Many people are afraid to create an online store because of the initial costs and hassles with order processing. But imagine if someone offered to prepay their inventory costs for thousands of items and manage their order processing operations? It would be a lot easier to get started and you could run your business from anywhere in the world. Does it sound too good to be true? But it is not, if you know dropshipping.
In this article, I will teach you everything about dropshipping. I will provide a brief definition, list the benefits, show you how to find wholesalers who practice dropshipping, and provide solutions to some common problems associated with dropshipping.
What is dropshipping?
The dropshipping is a retail method where you do not keep products in stock. Instead, you establish a partnership with a wholesale supplier who stocks your own inventory – you transfer orders and delivery details from customers to them, and they ship products directly to customers. The biggest benefit of dropshipping is that you don’t have to worry about inventory or order processing issues.
In addition, most customers are unaware that you are drop shipping, as “custom branded shipping” allows you to ship from the wholesaler with a personalized return address and invoice to your e-commerce store .
Benefits of dropshipping
There are several reasons why you should consider dropshipping :
1. You don’t need a lot of money: Drop shipping makes it incredibly easy to start selling online. You don’t have to invest heavily in inventory, but you can still offer thousands of items to your customers. Use the Oberlo app to select the best products and import them directly into your Shopify store.
2. Convenience and efficiency: Successfully starting and developing an e-commerce company takes a lot of work, especially if you have limited resources. Not having to worry about order processing is extremely convenient and leaves you free time to focus on marketing, customer service and operations.
3. Mobility: With all physical order processing issues handled, you are free to operate your business from any location where an internet connection exists.
4. It is a reliable model: You may be thinking that this is an incomplete or unreliable model – but it is not. Many Shopify online stores, even large retailers like Sears , use drop shipping to offer a wider range of products to their customers without having to deal with ever-increasing inventory issues.
How do I find dropshipping wholesalers?
Before contacting suppliers, you must make sure that it is properly legalized. There are several ways to find wholesalers who practice dropshipping and the video below describes your options.
Video subtitled in Portuguese! Click on Details> Subtitles> Portuguese (Brazil) at the bottom right of the video.https://www.youtube.com/embed/n2cGiSamRjY
If you already know which products you want to sell by drop shipping, contacting the original manufacturer is the easiest way to find qualified distributors. Not all distributors will be willing to practice drop shipping, but this will provide you with a list that can be used as a starting point. Unfortunately, the market is full of scammers and low quality information. If you decide to invest in a directory, take a look at the World Wide Brands paid directory as a reputable source for drop shipping wholesalers. But still, it is very important to be cautious.
The Google can also be an effective tool to find companies that do dropshipping, but you need to have some things in mind.
3 ways to use Google to find wholesalers
1. Search hard: Wholesalers and dropshipping companies are notoriously bad at SEO and marketing and generally won’t appear on the first page of Google for a term like “stock exchange wholesaler”. You will need to thoroughly examine the search results, often going through 10 or 20 pages of lists.
2. Don’t judge by the cover: Suppliers also tend to have old-style websites, characteristic of the late 90’s. So, don’t be alarmed by the bad design and layout. While an elegant and modern website can indicate a great supplier, a low quality website does not necessarily indicate a bad supplier.
3. Use many modifiers: When searching for suppliers, don’t just search for “wholesaler” – use other modifying terms, including “distributor”, “reseller”, “volume”, “deposit” and “supplier”.
4 common dropshipping problems
Despite my recommendation, dropshipping is not an ecommerce paradise. Like all models, it has weaknesses and disadvantages . With a little planning and attention, these problems can be managed and need not prevent you from running a successful dropshipping business.
1. There will be a lot of competition and terrible margins.
It is true. Products that can be sold through dropshipping will generate a lot of competition. This will generally lead to very low prices and lower profit margins, making it difficult to build a profitable business.
Solution: To be successful, you will not normally be able to compete on price. Instead, you will need to offer value in a different way, usually through excellent product usage instructions, service or product selection. To learn more about choosing a profitable niche and adding value, consult these publications on how to find a product to sell and the anatomy of a profitable niche.
2. Inventory synchronization is difficult and leads to out-of-stock items.
Solution: The best way to solve this problem is to work with several suppliers with similar product lines. Basically, it is dangerous to depend on a single supplier. Having two suppliers doubles the chances that an item is in stock and available for shipment.
Many sophisticated vendors offer a product feed in real time and you can use a service like eCommHub to easily synchronize your Shopify website with the deposit.
Eventually, you will sell the customer an item that is out of stock. Instead of canceling the order, provide the customer with a better product at no additional cost! You may not earn a lot of money (if you are going to earn any from the order, but you will probably create a loyal defender of your brand.
3. It is difficult to sell products that you have never seen.
Solution: In today’s world, you can become an expert on just about anything through online information. Selling products from manufacturers with detailed websites will allow you to become very familiar with a product line, even without ever touching a physical item. When you need to answer a specific question about a product, call your supplier or manufacturer, you can get the answer you need.
You can also buy your most popular items to familiarize yourself with them and then resell them as “used” or “refurbished” (often refurbished), often recovering most of your investment.
4. Involving a third party will result in more order processing failures, errors and logistical problems.
Solution: Even the best dropshippers make occasional mistakes, and mediocre ones make many mistakes. Suppliers are reasonably good at paying for remedies, but when they are not, you will need to be willing to spend whatever it takes to resolve the issue with your customer.
If you try to blame your supplier for a problem in order processing, you will end up demonstrating amateurism and a lack of professionalism. Likewise, if you are not willing to send a low-cost replacement part to a customer because your supplier will not cover the cost, your reputation will suffer.
One of the costs of the convenience of dropshipping is the expense of remedying logistics problems. If you accept this as the cost of doing business – and ensuring that the customer always comes first – this shouldn’t be a problem.