If you are a budding entrepreneur in 2020, dropshipping is something that crosses your mind often, it is an essential part of shipping management, and today we will see how to turn it into a profitable business. A lot of people try digging out information regarding this new business model but fail to find meaningful insights into the subject. Today, I am going to share this comprehensive and ultimate guide to dropshipping, and its role as an order management process with all ins and outs included. While a lot of people hear about this idea as a dead one, I strongly feel that you will be able to run its profitability after reading this article.
Dive in deeper to explore the opportunities of selling without owning stuff below.
Before we start, please take a note about the three major stakeholders: Manufacturer, Client, And You (aka the retailer.)
Conventionally, the firm which takes the order is the one who produces it and ships to their customers. But, if you are using the dropshipping model, you don’t need to manufacture, store, or ship the products at all! You can list the product you are interested in selling, receive the order from the customer, and then purchase it from the manufacturer/distributor. They will take care of warehousing, packaging, and handling, along with shipping the product to the customer.
Market Stat: By 2025, The market size for dropshipping is expected to reach $557.9 Billion
You don’t even need to touch the products. You can purchase their merchandise under your brand and market them directly. The warehousing also falls on their part, so you don’t need to stack the boxes at your garage or storerooms, let alone packing them. They will do it all on your behalf. All in all, this reduces the need for investment as you receive the order and forward it to the manufacturer. They will take care of the rest. And still, you get your cut out of the price difference. You bore only the shipping and marketing charges. It sounds wonderful, doesn’t it?
Dropshipping and Order Management
‘Order Management is the tracking of orders from inception to fulfillment and managing the people, processes, and data connected to the order as it moves through its lifecycle.’
As said by IBM
The entire process starts with a customer placing an order and then the order fulfillment process starts, and the process ends when the customer receives the products. So where does Dropshipping fit in the process? Or how to fulfill dropshipping orders.
Dropshipping is one of the methods of the order fulfillment process. Drop shipping is when the retailer does not store the stock or products but instead transfers its customer’s orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer. As rightly explained by Wikipedia as well.
Dropshipping is a great way if as a business, you are struggling with managing your goods. It is also helpful if you are running a small business but you do not have enough space to store the products. A dropshipper already stores the products and once you affiliate with a dropshipper, you do not need to worry about stocking the goods. This way, the ordered goods are directly shipped by the supplier to the customer.
First of all, I recommend people who are already in online retailing to go forward with it. Newbies can always start, but they will have to follow the later mentioned steps far more strictly. As an entrepreneur, the only thing you might have in abundance is morale. So I advise you to manage your finances, operations, and time in a systematic manner. If you are willing to do so, here are some of the most amazing benefits listed down below:
You can make a considerable amount of money, but the main advantage here comes in the form of exploring new horizons. No matter if you are looking to raise capital for turning your side hustle into a full-fledged enterprise while learning or considering expansion, it’s equally effective. Your venture on this level is more of a litmus test as it will give you an idea of whether to scale up or reconsider the products.
One thing I would like to bring to your notice is that all of these benefits come with one primary condition, you dedicate enough time. And of course, if you treat it like a quick-get-rich scheme, you will hardly taste any success. You need to remain consistent, focused, and calculative throughout this feat.
Though it seems simple, there are tonnes of technical aspects to look out for. In the following portions, I will cover the process of successfully entering the landscape. Have a look at the step by step process below:
Icebreaking becomes tough when we try to enter a highly diverse market. A lot of folks tell us to follow our passions, and that sounds decent. But, when it comes to business, I feel that such advice doesn’t necessarily work every time. You will never find any millionaire doing business about things they aren’t passionate about. Becoming passionate about things that earn you money is very easy. So let us start with the ultimate dropshipping guide to getting started in the dropshipping landscape.
Pick the product that a lot of people like instead of what you like. In practice, being emotionally driven is not a good idea in business. Yes, being ethical is necessary, but the attachment is never beneficial in commerce. So, commit to finding out items that satisfy the below criteria for best results:
So what do these kinds of products look like? Check out this list:
You see that all of these items are bought frequently, and almost anyone will buy them. The absence of brands will also make it easy for you to compete without large fishes hovering over you. Also, I think that you can see if your own branding can garner better results. You can use the following tools to figure out the successful items:
Once you make your mind, I want you to search out what other people dealing in the same niche do. Starting from scratch adds screen time in movies, but you need to act swiftly, smartly, to make sales.
You Must Learn From The Mistakes Of Others. You Will Never Live Long Enough To Make Them All Yourself
Dropshipping is a relatively old concept, and a lot of players have been active for years now. You can leverage from their experience by conducting a competitor analysis. Most of the people skip this portion of venturing. But, you should understand that even the biggest conglomerates do it and successful people do it for a reason. This is the most important part of starting your venture, and I am going to discuss the right tools for this purpose.
