What is Dropshipping: Get to Know the Basics
If you have never had a client whose business involves drop shipping, there’s a good chance that you are unfamiliar with the term. Unless you’re particularly well-versed in retail methods, a client mentioning that their business involves drop shipping might catch you unaware. Although drop shipping isn’t a new practice, the continued growth of virtual business means that it is becoming more and more common over time.
Whether you have a potential client who is involved in drop shipping or you just want to broaden your knowledge of retail methods, it’s time for you to get to know the basics of this rising online business trend.
What is Drop Shipping?
Drop shipping is a way of selling products where the seller or business owner doesn’t keep stocks of the products they sell. Instead, they purchase the item on an as-needed basis from a third-party supplier or manufacturer when a customer buys a product from their store. They then let the supplier or manufacturer ship the product directly to the customer. This means that there’s no physical store, the seller never actually handles the product, and the seller doesn’t keep an inventory.
Benefits of Drop Shipping
Many people who want to venture in online business look to drop shipping as an easy and inexpensive way to get started with selling. Here are some of the benefits of drop shipping:
- Less risk – Drop shipping is less risky because you don’t actually have the products with you. There’s no risk of spoilage, stale items to sell at a loss, or damages acquired during storage.
- Low overhead costs – No worries with buying a warehouse and no upfront expenses are required for stocking up inventory.
- Easy to set up – Many drop shipping business start with just a laptop. It’s easy to set up because so many online marketplaces now make drop shipping a lot easier for sellers.
- More products to sell – Since you don’t have to worry about a large capital or stale products, you can sell practically anything you want.
- Ease of access – Location is not an issue. Drop shipping business owners can work wherever they want.
Cons of Drop Shipping
As with any business model, drop shipping isn’t perfect. It certainly isn’t for everybody. Here are some disadvantages that make drop shipping unattractive to some business owners:
- Shipping issues – It can be difficult to manage shipping costs and standards when you work with a large number of suppliers.
- Major competition – Since anyone can start a drop shipping business nowadays, the competition has blown up. This also means having to sell your products at hugely discounted prices to keep up with the market.
- Low profits – With a huge competition and rock-bottom prices, a marginal profit per product is to be expected.
Where Do People Sell Drop Shipped Products
Many online selling platforms offer easy solutions for drop shipping business, so your client or potential client might be using one or more of them. Here are the most popular ones:
Overall, drop shipping can lead to a profitable business when run properly. Unfortunately, many people enter the business without sufficient knowledge, so they end up collapsing after a few months.
If your client is looking into remote staffing for their drop shipping business, it’s important for you as a VA to ensure that you know what they do. This helps guarantee the success of your online work and your client’s business as well.
*** Want your business to grow? Download our free startup tools and resources to help jumpstart your business today.
From marketing tips to business guides and actionable checklists, these resources can help provide you with quick, cost-effective ways to grow your small business and give it an edge among the rest. All for free!