Is drop shipping a good investment

In addition to all of the benefits above you don’t have to worry about building or leasing commercial space, hiring employees and having a large payroll, or having to be in a physical location stuck during normal business hours. It is one of the most controversial questions that dropshippers have to respond to on most survey-based and question answer websites. They only tend to sell a product to a customer only once.

Chapter #2: Pros and cons of dropshipping

Drop Shipping! Step right up! Find your ultimate freedom as a business owner — sit somewhere on the beach and coordinate your whole business remotely with little effort! However, setting the preaching aside, there’s something that you should know before you throw yourself into drop shipping and build your whole business around it. If you are looking for Dropshipping Suppliersbetter jump to our other article Best Dropshipping Companies.

Dropshipping is not a new phenomenon

To someone who is new to the online business world and looking to break into the ecommerce scene, the dropshipping process can seem a little intimidating as it can be difficult to find a reliable source that tells you everything you need to know. So here it is: The definitive guide to dropshipping. Dropshipping is a type of business model which enables a company to operate without maintaining inventory, owning a warehouse to store their products, or even having to ship their products to their customers themselves. This kind of business model is extremely attractive as it eliminates the need for the store owner to have a physical business location such as an office space or warehouse—instead, all they need is a laptop and an internet connection. As a business model, dropshipping has several different aspects that prove to be beneficial, such as:. Just like everything in life, there are some disadvantages that come along with the many advantages of dropshipping. Here are a few cons to the dropship business model:.

Is Dropshipping Worth it in 2019?

Drop Shipping! Step right up! Find your ultimate freedom as a business owner — sit somewhere on the beach and coordinate your whole business remotely with little effort! However, setting the preaching aside, there’s something that you should know before you throw yourself into drop shipping and build your whole business around it.

If you are looking for Dropshipping Suppliersbetter jump to our other article Best Dropshipping Companies. Drop shipping sounds simple on the surface. It entails you setting up your own ecommerce shop and reaching out to suppliers who take your orders and ship those orders to your customers. It’s slightly different than ecommerce fulfillment.

In short, it’s designed so that you don’t have to house any inventory, and you don’t have to worry about any shipping costs or logistics. As you can see, the most significant difference between drop shipping and the classic way of operating is that you don’t hold any product inventory.

Much of this pie goes to drop shippers. Go through the list of pros and cons above, and think how you feel about each one. Is any of them a show-stopper or game-changer for you? The goal is to learn something about yourself and your approach towards the business model of drop shipping.

Having your mind set and a good is drop shipping a good investment on how significant you think these pros and cons are will help you decide whether drop shipping is something for you — which is the topic of the next chapter. Did you know that according to E-DSS.

To help you with that, let’s start with the most common misconception in the drop shipping land … and also probably the main cause of failure of many drop shipping businesses. Let’s set one thing straight. Far from that! Just to give you an example — and it will be a recurring example in this guide since it’s easy to grasp — if you want to sell designer t-shirts, but you don’t know how to sew, you have two options:.

In other words, the business is still yours — you’re the brains behind. Drop shipping seems like an awesome concept when you look at it, but in order to truly take advantage of it, you must find your own place in the market, and pick a niche that you can really serve.

What do you think might be your main struggles when it comes to the challenges of drop shipping? Write down your top 5 worries. Having them on paper will help you decide if they are really serious enough to stop you from trying out the drop shipping model in your business.

Another misconception about drop shipping is that you can start in almost any niche imaginable, and that you’ll be able to make it profitable no matter your previous experience. Keep in mind that no matter what market you join, you will come across multiple competitors — competitors that are much more experienced than you, who may have been in this market for years now, and who probably have a much better understanding of the customers and their needs.

The fact that your initial costs are low — due to the drop shipping model — doesn’t mean that you are going to be able to compete with them effectively. That’s why you really should pick a niche that you know and understand. This will give you some additional advantages over the competitors who might not have invested the same amount of research or personal experiences.

And don’t get me wrong, you don’t necessarily need the seller’s experience in the niche, but the following would help a lot:. Having some sort of understanding of the niche will not only help you to compete and cater to your customers better, but it’s also especially important when dealing with your suppliers who send products directly to your customers.

This is the case in most industries, and even more so in drop shipping: You finding quality suppliers is crucial to your success. How about we backtrack a bit. If you work in the traditional model — where you hold inventory — and you mess something up, then at least you have the means to fix things and make everything up to your customers.

After all, you control the entire process. Since so much depends on your suppliers, you cannot just fix what they did wrong. The only thing you can do is find new suppliers. However, this isn’t always doable on the spot, and your brand reputation might suffer in the meantime.

Thinking local is my first recommendation, purely because it’s the most manageable solution, and in most cases it makes keeping in touch with the supplier easier.

Specialized drop shopping companies found on the web are great to find suppliers with more competitive prices or to find niche products that may not exist in your local area — and we’ll talk more about them in just a minute — but they might not necessarily be the top choice for your specific market.

