One of the most excellent techniques of scaling an online store is to implement a dropship model for your business. At present, nearly 35% of online retailers have already adopted dropshipping as their principal approach to order fulfillment.
Nevertheless, countless retailers choose to trade their own goods and drop-ship additional merchandise. Regardless of the trail, you choose, integrating the dropship technique would benefit your enterprise since it is smooth sailing to get started.
Dropshipping allows retailers to augment sales, no inventories to deal with, and be able to sustain brand integrity, delight in a blunder-free cycle with appropriate tools, and establish an online marketplace.
What is Dropshipping?
Dropshipping is known for being a fulfillment approach wherein the retailer does not necessarily keep merchandise in inventory. However, such a method depends on manufacturers or wholesalers to utterly ship orders to their consumers.
More and more entrepreneurs consider dropshipping because it can offer many benefits that it makes it luring to online sellers. When a consumer places an order for a drop shipped merchandise online, the order and payment will be received by the retailer.
Afterward, the retailer would get in touch with the manufacturer or wholesaler (manually or automatically); he or she will issue a purchase order for the product, and will provide the necessary details for shipping directly to the consumer.
Lastly, the manufacturer or wholesaler ships the item; and from there, the retailer gain profits. As you can see, dropshipping is advantageous because as a retailer, you don’t need to have your own inventory of merchandise.
How Does Dropshipping Work?
To get started in dropshipping business, this is how it works:
First, it is necessary for you to open an online store. To do so, you will have to fill it with the items that you prefer to sell from suppliers and vendors that would let you trade their merchandise. This means that they will fulfill the process in your stead.
The manufacturers or wholesalers store the inventory, do the packaging, ship and transmit to you the tracking details when you place an order with them. Indeed, as a retailer, you solely pay the manufacturer or supplier the moment the consumer places their order and gives you the payment.
Why Dropshipping Became Popular?
There are several things to consider when organizing the setup of an eCommerce business. You will need to deal with the arrangements of deliveries, and think about where the stocks will be stored.
In line with this, it is also critical to learn more about the most economical and less time-consuming approach for the firm to organize its merchandise.
For this reason, it is not surprising why dropshipping became very popular among other selling techniques. In this method, the retailer earns profits with smaller capital. As a matter of fact, time is considered the greatest investment when it comes to dropshipping.
Besides, there are lots of reasons why dropshipping is renowned these days. And the following are a few of the primary reasons why:
No stock keeping
There is no need to purchase goods before you post them as available for sale. In fact, the only thing for retailers to do is to purchase at least one item, so you could use it as a sample of the product you’re selling.
If the product is made of top quality; sure thing, it will be a cinch to sell. Moreover, you will have fewer problems with unsatisfied customers.
- No upfront purchase
Compared to many other businesses, you only require smaller capital when you get started in dropshipping. You will merely require a capital for the website host payment since it is unnecessary to purchase inventory.
On the other hand, if you do not prefer to pay for that, you may consider dropshipping through eBay or Amazon. From there, you can start your business without upfront costs.
- No product fulfillment
While any firm selling various times directly to customers via mail needs to deal with fulfillment, this is most commonly linked with eCommerce. The moment your online store site is set up and running, then you can start getting limitless orders.
But, a method on how to immediately fulfill and deliver the items is necessary. Entrepreneurs could either outsource the fulfillment and shipping process, or arrange it in-house.
How Entrepreneurs Make Money through Dropshipping?
Entrepreneurs have greater chances of earning money through dropshipping. This approach is known for being a straightforward, quick and low-risk method to begin selling various items online.
You won’t need to invest huge capital upfront on inventories that may not sell well. More importantly, it is your dropshipping associate who would deal with all the deliveries to your consumers.
You could enjoy a lucrative venture if you select the appropriate product and market. In the same way, it is possible for you to expand into other niches, and trade other items as well.
Despite thinner margins, retailers can still earn more profits. You can raise your prices if you wish to augment your earnings. However, when raising your prices; this must be only as much as your target market can bear.
More than that, you can also sell more volume. To do so, you can contact your drop shipper to work out a lower handling fee.
The Growth of Dropshipping
Yearly, there is a new debate about dropshipping becoming a failure. Even so, this is not the real case since dropshippers generally don’t fail but modify the manner they work.
We can safely say that dropshipping is still growing despite countless barriers. The many reasons for dropshipping growth include:
a) More consumers are purchasing online nowadays than in the past.
b) It can significantly assist with online paid marketing campaigns.
c) The world has adopted eCommerce.
d) Transmitting payments online is a breeze.
e) Marketers understand dropshipping concept. Likewise, they are more than willing to work with them.
f) The upfront cost in dropshipping is nearly zero.
This site is well-known for delivering various goods right to your doorstep. The company aims to incessantly look for ways on how to satisfy their consumers.
