The emergence and growth of the Internet has generated an infinity of tools, resources, opportunities and business models that generate millions (or even billions) of dollars a year in sales.
Thanks to the Internet thousands of people have been able to create businesses, grow and form empires with different perspectives, models, processes and ways of operating.
Much is said on the Internet about the wonder of selling digital products, creating courses / information products, automating the sales process and generating passive income while we sleep or play golf. And yes, info-marketing is an excellent business model that offers unique benefits and can be automated, however, it is not the only one and it is not for everyone.
I introduce you to Gerardo, an entrepreneur who has been sales manager in a multinational company for the last 25 years. Although "Jerry" - as his friends call him - has a great position that he has won over the years and he earns quite well, in many occasions he feels tired, fed up and too stressed.
What he wants is to have more free time to spend with his family, not having to spend 8 to 10 hours a day at work and live agitated all the time.
Looking for information on the Internet, Gerardo realizes with his computer and Internet connection can start a business and generate very good income. However, it does not motivate you or like the idea of writing an eBook, creating a digital course or blogging to earn money with Adsense or advertising.
Dropshipping - Guide, tips and resources to start
If the idea of selling information, software or any other similar business model on the Internet does not please you or you do not feel like going with you and prefer something more traditional such as the sale of physical products, it is possible that the large initial investment in inventory is an impediment that has not allowed you to successfully start your virtual store.
To minimize the initial investment costs of a virtual store, there is an e-commerce model called Dropshipping, which calls Gerardo's attention for the benefits it offers.
In dropshipping, the seller or creator of the store does not have inventory or product in their facilities. When a sale is made, the principal or wholesale supplier sends the product directly to the buyer. That is, the owner and creator of the virtual store is responsible for:
- Generate the sale
- Customer service
- Check in
- Save the client in a database
The supplier or wholesale company is responsible for storing, packaging and sending the product in the name of the seller or virtual store that processed the sale.
Advantages and Disadvantages of Dropshipping
This model of eCommerce is different and offers very good advantages for the entrepreneur who wants to start quickly but who may not have the capital and resources that are needed. Still, there are also some disadvantages.
Let's see the 2 sides of the coin:
Dropshipping Advantages
Less investment required
To start, it is not necessary to invest too much money in facilities, products and inventory. Thanks to the essence of this model, the initial expenses are more accessible so that more users dare to start.
So, at the beginning, money is not a pretext, since you only buy the product once the sale is made.
Less risk
Jerry loves the idea of dropshipping since the risk to start is minimal. In dropshipping the only expenses to start involve the creation of your virtual store and perhaps some necessary tool to manage, track or measure conversions of your business.
On the other hand, in a normal business your investment (something high) would not be insured or guaranteed to sell all the products you buy.
Flexibility
If Jerry wanted to start a traditional eCommerce business he would need a place to store his products, some employees, inventory management, tracking, etc. It's too much! If your goal was to leave that corporate world so tired, do not saturate yourself even more with work.
Luckily with the dropshipping all you need to start is a computer and an Internet connection - without forgetting the hosting, your domain and a good eCommerce WordPress guide to create your virtual store. So you could start operating your business from your own room in your pajamas or if you prefer, at your favorite beach.
As you grow in dropshipping, it is very possible that new and higher expenses will arise, however, everything is much simpler and with fewer headaches than a traditional eCommerce.
Greater variety of products
Thanks to the fact that you do not need to buy products in advance, dropshipping can offer a wide variety of products from the same niche or similar niches. As long as the wholesaler offers the product and can send it when requested, it is possible to add it to the virtual store without any cost.
Sell what you want
Jerry loves electronics and everything that has to do with technology (cell phones, televisions, computers, speakers, that's why he has decided to start his dropshipping business selling this type of products, where he can have a large catalog in one industry that always sells regardless of the time of year.
If the electronics were not Jerry's choice, he can sell many other things. For example, clothes, shoes, appliances, baby accessories, household items, watches or any other type of item.
Disadvantages of Dropshipping
Like any business model, dropshipping also has some disadvantages that we should consider.
Low profit margins
Many times, in order to start selling as soon as possible and deal with the competition (which also uses dropshipping), you have to put the prices of the products as low as possible. This translates to a very low average margin.
