There’s a new kind of business that cuts costs on traveling expenses and work with multiple suppliers on a global basis. Awesome, right? With technology, dropshipping is the kind that suits the best of both worlds. So what is dropshipping about? How do you get started?
Dropshipping is basically a trading technique where a retailer doesn’t hold products in stock. What the retailer does is have a third party involved that has the product. Products purchased are then shipped to the customer directly off that third party’s on-hand stocks. Most of these third party involvement are wholesaler or manufacturer of the products that the retailer sells. It’s a win-win situation to lessen transportation expenses, keep the stocks fresh and with little to less involvement of the retailer where shipping is concerned.
Pros of starting a Dropshipping business
This works similarly to an ecommerce site – except that you don’t have the actual products with you. This is actually the benefit of doing this kind of business. Here are the reasons why:
– No need to pay for warehouse rentals or even owning one
– Easy packing and shipping of orders
– Better tracking of inventory
– Better handle of inbound shipments as well as returns
– Continuous ordering and management of stocks
Cons of starting a Dropshipping business
– Low margin especially with high competition among ecommerce sites
– Inventory issues especially if third party/parties contradict technology needed to sync with your daily inventory list
– Shipping complications, especially if you have multiple suppliers
– Supplier errors
– Low quality products and packaging from suppliers
Now that you’ve already weighed your options, how do get started with your own?
1.) EIN registration: This is the number given to you by the government to issue tax. This is a pre-requisite to keep your business legit and for suppliers to trust you with their goods. Third parties usually require this number before they strike a deal with you. And most importantly, you can register for an EIN for free.
2.) Find your own niche: It’s never too early to start scouting for potential products to sell and niches to work on. Keep in mind that in the early phase of your business, you need to focus your products on a certain industry (e.g. beauty, health and wellness, consumer goods, etc.). Expansion usually happens if your consumers starts wanting you to sell more off your site.
3.) Find credible partners: You just don’t go for any supplier and strike a partnership with them. Again, research and do some background check. Credibility will be the foundation for your business to work.
4.) Open an ecommerce site: Where would customers go if you don’t have a website of your own? Invest in creating a quality ecommerce site. With the stiff competition in the ecommerce arena, it’s better to come ready and prepared.
Before you get started with doing a dropshipping business on your own, weigh first your options and consider the pros and cons of running one. It isn’t perfect and there is no such thing as a ‘stress-free’ business — even with technology. Learning the loops in the earlier stages will help you make the right decisions in expanding your business. Eventually, you’ll be able to handle the complexities of handling a dropshipping business and be successful at it.