Main Selling Points:
- Shoppers find it easier to buy what they’re searching for online
- Better selection, affordable prices, and convenient services
This is famous for being labeled as the grandfather of wholesale supplier directories.
Main Selling Points:
- Supplier information is less complicated to access
- Comes with a directory of 1.8 million products
This site’s droshipping merchants have sold more than 85 million goods worldwide, from the firm’s foundation. It is the exclusive platform of Shopify.
- Makes it less complex for sellers to look for great items that they trade online
- Excellent inventory management with automatic updates for products that come with adjusted prices and out of stock items
Reasons Why People Stop Aliexpress Dropshipping?
Aliexpress dropshipping is deemed as one of the most prominent marketplaces for eCommerce that more and more entrepreneurs prefer to utilize.
It is easier for users to import images, as well as the content of the product from this site; directly to your online store, and pick from limitless of various merchandise. Besides, you can even set your markups and prices.
For all that, there are also several downsides for you to look into. In fact, many people stop Aliexpress dropshipping because of the following reasons:
- At first, it will take a longer time for your credit card to be verified. This is why when setting up an online store, it is critical to ensure that you devote adequate time to your initial sale. This is to avoid dealing with unsatisfied clients.
- The shipping period takes too long. As a matter of fact, there are instances that shoppers receive the ordered item for over a month. Luckily, ePacket shipping to the USA and some other select nations merely takes a couple of weeks.
This means that parcels do not need to be carried by boats; hence transport period is shorter.
- At Aliexpress, it is impossible to bundle products. This implies that if a shopper orders multiple items from different suppliers, then there is no means for these items to arrive at the same time.
- Suppliers on this site do not speak English fluently. As a result, expect to deal with communication issues more frequently.
Brief Explanation on Why Dropshipping is Getting Less Popular
As opposed to the common belief, dropshipping is not a quick-rich type of scheme. You cannot deny the fact that it looks like easy money since you only sell other companies’ merchandise and earn profits from that.
If you’re going to dig deeper, you’ll see that it isn’t easy as it seems. You need to think through all the barriers, downsides and the day-to-day management. Nonetheless, if you approach dropshipping method in an appropriate approach, and utilize the tried and tested schemes; then it can be a flourishing venture.
But, be reminded that enjoying the lap of luxury can’t be obtained overnight in dropshipping.
A commodity can become market saturated when there is a lack of new demand produced for it. A progressive drop in sales is a warning signal of declining interest in the merchandise or that the whole customer base already purchased one.
When manufacturers create more than the amount that consumers need, this is also a clear indication that the market is saturated. But, trying to avoid a saturated market won’t help in obtaining dropshipping venture success.
Market saturation is inevitable. So, instead of avoiding it, it is better to learn how to utilize the opportunities that the situation offers. For you not to be left behind, do not stop innovating.
Take in mind that if your brand possesses a staying power, then your competitors won’t be able to oust you.
- High Competition
Dropshipping has become a flourishing industry that comes with a considerable number of people penetrating the market in a shorter time. Since it is a cinch to get started in dropshipping; for instance, no need to hire or pay workers, no inventory, and low start-up costs; it’s not surprising why this instantly became a renowned business option.
This increase took place to the extent where, at present, dropshipping is a difficult venture to maintain. Not to mention, staying competitive on a small scale is quite challenging. This solely conveys that it is much more competitive than ever before.
- Low-Profit Margin
While it is true that it is unnecessary to store or manage your own inventory when dropshipping, and it only requires low overhead, expect low returns too.
This connotes that you invest little capital; however, you also earn less. Put simply, for each sale you make, most of the earnings are obtained by the supplier. Basically, what you earned is already reduced.
As you can see, that is barely enough to fill in for your advertising and marketing costs, in managing sales orders, maintaining your online site, and sufficing your office hours.
Many Scam Products that Don’t Work
- Misleading Products
More companies are tempted to make misleading ads just so they could easily lure new buyers or encourage shoppers to subscribe to their services. Be that as it may, this strategy is generally not advantageous for the future of your business. Primarily, it could impede the success of your business.
Businesses, whose main objective is to earn as many profits as possible, are more likely to utilize advertisements that cover up some costs, discard valuable facts, or employ misleading images.
It is worth noting that this is a type of marketing is not useful at all. It actually deprives consumers of the precise information they require to come up with well-informed purchasing decisions.
Furthermore, the negative effects of misleading ads greatly affect plenty of players in the field of business.
Examples of misleading consumers regarding what your products or services can do for them include the following:
- whether the product or service is approved for safe usage
- how the products or services actually work
- if the spare components or repair facilities are ready for use
- what perks the products or service offer
- any conditions, warranties, or guarantees that you make
- how much the consumer needs them (for instance: are they required legally?)