Then, to have considerable profits, a large volume of sales is needed. This is certainly important to consider.
Inventory problems
In a normal store Jerry would always know the status of his inventory at all times, with a detailed report of the products he has, which are sold and needed for the future. However, the dropshipping does not have its own inventory and depends on what the suppliers or wholesalers have. D
Because these companies also send their products to other sellers, their quantities change every day and it is possible that they are not always aware of the inventory, which implies a risk when the seller receives an order (dropshipping) : that the product is not available for shipment.
There are many tools and technologies to be aware of the inventories with the update every day, however, the risk of a complication is always there.
Complications with shipments
Because products are ordered from different suppliers and wholesalers, there may be many delays or complications with shipments. For example, if the same buyer makes an order of three products, it is possible that each one has to be ordered from different suppliers, which means that there are three different shipments for the same order.
Foreign errors
An uncomfortable or frustrating situation that can occur in the dropshipping is when someone orders a product in your store and the wholesaler or supplier sends the wrong product by mistake, damaged or not working well. In these cases the reality is that it would not be your fault that this happens, but you will still have to assume responsibility with the client.
Of course it can be solved, you just have to ask the buyer to be patient so that you can work with the supplier and send the right product or in good condition.
Tips to take advantage of Dropshipping to the fullest
As we saw, dropshipping is a good business model that has both its advantages and its disadvantages. Still, I consider it an excellent option for people who want to start an eCommerce Internet business and who may not have all the resources and money to start.
If, like Jerry, you are interested in this business model and you are going to take it seriously, I recommend you follow essential tips:
1. Study your market well
Before choosing a niche or a specific market, make a good study of all aspects such as recent growth, percentage of Internet sales, profitability, sales margins, number of sales in your country.
Never choose a market or a niche based on assumptions, thoughts or riddles. It is best to check with numbers, data, statistics and facts.
2. Choose and study your suppliers
It is possible that you stop the niche you have chosen there are different suppliers of the same products. Take your time to study each of them and make the best possible decision for your dropshipping business.
Take into account margins, waiting times for shipments, the reputation of the company, efficiency in customer service and all kinds of information that may be useful.
3. The art of negotiating
When contacting suppliers, try to negotiate the percentages, prices and all kinds of adjustments that need to be made. Many of them are open to talk and reach mutual agreements that benefit both parties.
4. Always have an alternative or plan B
Jerry is going to enter the electronics industry and he has already decided who will be his provider of televisions and high definition screens every time he sells one. However, it is also important that you consider a plan B in case your first choice has problems with the product, you do not have it available or some delay occurs.
For each important category of product, look for an alternative (another supplier) that can solve any setback. Better be warned, it can save us a lot of time of frustration.
5. Make your relationship with suppliers a priority
Your suppliers and wholesalers are those who are responsible for sending the product to the buyer, so it is very important to have a good relationship with them. The present and future of your dropshipping business will depend largely on them and how much satisfaction there is in your customers.
We must also consider that they are responsible for making any type of return or clarification in relation to an unexpected incident with shipments.
6. Put into practice blogging and Internet marketing
To grow your store, create a blog and a content marketing strategy to position yourself in search engines and social networks. Little by little people in your niche will start to know your products and everything you offer.
To start selling you can try established platforms like eBay or MercadoLibre (in case you are in Latin America).
I also highly recommend creating your eCommerce virtual store. For this you have many affordable and very affordable options that you can start using in a matter of hours.
For example, if you use WordPress, you can set up your virtual store, install a theme, the necessary plugins and a payment processor to start receiving orders in 1 day or less.
You only need a domain, a web hosting account and choose a payment processor like Paypal. To learn more, check out the WordPress eCommerce guide .
There are also other good platforms like Shopify or Magento . It's all about evaluating options, setting goals and making a decision.
Like Jerry, you can also start your Dropshipping business quickly and without the need to spend a lot of money. Today we have access to tools, resources and opportunities that until a few years ago were unattainable.
What do you think of Dropshipping? Do you think it is an accessible model with potential? If you have any experience, share it in the comments so that we can all learn more about the topic
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