In the past, if you wanted to sell products online, you may have been forgiven for thinking that you needed to somehow establish a venture on the scale of market leaders like Amazon. Today, the story is very different, and there’s scope for almost anyone to dip their toes into the online marketplace.

If you have an interest in selling on the web, it’s a good idea to ensure you’re familiar with the concept of dropshipping. If this is new to you, don’t worry. Here’s a handy dropshipping guide to tell you everything you need to know.

What is dropshipping?

Dropshipping is a business model, which eliminates the need for merchants to create or invest in an inventory or ship products to buyers. With dropshipping, a customer buys a product from a retailer or merchant, but the item is dispatched and delivered by a third party, usually a supplier, a wholesaler or a manufacturer.

The merchant will never come into contact with the products they sell. The main difference between conventional retail methods and dropshipping is that retailers and sellers don’t own an inventory of stock.

Some people like to think of a merchant as a shop window, which displays and showcases products to a buyer. Once the customer has selected the item they want, the third party provider assumes control of the rest of the buying process. This process is outlined below.

The dropshipping process

  • A customer browses the merchant’s website and chooses a product
  • Payment is completed
  • The merchant contacts the third party and notifies them about the transaction
  • The third party, for example, dropshipping suppliers, dispatches and ships the product to the customer
The supplier takes care of production and shipping in the dropship process.

Running a dropshipping business: how does it work?

Dropshipping is a relatively new concept, and it has come about as a result of the opening up and democratization of the virtual marketplace. The development of advanced technologies, the growth of the web, and the option for multiple sellers to benefit from channels like Amazon and Shopify, have enabled budding entrepreneurs and influencers to benefit from selling online without the need to invest in stock or manage inventories.

Today, it’s possible for almost anyone to make money from selling merchandise or products online. Dropshipping has become a very popular way for YouTubers to use their popularity to increase their income, for example.

If you have a very successful YouTube channel, and you think there’s a market for branded merchandise, such as t-shirts, you can use dropshipping services to provide this service without investing in an inventory or having to cover expenses like the cost of printing machines.

You also have access to an array of designs and you can provide your customers with a swift, seamless service that won’t detract from your day to day life or impact your routine.

The benefits of dropshipping

Dropshipping offers an opportunity to get a foot in the door if you’re keen to sell products online, or you’re looking to monetize a career as an influencer or a social media star. It can also provide a lucrative sideline for those who want to boost their income.

This is a project that can be overseen on a casual basis without the commitment of running a store. If you have a 9-5 job, but you’d like to earn more, or you have ambitions to set up your own business one day, dropshipping could offer the ideal opportunity.

One of the most significant benefits of dropshipping is the ability to sell or set up a store without the need to invest in a huge amount of stock. You don’t have to part with hundreds or thousands of dollars to create an inventory before you even make your first sale.

You can scale your business from a sideline without devoting every second to work or having to leave a permanent or well-paid job. It’s relatively easy to get started, and your running costs will be much lower than many other entrepreneurial projects.

You can also enjoy flexibility in terms of location and schedule, and you can choose whether or not to grow your business. You have control over the scalability of your venture, and this is attractive in an age when many people are keen to adopt the concept of the 4-hour workweek.

You have the option to manage your workload, increase your income, and even hire remote assistants to enable you to live a more luxurious lifestyle away from the constraints of a 9-5 job.

Many dropshippers get to enjoy the 4-jour workweek life.

Are there any drawbacks to dropshipping?

Dropshipping is an incredible option for many, and it offers a host of benefits, but as with most things in life, there are a couple of drawbacks. The most pressing concern is likely to be the margins. As a trader, you’ll set the product price, but you won’t take all the profits home.

You’ll need to pay suppliers and third parties that take care of services like shipping. It’s also worth noting that competition is fierce online, and this means that many retailers start selling at low prices with small margins.

There is also a chance that you could be let down by suppliers, which could impact your customer rating and your brand reputation.

Who can benefit from dropshipping?

Are you looking to make a bit of extra money on the side? Do you harbor ambitions to be a retail magnate? Are you searching for a simple way to get started in the world of e-commerce? Are you hoping to use your online profile to earn more money?

If you’ve answered ‘yes’ to any of these questions, dropshipping may work for you. This business model is suited to those searching for a casual means of making money, and it offers a unique opportunity to sell online without having to lay out a huge amount of money to buy stock.

Dropshipping is a relatively new idea, but it is a concept that has grown enormously in the last few years. If you thought you had to establish an e-commerce operation on the scale of Amazon to attract online buyers and make money from selling products on the web, think again! With dropshipping, almost anyone can try their hand at being the next retail guru.

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