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A Comprehensive Guide on Dropshipping Business

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Alwin Panjwani
April 08, 2020
DropShipping Store

Dropshipping is a fulfillment technique, where a store does not stock the items it sells. Instead, it buys the item from a third-party vendor and delivers it directly to the buyer. As a result, the seller is no longer required to handle the product directly.

Dropshipping is an entirely new method of doing business.

The selling merchant does not own or maintain inventory. This is the most significant difference between dropshipping and traditional retail. The seller fills orders by purchasing products from a third party, usually a wholesaler or manufacturer, as needed. 

What is the Right Approach to Begin a Dropshipping Business?

The first step in starting a dropshipping business is choosing a target market and items to offer. The second step is to select a dropship supplier. The next step is to select an appropriate dropshipping ecommerce platform. While some individuals choose to sell on eBay or Amazon, others prefer to choose a dependable ecommerce platform and create a customized website to offer their items.

Dropshipping Ecommerce Platforms: How to Choose the Best One? 

Dropshipping business owners may now select from a variety of eCommerce platforms. Some examples of this include Magento, Shopify, WooCommerce, BigCommerce, Prestashop, OpenCart, etc.  Please consider comparing these platforms based on the following five key characteristics to make your decision easier:

  • Time & cost of setup 
  • Ecommerce Features
  • Ease of Use
  • Capable of being scaled
  • Support

Most Common eCommerce Platforms for Dropshipping:

Magento

Magento has been one of the most powerful ecommerce systems for dropshipping. The owner can select between two versions (Magento 1 and Magento 2 – both highly recommended) and two editions (Magento Open Source – free and Magento Commerce – premium). 

  • Time and cost of setup: As previously said, there are two Magento editions available, but the free (open source) one is sufficient for launching a dropshipping business. However, developing a Magento dropshipping website requires extensive technical knowledge. Therefore you may need to employ Magento experts. And, of course, there is a cost. In general, Magento website creation will cost between $3,000 and $5,000 and take 1-3 months. Get a full quotation for your Magento dropshipping web development project by contacting us. 
  • Ecommerce features: Magento indeed does have everything a dropshipping business requires, and some more. A Magento website has a quick page load time, simple and seamless checkout, attractive product and catalog pages, SEO and marketing capabilities, complete site management, and strong security by default. Find out more about Magento’s ecommerce features by clicking here 
  • Ease of use: Magento websites are incredibly user-friendly on the front end. On the other hand, for admins who are just starting and don’t have much technical understanding, it might be somewhat tricky on the backend. On the other hand, store owners can manage their sites efficiently and professionally after gaining experience with Magento websites and manuals.
  • Scalability: Among the top ecommerce platforms for dropshipping, Magento is the most scalable. It not only allows you to build a fantastic website from the initial concept with a limited amount of items, but it also helps you develop your business. You may add an infinite number of products and catalogs to your store, as well as manage an unlimited number of orders. 
  • Full Support: Because Magento is such a popular ecommerce platform, getting help from Magento authorities, the Magento community (forum), or even Youtubers who publish Magento lessons on their channels is straightforward. Apart from that, if you are unable to win support from such sources, consider employing a reputable Magento firm to supply you with support packages.

WooCommerce

WooCommerce is another popular ecommerce platform for dropshipping. If all you want from your business is simple functionality and convenience, WooCommerce might be the right fit. WooCommerce, in comparison to Magento, offers less complex ecommerce functionality; yet, it is more user-friendly for newcomers. However, from developers’ perspective, this platform is difficult to alter, and the majority of its features must be acquired through third-party plugins.  

  • Time and cost of setup: WooCommerce is a free WordPress framework plugin.

As a result, you’ll need to create a WordPress website before installing the WooCommerce plugin on your store. If you were a developer, creating a WooCommerce (WordPress) website would take less time than developing a Magento one.

As a result, even if you are a non-technical user, you may require the assistance of website programmers. Furthermore, the cost of a WooCommerce website is often between $1,500 and $3,500; however, if you want a lot of high-end features, you will have to pay much more for plugins and modifications. Know everything about the WooCommerce.

  • Ecommerce features: Your WooCommerce website will include primary and essential ecommerce features like the product, catalog, inventory management, pre-installed payment gateways, GPS location support, auto taxes, and shipment calculation multiple delivery methods, discount and coupon codes, sales report, and so on. There are many more WooCommerce plugins to choose from if you want to enhance your site.  
  • Ease of use: WooCommerce is quite simple, even for beginners, because of its intuitive, and clean user interface. Furthermore, the WooCommerce user guide (WooCommerce Docs) provides a comprehensive resource for store owners to manage their sites properly. 
  • Scalability: WooCommerce appears to be better suited to small dropshipping firms. Let’s go with Magento if you’re running a medium to a large ecommerce shop. The performance of your WooCommerce site will decrease as the number of products on it increases.
  • Support: If you have an issue, you may look for answers in the WooCommerce manual or contact WooCommerce support. 

