What is dropshipping?
The dropshipping model is a retail strategy that involves shipping products on demand from a supplier or a wholesaler to the customer. In this model, the eCommerce store owner literally holds no inventory of the products that they are dropshipping.
In this retail fulfillment method, online stores do not warehouse any inventory at all. They simply purchase products from third-party suppliers as and when their customers place orders with them. In a dropshipping business, the retailers do not handle the products directly at all, these dropshipping products are shipped directly from the wholesaler or supplier to the customer. So dropshipping is quite a hands-off process since the online merchant does not need to order inventory in bulk, stock products and warehouse them, or fulfill the orders themselves. The third-part supplier ships the products directly on behalf of the merchant.
How does dropshipping work?
When a customer places an order on your online store, it immediately gets routed to your supplier, manufacturer, or wholesaler to be packed and shipped. Generally, you would expect the manufacturer to be the supplier in the dropshipping model, but it is also possible for a wholesaler to drop ship the products to your customers. You might even get a dropshipping partner who offers customization services.
Normally, if you went the traditional route with a business in which your designs would be printed on a product, you’d have to order large inventories of the product, generally having to find a supplier that prints your designs in bulk. But with a dropshipping partner that offers custom printing services, your customers would place an order on your website which would be sent to your supplier who prints your design on the product and fulfills the order.
How do you find dropshipping suppliers?
Here are some of the ways through which you can find dropshipping suppliers:
Reach out to manufacturers
Get in touch with the manufacturers of the products that you intend to sell and ask them for a list of the suppliers that they work with. This helps you ensure that you’ll be working with legitimate suppliers and won’t be getting scammed. If you see a supplier’s name coming up multiple times, it might be the right one for you to start working with.
Go to trade shows
Try to attend trade shows in the niche that you want to start doing business in. These trade shows are a great way for you to meet suppliers, build a rapport with them, and even see and evaluate their products in person.
Dig through the SERPs
Google for suppliers and dig through the search engine result pages thoroughly. A lot of dropshipping suppliers have not figured out SEO just yet, so you’ll have to search multiple queries and actually look past the first page.
Buy something from your competitors
Buy some products from dropshippers whose offerings you admire. When you get the package delivered to you, look closely to find the return address, this will let you figure out who their dropshipping suppliers are.
Can you start dropshipping with no money?
The short answer? Yes.
It’s possible for you to start your dropshipping business without investing any money. You can use platforms like Shopify, eBay, Amazon, etc. to do that. While none of these platforms are completely free forever, just can get started on any of them for free.
With Shopify, you get to start building an online store by using a free trial that lasts 14 days. The good part is that you don’t even need to add your card details to avail this free trial. After that, you need to find dropshipping suppliers.
The good thing about starting a dropshipping store is that you don’t need to purchase large volumes of inventory in advance before you sell them, so there isn’t a huge up-front cost and investment required from you.
What are the pros of dropshipping?
When you opt decide to become a dropshipper, you don’t have to worry about huge upfront investments. You aren’t going to need to spend an enormous amount of money on research and development to create a new product. You aren't going to have to worry about manufacturing the products yourself either. You won’t even need to spend money on ordering and stockpiling inventory. Most of the money you’d spend would be on the technology that you need to run your business and on your marketing efforts.
It’s less risky to test the waters
If you aren’t sure about how well a certain design or product would sell, dropshipping allows you to experiment with it without needing to put a lot of resources behind it. It’s even useful if you’re trying out a new supplier since you would not need to place an order of thousands of units in advance, without having a very clear idea of their quality.
You can go remote
When you are dropshipping, you can run your business from pretty much anywhere. This is particularly true if you work with a dropshipping supplier that also takes care of returns. This allows you the freedom to become a digital nomad, running your business from anywhere, making workcations possible as well.
Branding products your way
Some dropshipping suppliers even allow you to white label or private label their products. This makes it possible for you to have products that have your branding on the packaging as well as the actual product, enabling you to come off as an established brand. To do this, you’ll need to work with an on-demand supplier.
What are the cons of dropshipping?
It’s rather competitive
Google Trends shows that interest in the dropshipping model has doubled in 2016 after plateauing for years on end. But that’s not all, the level of interest in dropshipping in Jan 2020 was around 9x the level in Jan 2016.
Lack of quality control
In the traditional model, retailers would check the product quality received from the manufacturer or supplier before shipping them out to consumers, but they can’t really do that in the dropshipping model. This could cause suppliers to relax their own quality checks, which would cause a larger percentage of your customers to return their products.
With dropshipping, you tend to order smaller quantities, only ordering when you make a sale. This means that you’re losing on economies of scale and making smaller profit margins.