Aside from these, it is also essential to be very honest about the following:
- sponsored advertisements
- approvals or affiliations
Same Products across Many Sites with Different Shipment/Price/ Promises
There are plenty of identical products that are found on many different sites. These items commonly come in different price tags as well. Shoppers encounter issues with these items because even though they are identical, it is surprising that sellers seem to change claims, prices, as well as shipping terms.
Many times, buyers tend to get confused because sellers have different claims or promises when the product offered is just the same. More customers get annoyed being charged with more expensive rates too when in fact, the product is supposed to be sold at a reasonable price.
Difficulty to Ensure Quality
When you encounter problems in terms of ensuring quality, guessing the root cause of the issue barely works. This is why a structured method is more excellent. To solve quality-related problems, consider the following:
- Figure out the symptom or problem.
Conduct some thorough investigations to determine the root cause of the issue. Then, point out how the root cause basically results in the problem that has taken place.
- Find out some alternatives and impacts.
The moment you figured out the root cause of the problem, search for the alternatives and impact of each alternative. It is also vital to address the impact in terms of risks, perks, and costs.
Be sure to look at the solutions in a more comprehensive manner, so you could choose the most outstanding alternative.
- Choose the most excellent alternative.
This will depend on the severity of the problem. If the problem is quite serious; the supplier or manufacturer may need to be involved too.
- Put into effect
Put your mini-plan into effect. This is to address the quality problem and carry out the selected alternative.
The resolution plan has to be kept track. This is to ensure that the quality has upgraded or is moving in that route. Further corrective action might be necessary if there is no improvement in quality.
- Low Quality
Needless to say, quality control is very valuable. For a fact, it is your responsibility to ensure quality as a store owner. It is just right to provide your consumers with a product or service that delivers what it claims from the product description.
Take note that not being able to satisfy the expectations of consumers would imply negative effects on your online store. For sure, you do not wish to deal with angry customers.
Since the distribution of defective merchandise would be regarded as your responsibility and it could result in serious repercussion and impair the success of your business, what can you do to ensure the quality of your products or service?
Consider the following:
- Educate your customers
- Check customer reviews
- Perform test orders
- Always deal with dependable and credible suppliers
Malfunctions of the product purchased from online stores are a common problem. Examples of these products include articles of clothing, electronic devices, as well as consumer goods.
- Manufacturing Defect
A clear example of this is when the product design is safe; however, the manufacturer was unable to manufacture the item as per the design standards, portraying the resulting product as irrationally hazardous.
- Faulty Design
This is when a manufacturer designs merchandise that is unreasonably safe for its proposed purpose, or for other practical anticipated uses. The product design depicts it as innately disputable and more apt to cause injuries.
- Express Warranty
This is when the seller or manufacturer promotes or otherwise indicate that a product satisfies specific safety standards. This implies that it has formed an express warranty that it must comply.
If the product description or safety standards aren’t met, then this is a clear violation of the express warranty and makes the seller or manufacturer accountable for the repercussions.
- Failure to Warn
The seller or manufacturer, who is aware that a product is potentially hazardous, needs to alert the shopper of the hazard, even if the hazard is not evident to the shopper.
This connotes that the product might be completely safe in manufacture and design, but merely so long as the shopper is properly informed on how to prevent the potential hazards.
In the event the seller or manufacturer was unable to provide sufficient information of the hazard and repercussions, then this makes them accountable for any hazard brought about by that hazardous condition.
- Illustration Varies Greatly from Real Item
This problem exists when the buyer received an item that is totally different from the photo advertisement or product description. In fact, there are several cases of this when buying online. The product’s photo appears so appealing but when you receive the actual item, it does not look identical as described or shown.
Such a condition angers customers since they feel deceived and were unable to get what they exactly paid for.
- Fulfillment Quality also Affected Long Shipment
Online shopping is not only solely about browsing various products and tapping the buy button. Essentially, it is more about customers’ experience. If you want to succeed even when the competition is consistently growing, then you have to convert each purchase into a more convenient, pleasant, and worthwhile experience from the placement of order to shipping, and beyond.
Order fulfillment has a serious impact on customer satisfaction. Packing, shipping, customer service, as well as your return policy serve a crucial role in the decision-making process. All these have a great influence on whether the consumer becomes a lifetime fan with a superior customer lifetime value; or whether your customers will shift to your competitors.
No Control Over Supply Chain
Supply chain fundamentally pertains to the process that brings goods from the manufacture to the customer. You might already know that in dropshipping, fulfillment is all that matters in this field.
Aside from this, the way you manage is crucial. This concentrates on integrating the entire supply chain to make it more effective. Since retail is not limited to local operations, retailers, wholesalers, and manufacturers need to look for a system. Such a system should manage the extended scope of the market without losing funds to incompetence. This is why without control over the supply chain; you’re likely to fail in dropshipping.
