Dropshipping As a Business Venture

Dropshipping is becoming increasingly popular with people who want to enter the retail business but don’t have the space to keep a lot of stock nearby.

Basically, dropshipping is a method of selling products without ever touching the product you sell. A third party supplies the product and ships it directly to the buyer. The third party can be a wholesaler, manufacturer or just a retailer.

dropshipping explained

Dropshipping is a great way to earn money without the risks that go along with having a stock like theft, loss due to natural disasters, employees that need to be paid, and of course, the rent that goes towards storing the stock.

Sales Channels

Getting started with dropshipping can be easy – if you have the right sales channels.  Sales channels are the places where you will sell your items, and there are many.

The most popular are Amazon, Shopify, Etsy, and eBay.

  • Amazon – This is the most popular sales channel and has a lot of traffic, meaning more sales
  • Shopify – Shopify is also a popular option, and you can build your business from the bottom up
  • Etsy – Etsy is for handmade products so it does limit what you can sell
  • eBay – This sales channel is similar to Amazon and is considered by many to be easier to use

The sales channel (or channels) that you choose to use depends on what you want to sell, so it’s a personal choice to make.

With any business, there are positives and negatives. But when weighing the pros and cons against each other, the pros are certainly more than the cons.

pros and con

Advantages

The benefits of dropshipping are far more than the disadvantages.

No physical shop needed

You can have an online store and won’t have to spend thousands on rent and insurance. Dropshippers don’t have to buy their own stock, so they save a lot of money on that as well.

No salaries to pay

Dropshippers can also run their entire business by themselves, and won’t need to hire workers. At least, not at first.

Low investment

It won’t take much to get started, and even when your business has grown, the expenses of keeping it running will be much lower than a physical store’s.

Location doesn’t matter

You will be able to work from anywhere. As long as you have an internet connection you can keep your business running whether you’re on a beach in Hawaii or in a cozy hotel in Finland.

Disadvantages

Low-profit margins

Because it’s so easy to get into dropshipping, there are many merchants who sell items at ridiculously low prices in order to grow profit.

This means if you want to have buyers, your prices will have to compete with already low prices.

The two big issues to look out for

There are a couple of very important things to keep in mind when going into this lucrative business opportunity.

Here are the 2 most vital things to keep in mind:

  • Shipping

Shipping can get very complicated since you don’t stock the items you sell. Also, many dropshippers work with more than one supplier to have a wider range of items for sale.

This could make shipping costs complicated, especially if a buyer wants items that are from different suppliers. You will have to pay for the shipment of the 3 items, but asking the customer to cover these costs will chase away customers. These costs will have to be carried by the dropshipper.

  • Inventory

When you get the items you sell from different manufacturers, it can be difficult to keep track of all their stock, since inventory changes every day.

It will be up to you to make sure the items you sell are still available from the manufacturer.

With all this said, it’s clear that dropshipping really isn’t hard to do and can be a very successful and relatively easy way to start a business.

If you consider all the things discussed in this article, you are well on your way to becoming a successful dropshipper yourself!

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