The dream of many people who think of setting up a business on the internet is to sell without having to have a stock structure.
I see this all the time in the comments of our videos on the YouTube channel and in the blog articles.
The idea of working from home or anywhere in the world, with just a computer and an internet plan, is the best.
Imagine not worrying about physical space for products, packaging supplies, countertops and shelves, etc…
Tempting, isn’t it?
Yeah … but, before you start liking the idea, I will show you in the next few minutes that starting this way can just end your business before it really starts.
Understanding the great myth
The internet has changed, a lot, the way people make money today. But even so, that image of a person on the sand of a paradisiacal beach, sitting in a chair with coconut water beside it and a laptop on his lap, is still very strong.
A great myth was created around this, which was transferred to the Ecommerce market dressed as a widely spoken name today:
- If you want to know if it is worth doing Dropshipping, check out this article here: Dropshipping Is it Worth it?
What is Dropshipping
Dropshipping, in my opinion, is nothing more than a stock strategy. Basically, it is the outsourcing of stock and fullfilment.
It works like this: you sell the product and the supplier of that product sends it to your customer.
The big problem is that there are some fake gurus teaching international dropshipping.
But what is the big problem with that?
The problem is that there is no legal permission for this activity, which can leave the entrepreneur working outside the law, paving the way for future problems.
Example of a dropshipping activity:
- You advertise a product, for example a watch, on your website or social network
- The customer completes the order using his payment link
- You enter Aliexpress or other international sites and purchase this watch by informing your customer’s address
In addition, from 08/27/2018 , the Post Office began to charge a fee of R $ 15 for all international orders, which practically makes the business unfeasible.
If your business is built on these pillars, you will have serious problems soon.
And I’m sure you don’t want that.
You will still have other problems like:
- Loss of product quality control
- Loss of control of product delivery
- Zero inventory control
- High number of complaints and canceled orders
- Burning your brand name on the market
- Serious difficulties to scale your business
Everything I’m talking about here is based on my real experience.
I have extensively tested dropshipping on several different models and do not advise you to follow this path.
Here, you cannot build a solid and long-lasting business.
Building a successful business
Starting a business is a lot like starting to build a house, for example.
Nobody starts by building a house on the roof. The most important part in the beginning is the foundation of the house.
If the foundation is wrong, the walls will all be wrong, the rooms will be wrong, the doors and windows will be in the wrong places … that is, you will have serious problems in the future.
The same thing is with your business.
Starting your business using dropshipping is like starting to build your house with the wrong foundation.
Now, if you want to build a solid internet business that has the power to change the history of your life and the people around you forever, you need to have some skills.
I highlight 3 key skills, which are like the perfect foundation for a successful business:
- Know the market you are going to work in (product, place, customer
- Have good relationships with good suppliers
- Know marketing and communication strategies
Knowing the market means understanding how Ecommerce works, the niche you want to work in and getting to know your ideal customer very well.
Good suppliers ensure that you always have the ideal product that perfectly solves your customers’ problems.
With the right marketing strategies, you will know exactly who your customer is, where they are and build a bridge that connects your product to your customer.
From there, with a validated strategy and product, you just need to scale.
This is the map … there is no point in reinventing the wheel or entering fraudulent paths that will lead you to total failure.
Always opt for techniques and strategies already validated.
International Dropshipping: An Alert
The Post Office started to charge R $ 15 for all international orders that arrive in Brazil. The measure aims to cover company costs and promises to limit illegal international dropshipping. Read on to understand how it affects Ecommerce in Brazil:
What is dropshipping
Dropshipping is the union of two words in English: drop and shipping. It is a form of internet commerce in which someone advertises a product without having it in stock and, from the confirmed sale, the seller orders the item from a second company, which is responsible for delivery. For the advertiser, the profit margin is lower, but it can be a convenient practice, as it eliminates costs such as inventory, shipping and order processing.
Is dropshipping illegal?
This is a sensitive issue. Legalized import works as follows: the Brazilian company orders international products as a legal entity, which enter the country, are taxed by customs and then resold here. In that case, all taxes are paid and it would be a legal model.
However, Brazilian sites that practice dropshipping usually place orders as an individual and put the address of the customer who made the purchase, in an attempt to not pay due taxes and maintain the profit margin (which is usually very low). In addition, companies that practice dropshipping do not usually generate invoices for their customers and send remittances abroad. This can even be considered money laundering, depending on the case.
The decision of the Post Office
The post office started to charge a fee of R $ 15 for all imported products. In principle, the justification is to bear company costs, such as order processing, inspections, formalization and inclusion in the database, among others. From now on, the recipient, that is, who bought the product, will have to pay this fee for each package that comes from outside the country.
