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Why is dropshipping gaining popularity among young entrepreneurs?

dropshipping business

All about Dropshipping

Commencing a business in this day and age is not an easy task to accomplish. The investment required for inventory, labour, marketing, etc. to establish a business and make it even considerably profitable is enormous. It is unaffordable for an ordinary citizen in this country. However, if you want to commence a startup with minimal investment and a low risk of losses, Dropshipping is the solution for you. 

Contents:

  1. What is dropshipping?
  2. How does dropshipping work? 
  3. How advantageous is dropshipping? 
  4. Limitations of dropshipping. 
  5. Final words. 

What is Dropshipping? 

Dropshipping is a business model which allows you to sell your products to the customer directly from the buyer, restraining you from the hassle of purchasing or storing inventory. Although dropshipping goes a long way back in the 20th century, modern-day dropshipping involves online marketing, where retailers take orders from customers online and transfer that order to the supplier. Then the supplier directly ships that order to the customer’s doorstep, making it look like the order is billed from the retailer itself.  

The primary difference between retail marketing and dropshipping is that the business owner doesn’t get hold of the inventory in dropshipping. The third-party supplier carries out all the storing and maintenance work and the retailers profit by being a dealer between the third-party supplier and customer. 

How does dropshipping work?

 The retailer in dropshipping takes an order from the customer of a specific commodity and passes the order to a third-party supplier. The third-party supplier further delivers the products directly to the customer on behalf of the retailer. This way, the cost of purchasing or maintaining the product for the retailer and procuring an office or warehouse for storing the inventory is minimized. 

Dropshippers earn money by acting as a middleman between the supplier and the customer. Though their margins vary on brand value and experience, dropshippers usually earn about 5 to 10 percent of the total bill from each sale. Drop shipping is proven to be an extremely competitive business model. Still, there are fewer risks for the business owner to bear losses and it is considered a low-maintenance business idea compared to retail marketing. 

How advantageous is dropshipping? 

If we take a closer look into dropshipping, it is more advantageous and convenient when compared to retail marketing. Here are some of the advantages of dropshipping.

1. Low investment

The dropshipping business requires a minimal investment to establish your brand as the expenditure on purchasing inventory and renting a warehouse or an office to store it is minimized. You need to search for a trusted and genuine supplier and you’re good to go. 

2. Avoids storing and maintenance of the stock or inventory. 

The retailer in the dropshipping business doesn’t need to purchase or look after the inventory as they transfer the customer’s order to the third-party supplier, who in turn ships the order to the customer directly.

3. Quick shipping. 

As the third-party supplier would ship the products directly to the customer and you wouldn’t need to store the inventory yourself first, the packaging and delivery process would be prompt and convenient. It would improve customer satisfaction as they get their products faster than the retail marketer. 

4. Wide variety of products for the customer. 

Many retailers in the dropshipping business tie up with more than one supplier who would deliver products to the customers on their behalf. This way, there is a wide variety of products for the customers to choose from as the number of suppliers has just increased. 

5. Flexible

Dropshipping is no rocket science, meaning anyone can launch it from anywhere in the world. You need not require a fancy business degree or a unique set of skills to make your dropshipping business profitable. You can start making deals within no time, get in touch with a supplier and reach out to a healthy customer base.

Limitations of Dropshipping.

1. Limited earnings. 

As an entrepreneur, commencing a dropshipping business may not be as profitable at the start as retail marketing. You must keep fewer margins at the start of business and cater to limited and unreliable customers. 

2. Limited control over your business. 

As a dealer between the third-party supplier and the customer, you can not control product management and the packaging and shipping process to the customer. Moreover, you are answerable to the customer in case of any defect in the products or complaint of the customer. 

3. Limited marketing. 

As an entrepreneur, you wouldn’t be able to advertise your brand frequently as you don’t get hold of the products you sell to the customer. It’s being directly shipped by a third-party supplier who may or may not involve your brand name while delivering the products. 

Final Words. 

Dropshipping as a business model is a wise decision for an entrepreneur with limited investment and a less loss-bearing capacity. Since you’ve read this article here, you must have understood what dropshipping is and how it works. Though the profits earned are lesser than retail marketing, the risk and difficulty in establishing a successful business are also less. 

You’re on the right page if you’re an entrepreneur looking for a platform to commence your online business. Growcify is a Saas-based company providing online platforms such as a website or a mobile application for entrepreneurs without requiring them to perform even a single line of code.

Also, Growcify is just the right platform for you, if you are planning to start your dropshipping business. You can get your ecom app and ecom website within 24 hours at an affordable pricing. To learn more about our company on Growcify’s official website.

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