Ever wondered what is drop shipping, the new kid in the e-commerce town? Maybe you’re wondering if it’s really profitable and worth your time?
In this blog post, we’ll talk about what is drop shipping, how it works, and why you should start right NOW.
Before everything else…
I’d like to emphasize that drop shipping is not a get-rich-quick scheme, so if you’re looking to get rich overnight, this is not the right business for you (and, frankly, don’t even look for a business like that).
Drop shipping is simply a new method of selling products online, but being a drop shipper is a little different from being a seller. How exactly? Let’s figure it out!
What Is Drop Shipping and How Does It Work?
To understand drop shipping, we need to understand the parties involved in it.
Here’s what basically goes down. You have a product manufacturer, a wholesale distributor, and a drop shipper.
The product manufacturer produces the products in factories. They’re focused on producing the best products they can, so they have little time to waste to market it.
That’s where the wholesale distributor comes in. They make a deal with the product manufacturer to distribute their products for a cut in prices. The distributor is now left with the task of distributing the products as fast as they can. And that’s how drop shippers can help.
Drop shippers will sell the products to consumers, and for every sale, they will get a profit. The catch is the drop shipper does not have to physically have the product to sell it. The products are with the distributors, but the drop shipper will advertise the products as if they are with them physically.
Once an order comes in, the drop shipper will then forward the order to the distributor who will then deliver the product to the buyer.
So… Drop Shippers Sell Products They Don’t Have?
Exactly. That way, you won’t have to spend a cent to buy your initial stock. You can start for FREE. And you won’t have to worry about maintaining an inventory.
Also, nobody will know that you don’t have the products because you can put a personal brand or label on the products. The return address will also be your address.
Uhm.. But What’s the Catch?
If it sounds too good to be true, that’s because I haven’t told you the downsides of this business model.
1. The profit margin is low.
In the drop shipping business model, you’re basically placing all the work on the distributor’s lap, and you’ll pay for that through markups that will hinder you from giving competitive prices to your buyers.
2. You won’t have real-time supply reports.
The products will stay with the distributors, so you’re relying on their updates if a product is available or not. If there’s an error or delay in their stock updates, you risk selling an item that’s out-of-stock or labeling an item as out-of-stock even if it’s available.
These kinds of discrepancies can cost you, so you need to ensure timely communication with your distributors.
3. You’ll deal with customer care.
Maybe you’ve thought about this: what if the distributor messes up the delivery? What if the product is faulty or the delivery is late?
Well, you’ll have to answer for that. As the seller who faces the buyers, ikaw ang responsible for answering their questions, settling disputes, and addressing any concerns. Even if it’s the distributor’s fault. Such a bummer, right?
These are the three main downsides of being a drop shipper. You have minimal control over your prices, products, and delivery service.
BUT, if you’re looking to start a profitable online business with as little capital as possible, then you should definitely start a drop shipping business.
Start a Drop Shipping Business for a Comfortable Tomorrow
Drop shipping, despite its disadvantages, is a great way to enter the world of e-commerce with very little risk. After all, this is how these guys from China make $60K+ A DAY.
And we don’t even have to look far. We have fellow Pinoys like Sir Marvin Espina and Richie Salvador of Springboard who earn around P150,000 a day. So yes, we Pinoys can do it too!
Just remember that they didn’t get there overnight. Just like every legitimate business, you’ll have to put in time and effort to succeed as a drop shipper.
Did you find this post useful? Share it with your friends who also want to learn what is drop shipping and how to do it!