Sometimes, or rather oftentimes, you might find local vendors willing to drop-ship to your customers if you just have a conversation with them and offer them a good deal. For example, there’s this home-based bakery in my local area that, over the years, has transitioned to the role of a drop shipping supplier. Basically, they started by baking awesome cakes and wholesaling them to local cafes, where they were sold by piece standard model.

But then, those cafes noticed that the customers loved those cakes so much that they started asking how they can get them. So the cafes started collecting orders from the customers, and sending them over to the bakery. In that model, the cafes get the order, get the payment from the customer, then buy the cake from the bakery, and then the bakery delivers that cake to the customer’s doorstep.

Classic drop shipping. This is just one example, and it might not be applicable to your specific situation, but I hope you can see that the possibilities are really endless with local businesses. The easiest way to begin would be to think about how you can arrange a deal with a local supplier, which would eventually let them sell their products to a larger audience through your online store.

Another place to look at, once you exhaust all the local possibilities, are various online suppliers. The good news here is that there are really more of those than you can shake a stick at.

Salehoo has great training resources, a supporting forum and market research tools that help you estimating profit margins and look for trends. Oberloon the other hand, is Shopify’s integrated drop shipping platform. But don’t treat that as gospel, be proactive and do your own research. It’s a good start. No matter where you go looking for suppliers, you should also pay attention to some red flags that might indicate that a supplier isn’t all that great:.

Okay, with suppliers done, it’s time to think about the products you can offer. You probably have some ideas already … this is where the next stage comes into play. Hold onto your seat:. I’m sorry to be the bearer of bad news, but just thinking that you can be a simple middle man won’t work.

Isn’t this whole drop shipping thing supposed to be about getting someone else to fulfill the order after I collect the payment?! There’s no room to add any more value in that, right?! Among many things that teenagers want — for all I know — is to either be different from their peers, or at least be perceived as different in the positive way.

Translate this into drop shipping … you should position the specific products that you are selling to be in some way different from everyone else’s. The ultimate goal is to be able to stand out and be unique, even if, at some point, a competitor starts using the same drop shipper.

Let’s take Teespring as an example. Teespring is a place where people go if they want to buy cool t-shirts. But the interesting thing is that the marketplace is community-driven. Everyone can come, design their own t-shirts, and put them on sale. If you want to sell with them, what you bring to the stage are your unique designs.

Those unique designs are your added value. It’s what makes you unique, and it’s what makes one seller different from another, even if they both use Teespring. Many drop shipping suppliers allow those kinds of things. Even sticking with the basic t-shirts example. Drop shipping white t-shirts doesn’t give you much room for margins, but t-shirts with original designs can go for 3xx the asking price of a blank tee.

Now, any type of insurance is technically a virtual product, as in the customer doesn’t get a product they can hold. They just get a promise. Nevertheless, it’s still a product in its own right.

Another way is to take that generic product and try to look for an angle you can use while marketing it. For instance, you could investigate all the insurance plans, analyze them deeply, and come up with a list of the ones that are the best for tuned-up performance cars and car modification enthusiasts. The plans offered through your business would cater to that specific customer only — the customer who likes to drive fast and modify their car.

By providing them with tailor-made plans, you’re taking an angle in a niche. At the end of the day, you’re selling something similar to your competition, but you’ve invested your time to find out what really suits your target customer. Many suppliers sell products that don’t have a well-defined purpose or target market. Other products have unclear user manuals, or even unclear sales materials, so that the customers don’t know what they should do with them, or even why they should buy.

This applies to those of you already running an ecommerce store and looking for ways to expand your inventory. A good start would be to research the kinds of products that your customers buy the most often, and try to look for drop shippers that can provide supplemental products products that go along with what you. Take the 1 entry and brainstorm over specific ideas on how to bring it to life.

Where will you start? How will you add value specifically? What will you customize? At the end of the day, the product is obviously the most important element and the differentiating factor. Without good products, you won’t get very far. But the message I want to leave you with is not to expect that you will hit a jackpot at first try. Any business — including drop shipping — involves a lot of trial and error.

So once you have an idea for a specific product, just go and execute. Put it on offer. See how the market responds.

Chapter #1: What is drop shipping (dropshipping definition)? (overview)

Similarly, India bans most products made of cow skin. By Brian Edmondson. Drop shippers who have a bad reputation or have bad business practices will quickly be exposed, often in detail, so you can avoid. Some countries have a policy that certain products cannot be imported. Sell smarter with a connected e-commerce platform Try xSellco free Sign up for a day trial today. While retailers large and small utilize dropshipping in order to offer investmsnt broader selection of goods on their online stores, without the need to invest in inventory and warehouses, e-commerce entrepreneurs have adopted it as a means to capitalize on consumer trends and make a quick buck. Advantages Gkod almost any products, in any niche Use a proven business model, which is even used by large retailers such as Amazon No need to is drop shipping a good investment any inventory No need to pack or ship out products No requirement for up-front capital. If you sell an item to a customer but the drop shipper has gone out of stock, this can cause a huge dilemma for you and create angry customers. Focus on high ticket items to get more profits from your products. Try xSellco free. Final Words. Essentially, you do all of the marketing, advertising, and promotion to get the customers and make the sale.