Shopify 

Shopify is the third-best ecommerce platform for dropshipping on the list. Shopify has already augmented other ecommerce enterprises, including dropshipping firms, all around the world. Oberlo, a Shopify-only dropshipping plugin, will specifically assist you in locating items to sell from Oberlo Verified suppliers, Oberlo suppliers, or AliExpress suppliers. 

  • Setup time and cost: Unlike the two ecommerce systems mentioned above, you must pay a monthly charge to utilize Shopify for dropshipping. Furthermore, you may need to purchase the website’s theme. However, there are several Shopify themes from which to choose. A new Shopify store may be set up in a matter of hours or days. 
  • Ecommerce Capabilities: Shopify offers a wide range of features for dropship ecommerce shops, including theme customization, product administration, order and customer management, credit card payment, various taxes, languages and currencies, limitless hosting, and search engine optimization. 
  • Ease of Use: There are chances that you are not tech-savvy, Shopify might be an excellent fit. It does not take long for you to become accustomed to this platform. Simply sign up, choose a package, pick a favorite theme, and customize it to make the website. 
  • Scalability: Shopify is a flexible platform. By selecting an advanced plan, you may simply scale up or down your business. 
  • Full Support: Shopify provides various support options, including forums, a help center, and direct contact.

What are the Advantages of Dropshipping?

Dropshipping is an excellent business idea, to begin with for aspiring entrepreneurs because it is straightforward. Dropshipping allows you to swiftly test several company ideas with little risk. This allows you to learn a lot about how to choose and sell in-demand items. Here are a few more reasons why drop shipping has become so popular.

1. There is a lower requirement for capital. 

The best advantage of dropshipping is the ability to establish an ecommerce business without needing to invest thousands of dollars in the goods upfront. 

2. Simple to get started

When you don’t have to handle physical items, running an ecommerce business is considerably more manageable.

You don’t have to worry about: 

  • Managing or investing in a warehouse 
  • Packing and delivering your goods using dropshipping
  • Keeping track of inventory for financial purposes 
  • Handling returns and inbound shipping
  • Ordering items regularly and monitoring stock levels

3. Affordable costs

Your overhead expenditures are cheap since you don’t have to worry about purchasing inventory or maintaining a warehouse.

  • Flexible location

A dropshipping business can be conducted from almost any place that has access to the internet. You can run and manage your company as long as you can successfully connect with suppliers and consumers.

4. Sells a wide range of items

Because you do not have to pre-purchase the items you sell, you can offer a diverse selection of innovative products to your prospective customers.

What are the Disadvantages of Dropshipping?

Dropshipping is a highly appealing strategy for anybody getting started with an online business or for those seeking to expand their current product offers for all of the reasons we discussed. Dropshipping, like any other strategy, has its drawbacks.

1. Small profit margins

The main drawback of operating in a highly competitive dropshipping niche is the low margins. As it is simple to establish a business and the overall costs are so cheap, several competitors may open up shop and sell items at rock-bottom prices in an attempt to boost profits. They can afford to run on razor-thin margins since they invested so little in the company, to begin with.

2. Inventory challenges

When you carry all of your products, it’s relatively simple to keep track of what’s in and out of stock. However, inventory may frequently vary if you source from many warehouses that simultaneously fulfill orders for other merchants.

3. The complexity of Shipping Methods

Your online store’s items are obtained from various drop shippers if you work with numerous suppliers, as most drop shippers do. It complicates your shipping costs.

4. Issues with suppliers 

Even the most significant dropshipping providers make mistakes in order fulfillment, for which you must accept full responsibility and explain.

5. Customization and branding are limited  

Dropshipping, unlike custom-made or print-on-demand products, gives you very little control over the product.

The supplier usually creates and brands the drop shipped product.

FAQ on Dropshipping Success Story:

1. Will dropshipping continue to be successful in 2021?

Well, that is questionable. It’s not going to be profitable if you expect to make thousands of dollars per day with little effort. However, if you are willing to invest money to make money, it will undoubtedly pay off.

2. Can dropshipping make you wealthy?

It depends on your definition of “wealthy.” Some people consider themselves wealthy if they have enough money to cover their everyday expenses. Others see it as a monthly income of millions of dollars. 

3. What is the dropshipping success rate?

According to successful drop shippers, the success rate of the dropshipping business model is 10% in the first year.

The majority of the money spent by drop shippers goes toward paid advertising.

4. How long does it take to build a successful dropshipping business?

It is determined by the amount of money and time you are willing to invest. Dropshipping is a long-term game, but it should pay you within 6-12 months if you make it a priority.

So, here you have it everything you wish to learn about dropshipping.

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