What is Dropshipping?

Dropshipping is an order fulfillment method that doesn’t require the store owner to keep inventory. Instead, when a retailer sells a product, it passes the order to a third party who then ship directly to the customer. Consequently, the retailer never sees and handles the product.

That is why in dropshipping the retailer purchase inventory as needed. from the wholesaler or manufacturer and the later fulfills the order. Thus there is a seamless integration between the retailer’s system and a third party.

Takeaways:

It looks like the easiest method in the retail industry because you sell another person’s goods and you get a commission. However, if you factor in all the disadvantages, challenges and day to day management. It is not as easy as it looks.

But if you with the right strategy, the methodology and patient it can help build a very successful business.

Benefits of dropshipping:

  • Less capital

This is unarguably the most decisive advantage of dropshipping. That is because you don’t have put upfront thousand of dollars for stock building. You only purchase a product to resale when a customer has already purchased and paid. In addition, order fulfillment is not done by you.

  • Low overhead

No inventory management and no physical stores. In fact, all you need is a home computer for less than $30 a month to make money from home.

  • Location doesn’t matter

You can run your dropshipping business from anywhere around the world. All you need is an internet connection. As long as, you keep the communication flowing between your supplier and your customers you are all set.

  • Easy to scale

Businesses that leverage dropshipping scale very well and rapidly compared to traditional eCommerce businesses. Since most of the work is handled by a third party. Further, because it is an online business the reach is worldwide.

This model has a lot of strong arguments that make it very appealing for everyone. However, it does have quite a few drawbacks that come with this convenience and flexibility.

Disadvantages of the model

  • Low-profit margin

This is the biggest disadvantages of this eCommerce model. Because it is so easy to get started with relatively no barriers for entry and an overhead minimal cost. Irrespective of the site quality the competitive environment drives prices down.

  • Highly competitive

This is because of the low cost of entry. In addition chances are you don’t have an exclusive contract with your supplier. That means many merchants selling the same products as you. Price point becomes, in this case, an element of differentiation and competition.

  • Supply chain issues

In this model, you don’t control the supply chain process, from sourcing the product to shipping it to your customer after purchase. You are essentially trapped and hoping the supplier or the fulfillment center addresses any issues with the product while providing an excellent customer service that’s out your control.

Above there are also problems related to the quality of the goods. Since as a dropshipper you don’t have control over the shipment. So shipment error can really damage the brand.

  • Legal liability¬†

This happens when suppliers illegally use a trademark logo or another company’s intellectual property. Thus affecting your brand.

Conclusion

Usually dropshipping is perfect for an established brand with an already existing customer base. But if you are starting from scratch you need to be fully aware of the pitfalls and the time needed to build your business. Virtually it looks appealing but in the long run, it requires a lot of work. If you pass that stage of implementation the business can prove to be extremely lucrative.

 

 

How to Make Money Online

How to Make Money Online

To make money online is pretty easy nowadays. Indeed, internet penetration has helped people make a lot of money. Typically, you can either take home income passively or actively. In this article, we will explore those options.

Passive income:

Passive income requires an initial effort. You have to put in the work first in building a product or service normally 15 days to 90 days. Revenue generating through passive income takes time, the rewards come in later. The video below explains and details how you can make it works. This video from Nate O’Brien illustrates these perfectly with more than 1million views and counting. The video is well edited.

Active income:

Active income requires permanent and constant work. If you don’t put in the effort by working you can’t get money. You can do it during your free time or dedicate maybe 1 to 2 hour per day and you can to take home a substantial income.

Summary: Make Money Online

This video practical wisdom summarizes both ways. It brings together the best ways. In my opinion, it is important to mix both. You can have an active income and a passive income. By doing that you can definitely improve your life for good.

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