How does dropshipping work in 2020 – What is dropshipping? It's a unique way to run an ecommerce store so you can get started without spending too much capital.
More specifically, dropshipping allows you to bypass large inventory requirements when running an e-commerce store, instead allowing you to outsource inventory management and fulfill orders to suppliers. third-party.
Take a closer look to help you understand what is dropshipping and how it works, while comparing it to a traditional inventory-style business. Then we'll also share how you'll get started with your very own dropshipping store.
What is dropshipping? Explain in more detail
Put simply, dropshipping is a trade method you can use to run an online store without inventory. It helps sell products directly from wholesalers to customers. As a retailer, all you need to do is keep an online product catalog – no need to keep any inventory.
Every time a customer places an order, you forward it to your supplier, who then delivers the product (s) directly to the buyer. No hassle for packaging or delivery. Moreover, you can export all product details from wholesalers (such as Alibaba) to your own electronics store.
Think of it as a three step process:
Customers place an order for $ 100 (product price).
You pay the supplier $ 50 (wholesale price).
The vendor ships the product to the customer and you keep $ 50 (interest amount).
How does dropshipping work?
There are three important factors in the dropshipping business: your supplier, your store, and your customers.
- Supplier – First, you need to find a supplier / wholesaler. The supplier will be responsible for fulfilling your order and keeping physical inventory. One of the most popular sources for vendors is AliExpress, but you can also find many independent vendors (though it takes a little extra work).
- Your store – This is the actual ecommerce store that customers will order. You only need to upload a product catalog, including clean photos, item details and a unique description. There are many different e-commerce platforms that work well, with WooCommerce and Shopify being the two most popular options.
- Customer – After ordering, you will receive a notification and you can forward your application to your supplier. You only need to pay your provider when the converted visitor makes a payment.
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Dropshipping model compared to inventory model
An inventory store is where you keep a stock of your products. In this model, products are shipped from your store. Unlike drop shipping, inventory requires a lot of investment because you need to have physical items on hand.
Easy to work with
Now that we have answered the question of what a dropshipping is, let's compare its efforts with the traditional inventory model.
The inventory model forces you to set up a warehouse to keep goods for the items you are going to sell. You must also hire staff for physical work. Also, it is important to get your inventory covered. Managing your storage space can be a bit difficult.
Dropshipping, on the other hand, does not require storage space, as the supplier takes care of the direct shipments. You can manage your ecommerce store remotely and independently. Basically, the only thing you incur is collecting orders and providing face-to-face customer service.
Packaging and delivery
With the dropshipping model, your supplier will handle the entire shipping process from packaging and delivery. There is a minimum processing fee (in addition to product costs).
In the case of inventory, you need to handle and ship the product yourself, so you have better control over the delivery process.
The main reason most start-ups choose a dropshipping model is the low capital requirements. You don't need a physical space for dropshipping, so there's no need to invest in a warehouse, buy bulk stocks or hire a lot of employees.
However, your profits will be lower, as the supplier will want a bigger cut to complete the process.
In addition, because it requires too little capital, there are fewer barriers to joining an opponent.
Basically – just as the dropshipping model makes it easy for you to get started, it also makes it easy for potential competitors to get started, which is one thing that can drive down the curb. yours.
Can you dropship using WordPress and WooCommerce?
While Shopify is a platform many people overlook, it's not the right tool for everyone, especially because you'll need to pay relatively high monthly fees even if new. Start your small shop.
Thankfully, you can also use WordPress and WooCommerce to create a dropshipping store.
WooCommerce is currently the most budget friendly platform to start an online store. You can use WooCommerce for free and only for hosting. When you first get started, you can find quality WooCommerce hosting service for only $ 3.95 per month.
In addition, Shopify has fewer theme options than WordPress, so you can gain the upper hand in your e-commerce competition.
We have a quick guide to help you set up a WooCommerce dropshipping store in just a few minutes. And you will also want to consider these mandatory WooCommerce plugins.
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Now you can answer what is Dropshipping, that's when you choose your product provider.
To get started easily, you can browse through a range of vendors at AliExpress. You can easily order samples to check product quality and delivery time.
From there, you can test multiple products on a dropship store. Open your store with five to ten products right from the start and see how it works. Then you can dive into the best converting products.
Do you have any more questions about dropshipping or how it works? Ask in the comments section below!