- Terrible Customer Service
In all types of business, including dropshipping, the significance of a good customer experience should not be undervalued. Negative customer service could make a remarkable impact on the retention rates of a brand. As a result, this would chase away customers.
Examples of terrible customer service include:
- Putting customers on hold for a long time
- Prioritizing the policy of your business above the needs of the customers
- Using negative language
- Ignoring the feedback of your customers
- Mismanaging your social media
- Long Turnaround Time Response
There is no quick shipping option when it comes to dropshipping. Time is money in any sort of business, particularly when we talk about a service that offers delivery. Surely, as dropshippers, it is our objective to do things as quickly as probable.
There are two stages to fulfill an order in dropshipping. This includes the processing time and the shipping time. The timespan to order merchandise in dropshipping usually takes more than a month- 35 days to be exact.
Substantially, this is the normal order processing and shipping time considered when making a purchase. Take note that this differs on the types of goods ordered and the location.
- Generic Answer to All Customers’ Enquiries
The quality of the product and the terms of the sales are not the only factors that you need to focus on. Apart from these, how you respond to customers’ request also play a vital role in ensuring a successful deal.
As dropshippers, it is important to be insightful about what you are sending. While responding to an inquiry, see to it that you are well aware of what information is available. If the customer stated in detail the things they want, then your response must be able to meet their requests.
Checking the items that you transmit is very substantial. It is necessary to know not solely the type of information you have included in your response, but also the information it lacks.
If your response did not indicate the information your customer is looking for, then consider inserting it somewhere. Be honest if you do not have what the customer is asking. You can courteously tell the customer that you will transmit it to him later.
However, it is a must to set an anticipated deadline. For sure, customers do not want to wait for too long for your response.
Fewer Customers and Less Demand
- Delivery Time Takes Too Long
The time-consuming delivery period has generally been a serious concern in dropshipping. The delivery period usually takes 12 up to 60 days depending on the country you are delivering to.
There are dropshippers who solve this delivery-related problem by purchasing products wholesale, then hire a fulfillment center in the country they are delivering to. This method allows dropshippers to ship customer orders in as short as 1 to 2 days.
Anyhow, if you’re new in dropshipping venture, it is risky for you to put in more capital in owning the inventory, particularly with untested dropshipping merchandise. You’re more likely to suffer from the excess inventory of products that are no longer suitable for the present season, or most shoppers already have them.
So, how can you appropriately deal with extended delivery periods? (This is in particular to Aliexpress.)
- Use ePacket as a delivery approach.
- Be transparent when it comes to your delivery periods.
- See to it to offer an excellent customer service
- Dropship from the country where your buyers are
- Sell unique items that are unusual to find.
So is Dropshipping Still Relevant?
Recently, a lot of people have been discoursing about dropshipping. Many people think that this field is declining, while others think that despite the slight drop in its popularity, this business venture is still effective and lucrative.
If you’re going to observe the trend in Aliexpress dropshipping, you’ll unveil that it had its seasons of dropping. Nonetheless, it is still a very powerful trend at present. The data reveals that dropshipping through Aliexpress is more renowned in the USA compared to other places globally.
As asserted by Google trends, dropshipping is still very much relevant, particularly in some parts of the globe.
Now, the question is, is it still worthwhile to start a dropshipping business these days?
- It can be a sustainable business but with great effort
We can safely say that dropshipping can be profitable if you prefer to have a side hustle for extra income. For example, it is worth starting if you already have a full-time or part-time job. Or, if you are currently raising a baby, still furthering your studies, and wish to make some money.
Of course, it is impossible to earn millions of dollars in a short time. Keep in mind that dropshipping takes a long time to ship the items to your consumers. This is why it is quite inconvenient for today’s contemporary buyers who are aware that they could have the same product the same day that he ordered it on other sites.
Primarily, you could always change the price and quantity. If a customer wishes to order several mugs for a firm, there’s a greater likelihood that no local store would have such a quantity of mugs in their warehouse to print the firm logo on them.
This is natural since no one wishes to keep their money futile, sitting in a warehouse; particularly when such a huge amount of orders do not take place daily. Hence, this shopper may resort to dropshipping business as the waiting period would be similar; nevertheless, the price is much lower.
- Demand is always there- need to know how to market it – own effort, time and money
If it is your main goal to learn how to satisfy your customers, then it is very important for you to meet their demands. Customer demands are rapidly changing, especially in these modern times. Some of these demands include social media activity and support, same-day delivery options, as well as appealing web design.
As you know, it could feel inconceivable to cover all these, specifically if you are a small but developing eCommerce business. Take in mind that different customers have different demands. In the same way, every online store is slightly different.
This is why it matters to carefully observe the general improvements that consumers tend to want. These are the products that you may be able to engage in, though the precise solution would be slightly distinct even from your rivals.