What is Dropshipping?

Many people now look forward to Dropshipping as a low risk new job opportunity. We are ready to discuss as much as possible its advantages, obstacles in getting started and how to continue to do so.
Dropshipping is a business model that relies on another manufacturer without maintaining a factory or, perhaps, a warehouse. Simply put, you are doing something like the work of an intermediary.
Suppose you put computer accessories on your website. Now suppose someone comes and pays online and orders a pen drive for around Rs. 2000. Now all you have to do is order a pen drive of the same type through a good Aliexpress seller by putting the details of the person who came to your website (let's say you paid 1500 for that). Aliexpress Cellar will send it to your name. So you just have a profit of Rs 500.
This can be done in two ways. One is to allow a retailer to establish a relationship with a manufacturer or wholesale store, deliver what the customer orders from them and mail it directly to them. The other is to get it to yourself and mail it back to customers. There are various advantages and disadvantages to both methods.

Its most common process is simply:

  • The customer orders a product from the retailer's online store.
  • The retailer automatically or manually directs the order and customer information to the dropshipping supplier.
  • The Dropship supplier sends the order directly to the customer in the name of the retailer.

Advantages of Dropshipping

It's important to ask yourself why you should start a new business. As a business model, there are several different areas where dropper shipping proves to be advantageous:

  • Lack of Capital - Usually the biggest problem you need to start a business is capital. But the financial commitment required for this is minimal. When you forget about computer and internet charges, it costs no money to start trading on a website like eBay, AliExpress.
  • Easy business start-up - There are only 3 steps required to do this so you can easily start selling. These are the 3 steps to finding a supplier, setting up a profile on your website or online store and starting selling products. This business model is relatively easy for even a novice entering the e-commerce industry to understand and implement.
  • No need to worry about extra costs and inventory - you do not have to worry about longevity and security because you do not have the goods, and you are free from store or store rentals.
  • No Limits to Goods - Being able to sell a wide range of products, not limited to one area, such as electronics or furniture, allows you to sell the best-selling items across different sectors.
  • Easy business expansion - It usually takes a few years to increase the supply of a business as a second step, but you can expand the supply in a matter of weeks.

Barriers to Dropshipping (Not Disadvantages)

Like both sides of a coin, there are good and bad things. Another advantage of Dropshipping is that you can successfully deal with it without looking at its disadvantages and preparing for them. So we prefer to call them "barriers" rather than disadvantages.

 1. Low profit

You only get a small amount after selling a remote product. You have to spend time talking / texting customers, telling them product details and solving problems, and if you run your own website, you have to spend money on it too. In comparison, the profit from the relevant item may be less.
The FitSmallBusiness website points out a method for calculating profits. In general, dropper shippers can expect up to 20% of their basic product sales and a conversion rate of around 2%. Then the following formula is obtained.
 
Estimated profit = (Access to the web page x .02) x (Average number of orders received x .20)
For example, if something sells for $ 1000, you can expect to earn $ 200 from every sale. Suppose you estimate that if 1,000 people visit the relevant web page per month, 20 of those people will buy the product. Then, if you have made $ 200 for sale and 20 sales, you can guess that you can earn $ 4,000.
The solution is to sell more and sell different things. Sri Lankans will not be at a disadvantage due to the minimal capital invested and the exchange rate gain (dollar appreciation against the rupee).

 2. High competition

Due to the ease of starting a business, there is a lot of competition in our country as well as in other countries due to the large number of entrants into the industry. The nature and success of any business depends on the competition. If the government does not restrict the business through price regulation, the competition between the businesses will result in higher quality and better prices for the consumer.
You can take advantage of this competition as an entrepreneur. The more competition you have, the less people you can face, so you can be a better competitor by providing better services. High quality products, competitive prices, discounts, fast shipping, and responsiveness to messages are just some of the strategies that can be used.

 3. Blame the goods on you

If the supplier delays in posting, sending the wrong item (order tampering) or sending the damaged item, you will be blamed and your account value will go down when you receive bad reviews. Also, if there are complaints of returns, non-receipt of goods and non-receipt, the loss and its guilt will have to be borne.
The solution is to select more people who are verified for the same product, have good reviews, and have a tracking code, and regularly check the product's progress after it has been mailed. Alternatively, you can have it delivered and mailed back to you, but it may delay delivery to the customer, otherwise you may incur losses due to the risk of non-sales if you keep stock.

 How to choose the right products for sale?

Another problem you may face when starting a dropshipping is what you need to sell.
The categories that are unsuitable or difficult to make a profit are,
  • More personalization - clothing, gender restrictions, etc. These are hard to sell.
  • ‍Emotional things - things exchanged between lovers etc. If these are not sent correctly you will get Bad reviews.
  • Time-limited items - One-time-a-year items like Christmas or Halloween items have to wait until that time to sell, and not sending them quickly can cause problems.
  • After-sales service needs - after-sales items such as electronic items, hosting, and things that are responsible for performance can cause a variety of problems.

Examples of goods for profit:

  • Purses, rugs, etc. - There are so many different styles to choose from.
  • Furniture - Diversified. The customer does not need them all of a sudden.
  • Home lighting fixtures - Diversification, no restrictions on specific brands and often no delay in delivery is not a problem.
As with any other business, it is your responsibility to continue to provide continuous attention after starting the shipping service. It is difficult to get an idea of ​​the business in a single article like this, but we hope that the interest in a new job opportunity may be of some help to you. If there is anything else you know about this, please share that knowledge in a comment.