It used to be that you had to purchase or lease a physical building and buy a store full of products before you could open your own retail business. However, with the advent of the internet, this is no longer the case as many companies are making huge profits simply by selling their goods online.
Take Amazon, for instance. In 2017, this eCommerce giant earned revenues of $177.87 billion USD, up from just $135.99 billion USD the year before. Additionally, though some of the products Amazon sells do come from one of its many warehouses, a decent portion of their goods are actually dropshipped.
What Dropshipping Is?
If you’re unfamiliar, dropshipping involves having the products sold in an online store shipped from the manufacturer or wholesaler direct to the consumer, cutting out the middle person, or the company which actually made the sale. This is much different than the traditional shipping model used by many brick and mortar stores which involves having the manufacturer or wholesaler ship the products to the company selling the goods, then the company selling the goods sending them on to the purchaser once an order is placed.
This newer method of shipping offers a number of benefits. For starters, upfront costs are quite a bit lower because you don’t actually purchase the items you sell until they’ve been ordered and paid for by your customer. Plus, you don’t have to store any of the products you sell, eliminating storage fees (which one survey found averaged $6.53 per square foot of warehouse space) while also eliminating of the risk of buying items that wind up sitting on your shelves for years because they didn’t sell as well as you had hoped.
For instance suppose you want to participate in an affiliate program that promotes a fishing rod or best braided fishing line. All that you need to do is to write down the pros and cons of a fishing line and link all product items straight to the manufacturer product page or amazon sales page that displays list of all fishing tools and equipment. This way you can sale fishing rods or braided fishing line via drop shipping, without having any item physically on your warehouse!
Dropshipping is also advantageous to the consumer because, by taking you (the seller) out of the shipping equation, they can sometimes get their products faster since they are coming directly from the supplier. They can also sometimes get them cheaper too since you don’t have to charge as much to cover storage or shipping expenses. So, how do you set up a dropshipping business?
Setting Up Your Dropshipping Business
If you already have an existing online retail business, your first step would be to contact your suppliers and see if they offer dropshipping services. If they do, ask about product and shipping costs should you take the dropshipping route, and inquire as to what shipping methods they would use to get the items to your consumer. It’s also important to figure out how you’ll handle refunds and/or exchanges so both you and your supplier knows who is responsible for what.
Alternatively, if you don’t have an existing business because you’re just getting started, the first step to creating a profitable dropshipping business is to decide what it is you want to sell. Maybe you’re a sports enthusiast, so you decide that you want to sell athletic gear. Or perhaps you’re really into cooking and would love nothing more than to have an online store that offers other at-home chefs access to their favorite kitchen utensils and gadgets.
Once you decide this, your next steps are to set up your online store and market it to your target audience. The main goal is to get your business and brand out there so the people who would enjoy your products most know that you exist. Get them excited about your company and what you have to offer so they come back to you to make purchases again and again.
Dropshipping can save online businesses a ton of money, both upfront and in long-term storage fees. That makes choosing this shipping method one that can help you improve your bottom line, both now and in the future.
About Mohammad Mustafa Ahmedzai
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