Drop Shipping for Beginners: Understanding the Pros and Cons
Drop shipping is a business model that has been around since the 1990s. It’s an e-commerce strategy where you don’t keep inventory or products on hand, but instead send orders to your supplier for fulfillment.
If you’re new to this business model and want more information, we’ve put together a comprehensive guide to help answer your questions about drop ship businesses!
How does drop shipping work?
A drop ship business allows you to sell goods on your own website without the need for stock. When an order is placed, it’s sent directly from your supplier to the customer. You can also decide which items should be in-stock and available at all times or if you want a more varied selection of products throughout the site.
Drop shipping is a business model that has been around for decades, but it wasn’t until recently that people started using the term to describe what they were doing.
The concept was first introduced in 1919 when Arthur Young created a catalog and told his customers he would ship their orders from Chicago to their door.
Young would receive the order, then it was sorted by state and delivered to a local company for shipping from there. This is how drop shipping began.
In 2018, people are using the term to describe any online business that does not keep products in stock but instead obtains orders through a third party before shipping the items to customers.
The third party is usually a manufacturer, distributor, or wholesaler who then sends products directly to the customer’s door.
Examples of drop shipping
One of the most popular sites for drop shipping is Amazon, which allows you to sell items on your own website without having stock. You send orders to your supplier and they handle fulfillment.
Another example is AliExpress, which sells both physical goods as well as digital downloads like e-books and software.
These sites are examples of drop shipping, but there are many other websites and companies that also use this business model.
You can even create a store with Shopify or WordPress where you're the one who handles fulfillment without having to worry about inventory management and storage space.
What is Shopify?
Shopify is so much more than an e-commerce platform. Shopify offers a complete solution for the modern needs of commerce, including tools to design and process sales, collect payments, manage inventory, fulfill orders – all from within one system that can be accessed on any computer or mobile device in real time via the Internet.
When you sign up for Shopify, you get a free trial and an option to start with your own domain name or one of our many attractive subdomains.
Shopify is the best e-commerce platform in the world – it lets anyone sell anything online.
What is WordPress?
WordPress is a web design, development and blogging platform that allows you to make attractive sites without much technical knowledge or experience. You don’t need any programming skills whatsoever – some HTML will do just fine.
The beauty of WordPress is how elegantly it’s all been packaged up in the form of an intuitive interface and user-friendly admin panel.
Currently, WordPress is the most popular and powerful blogging platform out there because of its strong community and ease-of-use when it comes to making blogs or websites.
WordPress can be used for so much more than just blogging – you’ll find that some companies use this software as their entire website! Good examples are famous online clothing stores like ASOS, Dresses.com and Lisa Angel.
What are the advantages of drop shipping?
There are several advantages when using the drop shipping business model, including:
• You don’t need any upfront investment for inventory because you can buy the products online after customers order.
• Drop shipping business is scalable with time and effort, so it’s workable as a part or full-time job if desired.
• Drop shipping allows you to build an online store without a large capital expenditure.
• The costs are on the low side because of little or no inventory management.
• There is less risk involved in drop shipping, since there’s no upfront investment and it doesn’t take long for your products to make profits – in fact, it can take as little as a few hours.
Drop shipping is considered one of the best ways to start an online business because you don’t need any special skills or knowledge for drop ship businesses – just know your niche and be able to get products shipped quickly.
You can also try different niches when starting out with drop shipping to see what you’re most interested in, and then focus on that one.
What are the disadvantages of drop shipping?
• Drop shipping is not a good business if your niche has low margins, because you will still need to pay the retailer’s markup.
• You are at risk of receiving products that don’t sell well and having wasted money on inventory.
• Expensive upfront investments can be difficult for start ups with limited funds or credit history.
• Drop shipping is not a good business if you have no intention of handling customer service and dealing with returns.
• If you are drop shipping a highly sought after item, it is possible that your supplier will not be able to get the items for you in time.
To avoid these disadvantages, it’s recommended to start small and sell as many products that are in demand by your customers. When starting out, only invest a few dollars on inventory at first so you can gauge what sells well before investing more money.
Alternatives to drop shipping
One way that some people avoid the disadvantages of drop shipping is to find a manufacturer in China and wholesale their products. This eliminates the need for shipping goods from overseas, but it’s important to do your research on where you buy these items because there are scams out there.
Another option would be finding another supplier close by who can provide the products you need to sell.
Finally, some retailers choose not to drop ship but instead buy from a wholesaler and the manufacturer themselves. This option is more expensive because it requires higher stakes in inventory, but this way they can be assured that everything will arrive on time for their customers without any additional risks involved with overseas suppliers.
How do I start a drop shipping business?
The key to starting a drop shipping business is to determine what you want to sell. This should be a product that has low to medium demand, and is bulkier than it is heavy. Be sure not to choose any perishable products like food or cosmetics because they will spoil in transit if the package arrives late.
Find suppliers who are willing to drop ship with your business. They should be able to provide you with a wholesale price list, as well as the total cost of shipping per shipment.
The next step is finding an e-commerce platform that will allow you to sell your products online and take payment from customers without having any physical inventory on hand. Chatbots can also help greatly in this process by giving you the opportunity to chat with potential customers and provide them with information about your products.
Tips for a successful drop shop business
Always research before jumping into an online business opportunity and understand what type of work load each one has on you as well as which ones have the best potential for success.
Research the type of work load, as well as the potential for success in each opportunity before jumping into it.
If you are spending $500 on a monthly subscription to ship products and have been doing that for one year with no sales, either find a different product or service to sell or look at other ways to promote your business.
Take a look at the amount of time you have that can be dedicated to this business. If you are spending all your free hours running around sourcing products and shipping them, it is not likely to go very well for either side.
Other tips include:
• Be sure not to choose any perishable products like food or cosmetics because they will spoil in transit if the package arrives late.
• Find suppliers who are willing to drop ship with your business. They should be able to provide you with a wholesale price list, as well as the total cost of shipping per shipment.
• Create a Facebook page and update it with new products regularly. You can also create an Instagram account to show your latest drops, or download the Wish app for iPhone or Android so you’ll be able to track customer’s preferences based on what they click on within the app.
• Research how long different types of packages take to ship from China by looking up the average transit time.
• Consider using a service like Shopify to create your online store and begin selling products, or use WooCommerce for WordPress if you already have one set up. The Drop Shipping Store is another great option that lets you list items on their site and they will ship them directly from China so all you need to do is get a vendor’s wholesale account and start selling.
• Make sure to update your product descriptions with photos, prices, sizes and colors available– that way customers can easily find what they’re looking for right away.
• Consider signing up with sites like Ali Express or Alibaba if you want the convenience of drop shipping from China without having to manage the back and forth with suppliers.
• Compare prices of various wholesale accounts to find the one that best meets your needs, whether it’s based on price, quantity needed or dollar value limits.
• Consider adding a shipping calculator for customers so they can see how much their order will cost in total before checkout.”
Review of Dropship Lifestyle
If you’re considering launching a drop shipping business, check out our review of Dropship Lifestyle here. Dropship Lifestyle offers an online course describing how to start a drop shop business using Shopify.
I buy and review courses so you don’t have to. Sometimes, I even find courses that are legitimate and worthwhile; and that’s how I accidentally came across one that led me to building a 6-figure business in a little under 5 years. Now, I still review courses because it’s my favorite hobby. 🙂 Learn more about me here.
