If you are into online marketing or have stumbled upon it recently, you must have heard about various online ecommerce models. One of them is dropshipping.
The term “dropshipping” gained popularity in 2006 when AliExpress became popular in the United States.
Most of the entrepreneurs launched their stores and promoted their products on AliExpress.
As the prices of products on AliExpress are lower because they are made in China, the dropshipping business became an instant hit.
So next question: what is dropshipping?
Dropshipping is a supply chain management model in which retailers don’t have to worry about managing their own inventory. They can easily promote the products of suppliers and earn handsome commission on arbitrage.
The dropshippers work as intermediaries between suppliers and customers. They transfer the order information to the suppliers while keeping a certain amount as commission, who then dispatch the product from the warehouse to the customers.
Benefits of dropshipping
Dropshipping is a highly lucrative business opportunity for entrepreneurs. The good thing is that it doesn’t have a barrier to entry, and anyone having little or no investment can easily enter the market. It is practical and convenient for anyone who would like to start their ecommerce store.
Here is a list of benefits of a dropshipping store.
Low barrier to entry
- In dropshipping, you don’t have to pay upfront for the products. So, you will only pay for the hosting and domain charges.
- As you have no excess inventory, your business is less prone to loss of revenue.
- You can upsell your own products along with best-selling ones on your store.
Convenience for supplier and dropshipping store
- With dropshipping, the dropshipping store does not have to worry about shipping and packaging of the product, and the supplier does not have to worry about marketing and promotion of his products - both reap decent profits.
- Dropshippers can work with multiple wholesalers at once.
Easier to scale and remodel
- As dropshipping stores don’t require storage facility and are completely digital, they are easier to scale.
- Even if one niche or product doesn’t sell well, dropshipping store owners can easily move to a better selling product.
- A dropshipping store can be started for free. Just get a domain with hosting, and you are good to go.
- Even if you lose the store, not able to scale or profit from it, you can easily back out with no risk at all.