Dropshipping: What It Is, Why You Should Care, and How to Get Started

 

Have you ever dreamed of having your own online store and the flexibility that comes with it?

Global online retail sales are growing and is estimated to reach 8.8% of total retail spending in 2018. If there was ever an optimistic time to think of growing an eCommerce business, it’s now!

With those numbers in mind, it’s easy to get excited about all the possibilities to run the whole show no matter where you are. But there’s a set of challenges that comes with it: you need to look after inventory, shipping, returns, and overall operations—and that can get complicated quickly.

Luckily, there’s a solution: dropshipping.

So what is dropshipping?

At its core, dropshipping is the business model that enables a person or a company to sell products that they don’t physically own, keep in stock, or manually ship to their customers.

Let’s unpack that a little.

A standard eCommerce store, many of which you’ve likely bought from in the past—like Gap, Home Depot, or Best Buy—maintains its own inventory that you can purchase on their website. Once they receive your order they have staff that reviews it, packs it in their warehouse for you and hands it over to a shipping company to deliver to you.

In this scenario, the shop you’re buying from has multiple touchpoints with your order and the products being sent to you.

With dropshipping, the person or the company behind the storefront have zero touchpoints with the products they sell. When you buy from a dropshipper, you complete your order just like you did in the example above. However, instead of having warehouse staff that packs and sends your products, the shop owner forwards your order to a supplier.

This supplier, typically a manufacturer or a wholesaler, ships the order to you on shop’s behalf.

In both of these cases, the customer knows nothing about the process behind the scenes; they pay for a product, they wait, they receive it.

Another thing in common to these scenarios is the fact that the products are being sold at a marked up price. The difference between the supplier price and the selling price is what the shop makes per sale each time.

Once you decide to build an online store with dropshipping, this markup price is how you’ll make money as a merchant.

The advantages of dropshipping

Since the experience is essentially the same for the customer, you might be wondering what’s the advantage of choosing dropshipping as your online store operating mode.

No fear of risky investments.

Not only is it easy to launch an online store using dropshipping, it’s also easy to adjust your course. If you were producing your own products and they didn’t sell well, you’d be at a loss with an inventory of hundreds or even thousands of products you can’t sell. But when you’re selling third-party products and notice the shopping trends are changing, you can swap your products in minutes at no cost.

It allows you to focus on top-class customer service.

Because you won’t spend any time running the behind-the-scenes of your store like production or shipping, it means you can focus on your marketing, customer service, and building a strong and recognizable storefront. You can provide extra efficient support to your customers, blog about your niche, and send engaging email campaigns—because you have time for it.

It’s easy to scale.

Once you find a niche and products that are in-demand and have a profitable margin, you can take specific actions to  sell more of those products without the extra work of manufacturing and storage. Likewise, selling more products won’t require you to spend more time packing and shipping them like it would in a typical eCommerce setting.

It’s flexible and location-independent.

When you run a store that requires a physical inventory, you either have to be at that location, or hire someone to do so for you. When your business foundation is in dropshipping, you can run your business from wherever you are.

That gives you the opportunity to travel often or live wherever you want and move whenever you feel like it.

Ultimately, dropshipping lets you enjoy the perks of running a business—like flexibility and scalability—while relieving you of the typical challenges of running an online store, like manufacturing your products, running an inventory, and the logistics of shipping and returns.

Breakdown of the dropshipping process

We touched on the process earlier, but let’s break it down into more detail and look at what—and who—is involved in getting the product to your customer.

Step 1: Customer places an order through your online store

Your customer finds a product they were looking for. They’re satisfied with the way it looks, the description, reviews, features, and pretty much everything else they can find about it on your website.

They place the order, together with their payment details, billing and shipping address, and email address. Once their purchase is complete, they see a page confirming their purchase, and their information is sent directly to you—the store owner.

Step 2: You forward this order to your supplier

As we mentioned before, with drop shipping, you don’t physically or otherwise own the products you’re selling. This means that the order you’ve just received needs to be passed onto your supplier—a wholesaler or a manufacturer—in order to be fulfilled.

This can happen either manually or automatically depending on the setup of your store. As opposed to a standard online store, where the store fulfills the order as they receive it, you play the role of the middleman between your customer and the supplier who will ensure your customer receives their purchase.

Step 3: Your supplier packages and ships the order to your customer

Once they receive the order you forwarded to them, your supplier will package it and send it directly to your customer.

As the shop owner, you never actually saw or touched the product. Apart from ensuring the order reaches your supplier, you didn’t have to spend any time fulfilling this order—and your customer has no idea that there was someone else involved in this process.

Yet, she’s a happy customer, and you’re a happy shop owner!

What successful dropshipping stores look like

You’ve likely come across success stories from the dropshipping world. Profitable cases vary from making $1,500 in the first month as a side project to seven-figure revenue within the first year. Want to get to know them? Here are some of our favorite examples.

$12,000/month while in a full time job

Justin Wong founded the So Aesthetic shop with apparel and accessories. He launched his shop while still in his full-time job, and within about two weeks from the first sale, he reached $11,793 in sales.

When he was asked about his first sales, he said he turned to Instagram because he’s already been an active user of the platform. He opened an Instagram account for his store, started sharing his products, and used a lot of hashtags. Followers came in, but sales didn’t, so he started reaching out to influencers and offered them a 30% affiliate fee from every sale.

Despite the many unanswered messages, he got over 100 partnerships and successfully got his store off the ground in under a month!

$13,500/month in the first year of business

Jonah from Denver, Colorado founded the Watch Outfitters store with no experience selling online. When he started out, he had many days with 0$ in sales, and he says everything changed when he realized he should get to know his audience better and provide value to them.

This affected his ads, his store, and his understanding of customer behavior. He started doing more ad testing on Facebook, refined his product copy and photos, and focused on growing his email list. As he got better at each of those things, he reached the revenue of $13,500 per month in his first year in business.

The simple way to get started

By now, you might be wondering if you have the skills and tools you need to try building your own dropshipping business. The great news is that you can get started easily and with no technical skills with the help of eCommerce platforms and NinjaSeller.

Create your store. With the help of Shopify or WooCommerce, you can have your store up and running in the matter of a day. Whichever platform you choose, they come with incredibly user-friendly interfaces that guide you through the entire process.

Add your products. Once you sign up with NinjaSeller, you can integrate your store with it and add products to it instantly. From here, you can easily import them, edit and update them, remove those you don’t want to sell any longer, and make real-time updates to your storefront.

Enable order fulfillment. You’ll want to make sure every order reaches your supplier as soon as your customer completes their purchase. The best way to do this is by using auto-fulfillment, so your orders can be processed and shipped quickly and efficiently without extra work on your part!

Monitor your performance. Once your store is up and running, it’s important to have a complete overview of what’s happening at any moment. With an integrated dashboard, you can keep a close eye on all sales, popular items in your store, returns, profit, and much more.

 

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