What Is Dropshipping?
Dropshipping is basically selling products to consumer directly but the product is shipped by the supplier/manufacturer to the consumer with the dropshipper’s name on the sender detail.
The workflow sequence are:
- You (dropshipper) put products information on your dropshipping website.
- A customer buy something and pay for a normal price.
- You forward the order and pay for a discounted price to the supplier.
- The supplier send the ordered goods to the customer.
This is a bit different with affiliate marketing, where you just promoting your affiliate links in order to get commission. Dropshipping is really like having your own store but without having to do stock management.
The Advantage of Dropshipping Business Model
- Less problem because you don’t need to manage stock,
- it can be started using small amount of capital (because you are not required to keep some amount of stock),
- you have the ability to gain market recognition to your store.
The Disadvantage of Dropshipping Business Model
- The revenue margin might be smaller than being a stockist agent (official reseller who must buy in bulk order to supplier),
- you need to check the stock to your supplier every day to make sure you don’t sell unavailable products (this will become a burden when you sell a lot of items)
- you need to handle the order manually to the supplier.
How Much Will I Get From Dropshipping?
Regularly, the supplier will give dropshippers a discounted price which is lower than the normal price in the market so the dropshipper can get revenue from selling the products at a normal price. But it is also possible to sell the products at a higher price than the normal price and make ekstra profit from doing so.
The dropshipper’s revenue may vary, depends on the discount that the supplier give for each product and the total sales that successfully brought to the supplier.
Let’s say you do a tee shirt dropshipping, and the supplier give you 10% discount on every products at $10-20 price range. In one day, it turns out that you could sell 10 pieces of $20 tee shirts. So the profit would be $20 x 10% x 10 = $20.
What Do I Need To Start A Dropshipping Business?
- Access to suppliers
- A website
- Ecommerce site account
- Social media account