Dropshipping is simply fulfilling customer orders by allowing online stores to connect harmonically with the suppliers to achieve a satisfactory business result.
This model is more relatable to entrepreneurs who want an efficient way of going about their business while maintaining a low operation cost. The low price is pretty attractive. However, the model can as well come at a cost. This SSSSarticle will show some guidelines for doing dropshipping work for you.
What does this business model involve?
The question mostly asked is, ‘what is dropshipping?‘ Dropshipping involves promoting products via vigorous marketing and selling products on an online shop. This enables the customer to access the products and place the order quickly.
When the order is placed, the charge is forwarded to the supplier, who notifies the customer that the order is in transit. The delivery process is out of your hands, as the supplier will organize that and make it happen.
In some models, you might find yourself handling customer services, and in some, you might even control the fulfillment of the physical goods to the customer.
How Does Dropshipping Work?
Dropshipping follows a particular process, but all the exact logistics involved depend on your arrangements as the entrepreneur or owner of the business.
The general sequence is as stipulated below:
- The owner of the dropshipping enterprise signs a contract with the suppliers,
- The online store is set up and marketed, and branded to the consumers,
- The customer visits product review site and then places the order on the online store,
- The seller receives the orders as they are placed,
- The seller confirms the order to the customer,
- The order is then forwarded to the supplier, who in turn notifies the customer that the order is in transit,
- The order is then shipped to the customer, and finally
- The customer receives their ordered product at a location of their choosing.
Who are the key players in the business model?
The business owner is commonly known as the seller of record
The process will always start with the entrepreneur. This is because you are the prominent seller of the products to the customers. You set the prices, record purchases, and perform many more tasks that are crucial to the continuity of the business.
Manufacturers and Wholesalers
Manufacturers sell the products to wholesalers, who sell them to retailers. You can also purchase your products directly from the manufacturers rather than wholesalers.
What are the potential benefits and setbacks of the model?
The model’s pros include lower overhead costs and low startup and maintenance charges. It enables you to conduct your business regardless of location and allows the seller to reach the customer via multiple social media channels.
The cons are product quality, as dropshipping reduces your involvement with the checking of the products, immense competition from other sellers, and low-profit margins due to the high competition in the business.
That’s about everything on dropshipping. Do you want to venture into dropshipping?