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What is Dropshipping? (Beginner’s Guide)

24 May, 2022
- Federica Artuffo
 
Dropshipping is a word that we hear more often, but what is it exactly and how can you create a business from it? Today we will answer about all of these questions. Dropshipping is a cost-effective way of starting a business with a low budget and quickly, without needing any asset.
 

The idea behind dropshipping is that you will create an online store (or use one that already exist like Amazon) to sell products, without the need to manage inventory, delivery etc. You are basically being an intermediary between the producer of that product and the customer, and you will put a margin on each sale that you will do. Let’s see together the pros and cons of dropshipping.

 

Pro about Dropshipping

  1. Simple Business Model: Dropshipping offers a very easy and simple to understand business model that you can start understanding without the need of any previous high-level education or business experience;
  2. Low Risk: If You don’t sell you don’t own the products, you don’t have a warehouse etc. therefore you will not make any loss!
  3. Low Barrier of entry: dropshipping means that no starting investment is required for inventory and the product itself, just expenses in website and marketing setup.
 
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Cons about Dropshipping

  1. Less Control: Since dropshipping is based on re-selling a product you don’t have access to the actual warehouse of the supplier and you can’t manage properly the deliveries;
  2. Shipping Times: You supplier might be on the other side of the planet, you might incur in long shipping times;
  3. Competitiveness: Since dropshipping has low risks and low barrier of entry, this is a very competitive market to enter;
  4. Reliance of Suppliers: If the supplier decides to increase prices or for some reasons stop sending you products, you will have to deal with angry customers.
 
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Find suppliers

So where do we start with dropshipping? We start by looking for places where to find suppliers. Usually a good place to start is Alibaba (for bulk orders) and Aliexpress (for smaller ventures); but if you know how to calculate your costs and margins you can become very creative, you can look for items to resell from etsy, ebay or even locally with the right marketing strategy. Your number one priority to create a dropshipping business is to find loyal suppliers, since they will be responsible for any problem that happens with the product and its quality (remember to ask for samples when available).
 

Find a Niche

This is where doing a marketing research is mandatory, you need to find niche. The best niches that you can find are those products that people want/request, but there is yet not enough competition in the marketplace. Avoid choosing products that are too generic and are sold already by hundreds of other dropshippers since you will face extreme competition and low margins (if any!).
 
 
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Brand Your Packaging

There could be some of these suppliers that give you the choice to personalise packaging, labels etc. This is the best opportunity to create a brand even in dropshipping, something that your customers can recognise from the distance and something that you can advertise properly on social networks! As you are personalising packaging, it is advised to put some effort in creating some amazing photos for your new products, so that will increase customer’s conversion.
 

Become proactive at Dropshipping

If You want to succeed at dropshipping you will need to diversify your products, do various tests to see which products fit the market the best. You need to start having a mindset of change. Observe the market and analyse time by time when certain products are requested (by festive events, by season, school items etc.). It is very likely that a product that may be selling well now will not be doing the same after (remember that it is a competitive market, other people are watching for products that sell and as soon as they see an opportunity they will join it and profits will drop)
 
 

Be Patient

 

Remember that even though you don’t need previous business experience to start dropshipping, you will still need to learn through experience. It is a painful process and you will encounter failure along the way. Just be persistent and learn from what others are doing as well.
 
Are You ready to start your dropshipping business? Remember to select a proper niche and you will be seeing some effective results in no time!
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