What is Dropshipping – Sell Products without having Inventory?


Starting a business online is now easier with the increasing use of the internet. As the internet became accessible from all corners of the world, many new businesses emerged too. Many big and small brands started launching their online shops. The percentage of online shoppers significantly rose. However, when you think of starting a business, the first thing that comes to mind is inventory. That is where the concept of dropshipping comes into play. It is a supply chain management for retailers. Here, the business owner does not require an inventory or keep goods in stock.  

The dropshipping method is a great way to start a business with low capital. This method is used by e-commerce sites, from where we often make purchases. We place the order with shipping details on the e-commerce sites. When they receive the order(s) shipment details from the customer, they forward all the details to the manufacturer or wholesaler. These manufacturers are the ones that deal with the stock. Then, manufacturers, retailers, or wholesalers would ship the products directly to the customer.

Working without having an actual inventory

Many of the leading businesses in the world currently are selling products without having an inventory. Some of the well-known names are Uber, Facebook, Airbnb, Alibaba, etc. They do not own any physical attributes of their services. Uber doesn’t own the cars providing taxi services. Airbnb does not build hotels or own any real estate. Alibaba does not keep any stock. These companies have taken the idea of dropshipping to an entirely new level. These are some of the top brands and companies in the world. All of these companies rely on their customer service and marketing.

Benefits of dropshipping

At first, starting a business without having an inventory might sound like quite a scary idea. However, the concept of dropshipping, in reality, is much less scary. With drop shipping, you do not have to worry about having less or no stocks. Some of the benefits of dropshipping are as follows:

  1. a) Less capital: Unlike other businesses, to start dropshipping, one does not need to invest a huge amount of capital. It has made the online selling quite easy. It cuts down the cost of inventory. However, the availability of items to the customer is quite large in number. It is because the dropshipping business owner does not rely on one manufacturer.
  1. b) ConvenientDropshipping gives the business owner enough time to plan their marketing strategy and customer services. It does not require them to worry about meeting any requirements regarding the stocks. It is convenient and efficient. It works perfectly even when the person has limited resources.
  1. c)  Accessibility: To be in the dropshipping business, you do not have to work long office hours. You can operate from any corner of the world, as long as you have access to the internet. It does not require you to work from the confines of closed office space, either.
  1. d) Genuine products: If you are planning to get into the dropshipping, the first thing you will need to do is find wholesalers. You can find genuine wholesalers by contacting original manufacturers.  The original manufacturers can share details about their qualified distributors. Genuine products come from genuine wholesalers.

Risks with the dropshipping business

Just like every other business, this is not a bed of roses either. There are risks involved in any business. Assessing the risks and moving forward would help you to thrive in it. Some of the major risks involved in Dropshipping are:

  1. a) Low margins: In the business of dropshipping, there would be a lot of competition. There is also a very low margin involved in dropshipping. Offering the product at low prices would shrink the profit margin. 
  1. b) Limited advertising optionsWith low margins, you will have minimal opportunities to advertise your business. Being a new business does not help either. This might affect your overall growth in the industry. You will be required to use all the resources you have. It also becomes a little bit difficult to sell a product without seeing it.
  1. c)  Customer ServiceSince you do not see the product you sell, you have no control over how the requirements of the customers work. It might make customer support one of the most challenging tasks to handle. It might also become a bit of a hassle when a product is out of stock, and you only rely on one supplier.

Dropshipping is undoubtedly an easy business to set up. There is a high chance that it will be hugely profitable when the right steps are followed. The overall risks of dropshipping are very low. It allows you to acquire more resources and an increase in sales. Besides, there is hardly any loss because of damaged goods. Goods with a manufacturing defect are not your loss, as the product is shipped directly from the supplier. You also have full control over the inflow of customers, as it depends on marketing and advertising.

Wrapping Up

To retain customers in the business, you should put all of your efforts and time into marketing. You should focus on developing website content, advertisements, and excellent customer service. Having more than one supplier means you have an unlimited supply of both quantity and quality products. It all depends on how you advertise. It would successfully bring in customers and make them stay around for a long time. Dropshipping is a fantastic way to embark on the journey of the business world.

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