What Exactly Is The Meaning Of Dropshipping?
Similar to the normal trade – there are three parties involved in the Dropshipping Sale Format.
1. Ecommerce Store (Your Website)
2. Third-Party (Your Wholesaler/Manufacturer)
3. Customer (End-user who has purchased a product from your eCommerce store)
Everything seems to be normal, then why is this sale called Dropshipping?
Well, it is a Retail Fulfilment Method where-in your e-store does not hold any stock as it is not go-down.
When the customer i.e. the end-user purchases a product from you i.e. your store – you (your eCommerce store) will directly purchase it from the third party or the wholesaler (like Amazon or eBay) with whom you have tied up. On your behalf, your wholesaler will deliver it directly to your customer.
Is it not interesting? Without investing or holding any stock inventory, without even looking at the product you are completing the sale & minting the margin!
Why do you need a platform for dropshipping?
This is a win-win situation for all the three parties involved.
You will be getting a sufficient margin without handling any product directly.
Wholesaler (Amazon, eBay, with whom you have tied up) will get an additional sale thus enhancing his profits and the end-user, who gets the desired product!
Advantages of Dropshipping:
Limited Investment: Without wasting your capital in purchasing huge stocks you can commence this Retail Fulfilment Methodology.
Hardly Any Worry: All the functions like warehouse rent, tracking reorder level, packing material, handling returns, etc., need not be worried for with this unique model.
Lesser Running Cost: Without any direct investment in the warehouse rent or the product, practically you can commence your eCommerce store with the monthly expenses of around $75-$100!
Huge Range: Depending on the season and the customer interests’, you can offer a wide range of products.
What are the dropshipping platforms available for beginners to start?
I think you may have heard that there are platforms like ebay, amazon and shopify.
You know that they are the most popular dropshipping platform right now available for you to start your business
Now we will see how you can use this for your dropshipping business.
1. Amazon Dropshipping Platform:
If any Ecommerce store meets all the criteria as per the Amazon standards, Amazon allows the drop shipping policy. There are certain conditions and strict guidelines laid down by the Amazon to become their dropshipper:
· It is one of the biggest virtual markets available across the world
· Setting up an Amazon dropshipping platform is comparatively very easy.
· The store should be the designated seller of only their (Amazon) products.
· Responsible to process customer returns of their products and distinguish themselves as the seller of their products on all the packing slips.
· Not to purchase products from different retailers or to mention their identity on the invoices. Pros Of Amazon Dropshipping:
· Trustworthy: One of the most trusted brands across the globe is Amazon; hence becoming the drop-shipper is directly proportional to getting their goodwill.
· Huge Customer Base: Amazon carries millions of existing customer base, which can be the repeat customer of your eCommerce store.
· Amazon Fulfilment: When the product is fulfilled by amazon, all the responsibility goes to amazon, which is highly advantageous to the novice eCommerce stores.
· Lower Operating Costs: Save on the running costs, not only like a stocking, ordering and delivering of the product but also warehouse expenses.
· Expensive Products: If any eCommerce store is selling luxurious products the cost-benefit is on the higher side, especially concerning warehouse and stocking.
· Wider Product Range: If the eCommerce store intends to sell a varied range of products, it is possible as you need not stock the items.
Cons Of Amazon Dropshipping:
· Listing Payment: In case you list their product, you have to pay some nominal amount as per amazon standards.
· No PayPal: Though PayPal is widely accepted across the world, amazon does not allow PayPal payment mode.
· High Competition: This is the universal truth and even amazon has to face the same.
· Delivery Return/Failure: With the margins offered by Amazon, it is difficult to work on the operational difficulties like late delivery, return to the seller, etc. Amazon might charge restocking fees in some cases.
· Diminished Brand Image Of Your Ecommerce Store: As the product goes directly from Amazon, the store cannot insert its self-branding coupons or advertisements.
· Relationship Management: As there is no direct contact between the customers and the eCommerce store, there is always a lacuna in Customer Relationship Management (CRM).
2. eBay Dropshipping Platform:
eBay is one of the widely known brands across the world. Though not as big as Amazon eBay has its own market width, which is highly respectable and vast. You can become the drop shipper with their strict guidelines – but not as strict as Amazon!
Pros Of eBay Dropshipping:
· High Commission: Comparatively, in some exclusive products, the commission can jump up to 10%, which is very high in the industry.
· PayPal Facility: The belief and trust with PayPal are very high and eBay allows it – hence helps in increasing the customer base.
Cons Of eBay Dropshipping:
· Limited Products: It is a bit difficult to commence the dropshipping business with eBay because of its limited number of products that are available for your eCommerce store.
· Limited Auction Feature: The auction feature does not work in favor of dropshippers.
Shopify Dropshipping Platform:
What Is Shopify?
One of the most advanced and excellent platforms for businesspersons to commence their own online store. You can create your own Shopify Dropshipping Store with hardly any technical knowledge. Without much of the hassle, the businesspersons can launch their personal eCommerce store. Over and above, you get direct access to the Shopify apps and themes on their platform.
The main foundation of eCommerce business is Shopify that allows the novice and stalwarts businessmen to
start their own eCommerce store without any hosting fees. With some monthly charges to Shopify, you can concentrate on the marketing activities of your store.
You are in total control of your site without any interference and can run your business with 100% freedom.
Pros Of Shopify Dropshipping:
· You are in charge of the store to the fullest, without any outside interference.
· There are no third-party fees involved in Shopify.
· Excellent for mobile users as your store is mobile responsive.
· Once the store is online, you can spend time only to increase the marketing of the store & to enhance the sale.
Cons Of Shopify Dropshipping:
· Limited customer base
· Requires time to get maximum business success
· Not very easy to gain trusts like Amazon or eBay!
To Conclude Is It Really Worth To Opt For Dropshipping Mode Of Sale?
Yes, a perfect model to create a successful eCommerce store with hardly any technical knowledge. It comes with tons of advantages and a few disadvantages.
But, it is not that difficult to address these problems after in-depth planning and study the root cause of the problem.
Go For Any Of The Platforms For Dropshipping Of Your Choice!