Combating illegal dropshipping
But why is this measure important in combating illegal dropshipping? Some sites sell products at very low prices (or even for free!) In Brazil, then order from the supplier, usually located in China. The customer bears the freight and receives the order at home. With the new postage tariff, each order will have an increase of 15 reais, making dropshipping practically impossible.
Remember: if you want to do business in Ecommerce, you must do it legally! Don’t fall into the trap of looking for shortcuts. This can be very damaging to your brand image and end up bankrupting you!
What is dropshipping and how does it work in practice?
With several facilities set in more than 18 countries, Amazon really does its best to remain the biggest name in e-commerce in the world. But what few people know about Jeff Bezos’ company is that not all products sold there leave their own warehouses!
Thanks to a technique known as dropshipping, brands like eBay, Mercado Livre and the aforementioned Amazon are able to not only use the stock of third-party products to make their sales but, in addition, they still help other companies to grow in the market.
But what is dropshipping and how exactly does it work? That’s what we’re going to show in today’s post. Follow the next topics to find out!
What is dropshipping?
The term dropshipping was born from the combination of 2 words: drop , which means drop , and shipping , which can be translated as a shipment . Knowing this origin makes it much easier to understand the usefulness of the technique for virtual stores: basically, leaving the delivery and stock of products to another company.
With dropshipping, e-commerce sells the product and sends the order for this transaction to the partner supplier. It is the supplier who will send the item to the customer in the name of e-commerce, whose profit is the difference between the price charged to the user and that charged by the partner. See how there is no mystery?
If you have not heard of this technique, you may think it is relatively new. But in reality, it is not quite like that. TV channels and even some radio stations have used this model of logistics management for many years, offering in their programming some products that could be purchased over the phone.
Among the virtual stores, big names have been standing since the beginning through dropshipping techniques. This is the case, for example, of one of the largest virtual businesses in the United States, opened in 2002: Wayfair. And that, of course, not to mention the Chinese retailers, which have been using platforms like eBay, AliExpress, and Deal Extreme to offer their products for years!
What benefits does it bring?
At this point, you must be wondering if it is really worth betting on this type of technique for business and what are the real benefits of dropshipping, right? So keep an eye out to clear up these doubts once and for all!
Less capital is needed to start entrepreneurship
From the side of those who sell, dropshipping is a great choice, as it makes the entrepreneur not have to invest in a gigantic inventory of products before getting his hands dirty.
On the other hand, on the part of the supplier, the technique helps the company to focus on a smaller number of details – such as maintaining e-commerce itself, online advertising and even sales support.
It is much easier to start your online business
If your company does not need to physically handle the products to be delivered, the sales process is much easier. After all, after the sale, your part of the operation will be limited to observing numbers and continuing the cycle, generating more and more sales.
It guarantees regional flexibility
Are there no warehouses available where you live? Is the rental price too expensive? Is it difficult to take care of shipping logistics in the region where you work? With the dropshipping system, none of this is a problem.
It is a possibility to offer a wider range of products
As you do not need to have the product on hand to offer, it is easier to sell some less sought-after, niche items, even creating the possibility of testing some new markets and new product mixes for your online store.
It’s easy to scale your business
Anyone who has a traditional company is well aware that if the business doubles or triples in size, it is necessary to double or triple the investment. In the case of a brand that works with the dropshipping model, this account usually closes more easily.
This is because, in the case of sharp growth, the inventory and logistics portion can be passed on smoothly to suppliers (current or new), as long as they meet the demands. In fact, you can understand a little more about business scalability by checking our post on the difference between profitability and profitability.
And how it works?
Did you like everything we’ve said so far and are you already thinking about applying this technique in your virtual store? First, understand a little more about how dropshipping works in practice!
The choice of suppliers
First, you must choose the best suppliers for a given product, taking into account not only the price charged by them but also the quality of delivery and even your inventory and shipping monitoring.
The offer to the user
Once the supplier is chosen, it will show the respective quantities that you can put on sale in your e-commerce according to the product and, of course, for what price. As everything happens in real time, when a customer makes a certain purchase, the order is automatically processed by your online store, which sends the order to the supplier and generates the invoice.
From supplier to customer
The part of packaging the product and sending it to the customer is up to the supplier, who is still responsible for generating the tracking code for your company.
In case of return
If a customer needs to exchange or return the purchase, almost the entire return process is also up to the supplier – less, of course, contact with that customer, which is always the responsibility of the online store. Remember: stock and shipping are invisible!
Finally, it is good to make it clear that, in every buying and selling process using dropshipping techniques, the supplier’s side is invisible to the consumer. For him, from the moment of purchase until the time he receives the product at home, only his brand was present in the transaction. Therefore, it is extremely important to find committed partners, who will look after the name of your company in the market.
Ready! Now that you know what dropshipping is and how it can help boost your business – or even get it off the ground! How about looking for some business partners and get your hands dirty? Take the opportunity to follow us on social networks and stay on top of other tips to leverage your e-commerce!