over the internet. And how much does it all cost? Nothing! The Best Shipment is free. You only pay for freight generated on the platform, without monthly fees or fine print. Do like 150,000 more stores and sign up for the Best Shipment now!
How to find profitable, on-demand products to sell
Digital platforms are very important for those who want to reinvent themselves in the job market, but essential for those who have a desire to know how to find profitable products to sell on the internet.
One of the great advantages of undertaking on the internet is that we can relate to all kinds of people and still offer a valuable product or service, always based on the pains and solutions sought to solve a problem.
And so that you can learn how to find profitable products to work in the digital universe, we have separated in this content tips that can change your online sales strategy.
Learning how to find profitable products
The first step for you to succeed in this market is to have a very well-defined purpose. This will certainly guide you on the right path to choosing a specific niche and making the right choices about your work method.
And speaking of niche, there are some very particular methods for you to analyze the whole scenario and especially, how to communicate with people.
So, if you want to learn how to find profitable products through the strategic niche, check out some tips that we have separated for you.
1 – Passionate customers
Developing a relationship with consumers who are passionate about a particular product or service is very important for you to be able to sell on the internet.
A very interesting way to develop methods of how to find profitable products , is to do a thorough search for markets where consumers know that that product will make a difference in their life.
For example, imagine a person in love with bicycles and who is in the habit of practicing the sport as a real hobby.
In case he needs to buy something to equip the product or do some kind of maintenance, the efforts will not be measured for that.
And these are the moments when you need to be aware of how to find profitable products to offer to this very specific audience.
2 – Troubleshooting
One of the things you should be aware of when choosing a product to make money on the internet, are solutions capable of solving different problems for a specific group of people.
For example, if a person finds many problems to manage their time, and you start selling a solution totally focused on solving this demand in a practical and fast way, you will certainly have a very powerful audience to work with.
In this case, it is essential that you know the target audience in depth. After all, in addition to the sale itself, it is necessary to know how to communicate with these people so that sales become recurrent and you can make a living from it.
3 – Products difficult to find in local stores
Another excellent opportunity on how to find profitable products to sell according to market demand, is to analyze what is most lacking in local commerce according to the consumer.
Many products are extremely specific and unfortunately, they are only found on the internet at extremely different prices than they should be sold. It is at this moment, that you should see the market as a great opportunity.
After all, you can specialize in this type of demand to stand out in the market and serve an extremely loyal audience.
Thus, always keep in mind that, as long as there is a demand for a certain product, it will certainly have a specific demand.
4 – Timeless products
Surely you must have heard on the internet that in order to find profitable products to sell, it is necessary to follow the demand and the trend of the moment, right? What if we told you otherwise?
Believe me, although it seems crazy at first, working with timeless products is one of the best strategies for those who want to profit in the business in the long run.
After all, if instead of changing all the products and descriptions all the time, you spent more time structuring the platform so that there would be long-term sales, without relying on paid ads?
This way, in addition to bringing financial savings, you gain time savings and a much more interesting market niche, since you can work with the loyalty of a specific audience.
5 – Fast Fashion Products
Although we gave a preview of them in the previous topic, if you think it is best for the chosen target audience, working only with products that are indicated as a trend of the moment, this can be a good alternative.
However, to know how to find profitable products for this demand, you will need a lot of study. From the behavioral profile, to the average ticket that these people are willing to spend.
However, you must be prepared not to rely on a recurring sale from this target audience, as they will certainly only remember you for the purchase of that specific demand.
So, for this part of your study of how to find profitable products , take into account some factors such as:
- Target Audience;
- Average consumer ticket;
- Product cost value;
- Understand the competition;
- Define your differential in the market.
6 – Niches with plenty of accessories
Another opportunity to find profitable products to make your sales stand out is to work with niches that have complementary accessories.
For example: If you buy a TV, you will certainly need an extra HDMI cable to be able to mirror your computer screen on the device.
In this way, it will be possible to offer the solution to the consumer not only with the chosen cable, but with other complementary products that may make sense for the specific demand.
Therefore, it is essential that you understand in depth who are the people who are going to buy from you and how to make the shopping experience something unforgettable so that loyalty happens in an easier way.
Is it worth learning how to find profitable products to sell on the internet?
Now, if you are still in doubt as to whether to start selling on the internet, reflect on what you fail to earn if you do not take this action.
After all, unlike a physical business, if you use the right strategies, you can attract thousands of people to your platform on a daily basis.
This would impact not only the profits of the operation, but also a possible improvement in their quality of life.