Most people who want to start an online business are hesitant to sell physical products online because they have a false impression that you have to store and ship all of your own products.
But did you know that you can run a successful e-commerce business without carrying any inventory at all? In fact, it’s pretty straightforward to run a full blown online store without worrying about storing or shipping anything physical at all.
Alibaba, Amazon, Flipkart, Snapdeal, and eBay sell online with Zero Inventory.
You can also do the same to start the online business with Zero inventory.
A drop shipped online store is a type of e-commerce business where you take orders on your own website, but your vendor or distributor is responsible for shipping the product to the end customer. You don’t have to carry any inventory at all. You simply act as a middleman between the distributor and the buyer. You can effectively manage the content management from there as well.
How Drop Shipping Works?
Customer finds your website online and ordered the product.
You will receive the money from Customer and place the product immediately with your distributor at an agreed upon wholesale price.
Then distributor will send the ordered product at customer place with your company brand and logo. As a result, it appears as if the product is coming from YOU and not the vendor.
Advantages and Disadvantages of DropShipping:
1) You don’t have to carry inventory or ship out any orders yourself
2) The startup costs are really low. There are no upfront costs for inventory. You simply need a website and can start taking orders right away
3) The overall risk is negligible.
1) The margins are usually super low (on the order of 10-30%)
2) Managing customer service can be a pain since you have no control over fulfillment
3) Your advertising options are limited because the margins are low.
4) There will be many other stores selling the exact same products which will cause pricing pressure.
5) The ramp up to significant money will be much longer than a traditional store because margins are low.
6) You will likely have to rely on SEO and other free methods of promotion.
7) Customers may need to be shipped separate packages of different drop ship vendors are used in your store
8) You need to connect to your vendor’s database to determine inventory levels
9) You are responsible for driving traffic to your own website
Features of DropShipping:
- Tried & tested business model
- No or little starting up cost
- No heavy investments
- No inventory issues
- No storage maintenance cost
- No shipping hassle
- You can wholly focus on marketing, operations and maintenance service standard
- Flexibility of running a business from anywhere
- Don’t have to deal with unsold stock
- Reach more buyers
Find Out Right Suppliers:
A seller will be able to get all the benefits related to drop shipping only if he/she partners with a reliable manufacturer/supplier.
- B2B & B2C marketplaces such as Alibaba, IndiaMart, Shopclues, Amazon, eBay where you can find many wholesalers
- Wholesale supplier directory
- Drop Shippers like Seasonsway, Printrove
- Look around in the local wholesale market or small retail stores
- Personal/professional contacts
- Trade & business magazines, online business publications
- Knowledge-sharing sites like Reddit, Quora
How you should tackle Biggest Challenges:
Meeting Delivery Timelines:
Online marketplaces run on tight delivery timelines to stay ahead in the competition. A seller has to depend on the third party to ship the products on time and carefully. Don’t rely on one supplier when you are starting your business.
You will find many competitors who are also using the same formula which you are using. So the best way to give strong competition in the market than you have to focus on marketing, content management and add value to your service.
If you are working with multiple suppliers from different areas/cities, then shipping charges will vary. So keep you profit margins expectations a little low unless you come across a manufacturer who is unaware of his product’s worth in the online market.
Shipping and Packaging Error:
If the product is not packed well and handle it with care to the customer, then it comes with a high return. High return rates to any business are detrimental. You are handling the business then blame of error will come to you. So Prepare shipping guidelines and share with suppliers.
Are you ready to start your business with DropShipping?
Drop Shipping is an excellent medium for online sellers with limited funds. New sellers can learn the basics of online selling by dabbling into this fulfillment model before finding their niche and moving onto an inventory-based model. It is a great training ground to learn the ropes when it comes to e-commerce.