Through the dropshipping process, manufacturers, wholesalers, and retailers now have an efficient way through which they can fulfill customer demands.
From the surface, the dropshipping process may seem somewhat complex, but it is easier than you think. With the help of this guide, you will learn how to start dropshipping.
Before we proceed, let’s define dropshipping as this will simplify things for you as we continue with the discussion.
What is Dropshipping?
In a nutshell, dropshipping occurs when a retailer fulfills a customer’s order using a third-party supplier. The supplier then ships the goods directly to the customer without passing them through the retailer.
To get a better understanding of how the dropshipping process works, you must at least have some knowledge of how goods move in the supply chain. The dropshipping supply chain consists of three major players who play unique roles in ensuring customers get what they need.
Dropshipping Process: Dropshipping Supply Chain
It all starts with the manufacturer who creates the products that are on demand. Most manufacturers only deal with wholesalers, so they don’t sell their products to the general public directly.
Once the wholesalers get the goods in bulk, they add a markup to the price, after which they sell the goods to retailers. It is important to keep in mind that wholesalers can stock the products on behalf of retailers.
However, it is through the retailers that customers can order the products that they need. Now that you have a rough idea about the whole thing, let us go straight to the dropshipping process.
Since most retailers have an online storefront, customers can easily order for products while in the comfort of their homes.
Step 1: Customer Places an Order from Your Online Storefront
- Customers can make an order for any of the products available on your online store. Since you are the retailer, you are the one to approve the order after coming to a consensus with the customer.
Step 2: You Forward The Order to Your Dropshipping Supplier
- Step 2 is very easy since you only have to forward the customer’s order, details, and any other information that may facilitate the dropshipping process.
- The supplier will then prepare the order according to the customer’s specifications.
Step 3: The Supplier Ships the Order Directly to Your Customer
- Once the supplier has prepared the order, the product will be sent directly to your customer using the address that was provided.
- Before that, your supplier will inform you when the customer’s order is ready by sending a tracking number, which you can forward to the customer.
As you can see, the dropshipping process is not only simple but also straightforward. Nonetheless, like all business practices, it has its advantages and disadvantages.
Advantages of Dropshipping
- Requires Less Startup Capital
-The good thing about dropshipping is that you don’t have to invest large sums of money to get started.
- Low Overhead Costs
-Since you can manage your online storefront from home, you don’t need a warehouse, and neither do you have to keep on-hand inventory.
-All you need is a stable internet connection, and you will be good to go. Moreover, you can connect your customers with the suppliers from just about anywhere.
- Allows You to Sell a Variety of Products
-You can list any of the products that your wholesale supplier has in stock on your online store.
Disadvantages of Dropshipping
- Low Profit Margin
-The market is highly competitive, so you may have to sell at low margins to get more customers.
- Unreliable Suppliers
-Dropshipping solely depends on how the supplier handles orders. Unreliable suppliers may lack the products that your customers want.
- Shipping Errors
-As a retailer, all you can do is trust your supplier to deliver the right product to your customer. That is, however, not the case with some suppliers. If a customer gets the wrong product, you will take all the blame since the customer is not aware of the suppliers’ existence during the dropshipping process.
Final Verd ict
If you are planning on becoming an e-commerce entrepreneur, you can take part in the dropshipping process. Besides, dropshipping is easy to test, so you can always walk out if you notice that things are not working out for you.