Have you thought of owning a large retail store or a large e-commerce business where you own the products but do not have enough money to start which makes you turn to drop shipping?
You might have heard about drop shipping and want to become a drop shipper because someone introduced you to it and said you could start your retail e-commerce store business with little or no money. For budding entrepreneurs drop shipping is either a brilliant road to making good profit and riches or a total fool’s quest since there are little guidelines on how to rise in the e-commerce or drop shipping industry.
First, drop shipping is an online business that involves fulfilling consumer’s shopping demands without a store where the products available in the stock page. With drop shipping, the e-commerce store/business does not have to keep the products in their stores rather orders made through the site are passed to a third party supplier who then ships the order to the customers. In literal words, it is selling other people’s goods while taking a percentage based on the price set by the drop shipper.
Most e-commerce store do drop shipping
With drop shipping, it is easy and affordable to sell online while avoiding companies that want to charge distributors and sellers fees for selling their products. It allows drop shippers to operate an e-commerce business with easy flow of operations. In a simple drop shipping chain, it includes three parties which is the drop shipper, the customer and the supplier. In some more complicated cases, there can be more than two intermediate suppliers.
Difference between traditional supply chain and Drop shipping supply chain
In a traditional supply chain, the seller buys the product from the supplier, holds the product and wait for a buyer to order then sells to the buyer. In drop shipping, the buyer buys a product that the drop shipper doesn’t have, the drop shipper purchases the product from the supplier and instructs the supplier to deliver the product to the buyer.
With traditional supply, sellers might have to sell goods at a lower or discounted price due to excess amount of product or long stay in store or shelve but this doesn’t happen with drop shipping.
The Good side of Drop Shipping
With drop shipping, cost are negated. Drop shippers have a business, a supplier and customers with no worries about finance to get enough stock, worries about safety of the stocks such as damage or defects since the goods aren’t stored by the drop shipper
Worries about selling all tock isn’t a major concern for the drop shipper since there is no visible stock. The drop shipper only purchases good they already ordered and paid for by consumers.
Anyone can start a drop shipping business, all that is needed is a computer and access to the internet.
The drop shipper can have a broader product inventory since the products are not physical and just needs to be ordered on demand.
The Bad side of Drop shipping
As easy as it might look, there are downsides to it, a few once are;
- Low profit margin
- It is highly competitive
- The drop shipper does not have control over the supply chain
- In cases of low quality product supply, the drop shipper losses trust and not the supplier which affects the reputation of the business.
- Delay in goods delivery or delay in refund by supplier will lead to delayed services to consumers
- Legal risks are high, unlike kids selling lemonade in a lemonade stand outside their home who doesn’t go to court for littering because they are underage and might be doing it for fun, drop shippers have lots of legal risks.
The Reality
Of course, there are many good and bad side associated with drop shipping, the bad side can be handled well if the drop shipper knows and understands how to go about it. Although drop shipping comes with the belief that there is no need for a real inventory, but if as a drop shipper it is advisable to start keeping little inventories for emergency days. As much as drop shipping brings lots of benefit to drop shippers, so does it come with its problems.
I started dropshipping at a point in time but the competition was really high. I had to close the site because i barely had sales with little brand presence while other competitors and major e-commerce companies were the focus of consumers.
There is a good and bad side to dropshipping, it isn't always easy to start a dropshipping businesses because competitors are high and most consumers prefer e-commerce giant like ali-express, Ebay and so on.
Absolutely correct.
This is an interesting post. I haven't tried dropshipping before but i once thought of being a social media influencer, as well as owned my fashion label but after doing a lot of researching i understood much about it and have decided to hold on to fully understand how it works.
Wow!!! I have seen a lot of people who say they are influencer on social media only to have their good morning post liked by their parents and a few friends. Starting most online business is often difficult
There was a time i ordered for a wristwatch from Jumia, only to see that what i ordered wasn't what i got. The wristwatch was low quality. I was furious and i had to return it and ask for a refund.
Later when i copied on the name of the wristwatch and searched on google, i realized it was actually ordered from Ali-Express. Then i knew so many e-commerce stores also drop ship.
This is often not a new thing with e-commerces as well, i had my fair share with Jumia as well but the good thing about publicly traded companies doing dropshipping is that they can handle legal issues and do publicity to keep their name ringing hard on customers mind.
Thanks for reading my post.
Resteemed already :) Upvote on the way
Thanks a lot @project.hope
This happens but not always often. I remember a time i ordered for a product and waited for about 2 weeks only to be told the product was out of stock and i had to wait for another 7 working days to get a refund. As a consumer, i was freaked out but reading this post i seem to understand the long chain process.
Thanks for the post
Greetings friend @ojerinde.
This is not a new concept. Some attribute their creation to Nick Swinmurn who founded Zappos.com in 1999.
With the exponential growth that online commerce has had, and internet access devices in our pockets, anyone can do dropshipping. Therefore we must assume that competition in this market is huge.
This competence should be taken as a motivating aspect that will test our creativity to do business.
In my opinion, you could start with the delivery of products locally. Many people do not even dare to leave their homes to go to the supermarket. So a home delivery company can function as a micro dropshipping concept.
I really liked this reading. Thanks for sharing.
Your friend, Juan.
Hello friend @ojerinde, interesting reading.
That is a good business option for someone who wants a relatively simple venture without investment risk, I find it interesting.
Thanks for sharing, welcome to Project Hope.
I have always liked the idea of drop shipping, although I have never considered that it has these bad sides, thank you for sharing it.