What is Dropshipping?
Drop shipping is a type of retail business model in which the vendor accepts customer orders but does not hold stock at hand.
Instead, the seller sends the orders and shipment details to either the factory or producers, a wholesaler who deals in the same product, another retailer, or a fulfilment company, who then ships the items straight to the buyer.
As a result, the retailer is responsible for advertising and sales of the product but seems to have little control over product quality, warehousing, inventory management, or shipping.
Doing so eliminates the costs of operating a warehouse or even a brick-and-mortar shop acquiring and storing goods and employing the necessary people for such operations.
As with any other kind of retail, the seller profits from the spread between an item’s wholesale/retail price, less any applicable sales, merchant, or shipping fees.
Who is a drop shipper?
A drop shipper is a person or company that implements the dropshipping model, which involves purchasing products and fulfilment logistics from a third party rather than storing and shipping the goods directly.
The drop shipping industry
Dropshipping is a relatively simple way for young entrepreneurs to enter the world of e-commerce. To enter the market, you don’t need a fancy business school degree or a large sum of money. The trend of shoppers preferring e-commerce over physical stores also gives you an advantage.
Drop shipping is now a legitimate business prototype that can help you or anyone earn up to $10,000 in two months or less once you get the best knowledge of it! Your only limit is the sky. Dropshipping is so effective that more than 33% of online stores use it to meet product demand.
The worldwide drop shipping market was estimated at $162.44 billion in 2019. The value of the industry is expected to reach $591.77 billion by 2027. How did we end up here?
Dropshipping dates back to the 1960s when you could order items from a mail catalogue. You chose a product, called, and it was delivered directly to your door from a warehouse.
How does drop shipping work?
Two of the most common approaches to dropshipping are to use supplier databases to find a supplier in China (or anywhere else in the world) or to use an application or website that allows you and your store to thousands of suppliers from all around the world.
But first, consider what has occurred since the advent of the internet.
Amazon and eBay revolutionized online selling in the 2000s. Dropshipping is permitted on both Amazon and eBay. They do, however, charge drop shipping fees. Amazon, for example, takes 10% to 15% of your profits. However, Amazon enables you to reach over 300 million active monthly users with high buying intentions.
Fast-forward After another ten years, AliExpress emerged, allowing anybody on the globe to purchase things directly from Chinese producers.
The launching of AliExpress has a significant impact on the dropshipping sector because:
The linguistic barrier has vanished. The purchasing procedure got simpler and less expensive.
People were able to start online businesses in only a few steps with the development of Shopify. Other marketing automation tools in the Shopify App Store made life simpler for merchants.
Benefits of drop shipping
Location is variable/flexible.
A drop shipping business may be operated from virtually any location online with an internet connection. You can manage and operate your brand as long as you can interact effectively with both clients and suppliers.
Less money is needed upfront.
The most significant advantage of dropshipping is the ability to create an eCommerce company without needing to invest several thousand or millions of naira in the goods upfront. Historically, merchants had to invest large sums of money in procuring inventories.
Easy to set up
When you don’t have to deal with real things, running an eCommerce store is considerably easier. Drop shipping eliminates the need to worry about:
- Managing or financing a warehouse
- Order packing and shipping
- Inventory tracking for accounting purposes
- Returns and incoming shipments are handled.
- Continual product ordering and stock management
FAQs on Dropshipping
Is drop shipping legal?
Drop shipping is, in fact, legal. However, entrepreneurs interested in drop shipping should be cautious of the suppliers they partner with, paying specific attention to trademarks and intellectual property.
Is it lucrative to drop ship?
Drop shipping can be successful, but it is dependent on a variety of circumstances, such as competition, cheap pricing, and the percentages taken out by various intermediaries.
Can I start Drop shipping without a website?
yes, you can start by posting and selling on your social media handles.
Is drop shipping a high-risk business?
Not at all, Dropshipping is a low-risk business concept that allows you to sell products to clients without incurring large operating costs, as a wholesaler would.
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