With the help of these tools and tricks, you will get hands-on insights to their activity and operations. The main benefit of using them is that you will learn the best practices in no time, whereas they spent years devising them. So, when you start, you already have a glimpse of the dos and don’ts, which will save you from making mistakes.
After choosing your products, the next step is to find the ideal suppliers. There are a lot of places where you find them, and I advise you to find as many as possible. This is because you will negotiate pricing, delivery, and all other particulars before deciding to work with them. In the process, you will filter a lot of them, and even some of them won’t find it feasible to work with you. Thus, having more options will only benefit you. I am listing down some of the good destinations to find one along with their pricing:
|Free Sign Up
|$29.99/month or $149.99/year
|$249 (One Time Fee)
|$99(One Time Fee) / $69/month
I feel that you shall have at least two to three suppliers for any given product. Having more than one source always makes us feel more confident about the business. This will also give you an idea regarding the overall prices of the products you are willing to deal in.
To make the decision-making simple, I am going to share some common criteria that will enable you to select the most suitable shippers. Remember that they are extremely crucial to your success despite being invisible to your customers. I am once again repeating that the issues on their part will turn into your problems because the customer knows only you. Thus, be sure about whom you are working with. Here’s the list:
Most of us forget these aspects and tend to go only for the cheapest pricing. However, I strongly suggest you look at the entire picture. This will save you from getting into any trouble in the future. These questions will help you discover a lot of things about potential suppliers and how much you can rely on them. You can always compromise some profit for assured services instead of risking it all.
There are two options when it comes to starting your online store: Buy it or build it. We will discuss both options. Firstly, you can buy a ready store from places like Exchange. You can find out the ones which are already listed in the category you want to deal in. This will save you time in case you are looking to launch your business quickly or encash seasonal demand for your products. Also, if you are not a techie, this option will serve you well.
On the other hand, building your own store gives you unprecedented freedom to customize it extensively. Shopify is one of the most popular ecommerce platforms on the internet. It’s easy-going, highly customizable, feature-rich, and has plenty of updates regularly. Even if you aren’t a tech expert, you can choose from their free themes and improvise it. In case you want to go beyond, a lot of Shopify developers are available to get things going. When you start earning, you can also upgrade to the paid versions. However, you will need to invest in digital marketing to attract inbound traffic.Getting listed on Amazon, eBay, or Etsy is another way of entering the ecommerce arena. While you don’t have much control over the branding, you surely get a lot of traffic. Customers trust these places as they are already established brands. Though they charge a fixed percentage of your sales, I feel that they are worth it if you want to start cheap and play safe. You won’t earn as much while running your store independently for the same volume, still it’s a good choice for newbies.
See what works for you the best. Remember that it is not necessary to do what everyone else is doing. Weigh the pros and cons of each of the options as mentioned earlier and figure out the best choice for yourself.
In this section, I want to highlight a few considerations for setting up your online store. These things will help you in ensuring the best results. They have subtle effects on the overall profitability, and a lot of amateurs miss out on them. So make sure you go through all of these aspects to serve your interests best:
Once you are live, listing the products, processing, and tracking orders manually becomes tough with time. This is because you need to manage too many items in your product list and keep the pricings updated. Also, checking their availability before confirming an order is not always possible. All of these factors point towards the need for a dedicated automation-based solution. You can invest in an order management system to save yourself tonnes of efforts wasted in the clerical formalities. These solutions will take care of almost all the entire operations and give you powerful reports to explore your business further. A lot of people don’t understand the fact that making losses in the initial phase-out of improper management not only demotivates them, but these failures also demotivate their clients. Hence, it is crucial to make a place for automated software solutions in your budget.
One of the best things I learned is using generic descriptions. Before becoming active in this field, I wondered why certain stores write non-specific descriptions. They even wrote either of the two and whichever available. This is a remarkably smart way of selling smaller, inexpensive items that are bundled with bigger ones. If you don’t have a product readily available or pricing isn’t feasible, you can opt for the other. Many retailers either send the main article without the bundled items or ship them with identical ones. Notifying alternate items through generic descriptions will set the bar of expectations right. It also safeguards you from customers getting angry due to not receiving desired products.
Everyone seems to sound all praises for this ecommerce sensation. However, there are dark sides to it, which a few individuals discuss. It is imperative to know the ins and outs so that you start getting profits and remain profitable. Here, there are the most common problems faced by every dropshipper, along with the solutions included:
Coming towards the end, I want to share my two cents on marketing your online stores in the quick summary below. These actionable dropshipping tips will emerge as long-term strategic benefits for your venture:
I have tried to cover most of the areas related to dropshipping and order management. In the end, I will like to inform my readers that, like any other business, it too has its pros and cons. As long as you are willing to pour in time and operate systematically, you will reap reasonable profits. Don’t play blind on it as this will only hurt your chances of making money and eventually, your spirit of entrepreneurship. I hope that you will find this full dropshipping guide helpful in your journey in 2020 to become a successful dropshipper.