Dropshipping has been continuing to be a hot topic and keyword in the e-commerce field for many years. People usually say that it is one of the most accessible business to open and capable of gaining significant profits in a short time, dropshipping has always been very attractive to new merchants. More and more people are trying to enter this business type, but there is so little successful stores.
So what is dropshipping? Does it have such miraculous benefits? And is it still worth to try dropshipping in 2022? This article will find all the answers to those questions and prepare the newest knowledge about dropshipping in 2022 for you.
OUTLINES
- What Is Dropshipping?
- How Dropshipping Works?
- Strengths And Weaknesses Of Dropshipping
- Getting Started
- Choosing A Business Idea
- Choosing The Right Dropshipper
- Build Your Online Store
- Manage Everything You Have Created
- Is It Worthwhile?
What Is Dropshipping?
Dropshipping is a business model that lets you operate without maintaining inventory, owning a warehouse for products, and shipping products to customers yourself. Skipping all the production and shipping processes, you can focus on preparing your store and marketing plan while reducing production costs. All you need to do left is to partner-up with a dropship supplier that manufactures and stores products. They take responsibility for the package and shipping, but you still need to receive the customers' orders and forward them to your suppliers.
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How Dropshipping Works?
- At first, you research and find a suitable product and market. After that, you need to open a Shopify store and sell and promote its products.
- Your store receives the order and forwards it to a third-party supplier. The customer's order information is routed to your supplier for the fulfillment process. You only pay the wholesale price of the item and retain your profits.
- The supplier will pack the product and deliver it to the customer. That product can be packaged and labeled with your branding depending on your choice. Customers won't be aware of the dropshipping process; your store still looks like a regular online store.
Strengths And Weaknesses Of Dropshipping
Dropshipping sounds great, but before making a decision, we should look at every aspect of dropshipping. Including both strengths and weaknesses to give you a more objective view of this business model.
Strengths of Dropshipping
The first strength of dropshipping is the ease of preparation to enter the market. All you need to do is have an online store with Shopify, find the right supplier, and sell products to customers.
Secondly, the barriers to enter the market are very low. When opening a brick-and-mortar store, you have to spend money on facilities, decor, and model management. This whole process can be time-consuming and need a high budget. But with dropshipping, you don't have to worry about those problems anymore. The amount of capital required to start a dropship is usually small; most of it is spent on building websites (store design, themes, apps, etc.).
The store can be operated from anywhere and anytime. Dropshipping does not require an office, warehouse, or staff. The only thing you need is a laptop with an Internet connection.
The risk of dropshipping is generally low. It is much lower than other types of business models. With low capital, there is almost no pressure on time or inventory. Besides, it also helps online store owners focus on calculating margins and making better business decisions.
Weaknesses of Dropshipping
With a low entry barrier, the competition is very high. The convenience of the dropshipping model has attracted many merchants. If these people sell similar products, substitutes, or niche products, you will face fierce competition. Nowadays, most dropshipping products come from China, and dropshipping merchants also take this route. To face less competition, you may need to switch tactics to sell products from other countries, which has some unique characteristics that match a specific set of customers' demands could be a wise choice.
Low profit per sale is also a weakness of this business model. Because it's dependant on your product, the supplier will charge different shipping costs for the product which can impact your margins. That means you have to sell more and more products to get the revenue enough to scale in the future, requiring full performance from the store owner to gain customers. But if you dig more into a niche market, you can still find some products that will bring higher profits per sale. For example, Fidget Spinners in 2016, the wholesale price was only $1 - $3 with a minimum order quantity of 100 pieces, and the retail price was $15 - $25 per unit. But some factors impacted this trend, and it didn't last for long since wholesalers and merchants recognized the potential of this product. That led to a high level of competition and an increase in wholesalers' prices. Besides, the Fidget Spinner didn't serve a long-term purpose; that's why the price was bearish after 3-5 months, coming back down to its real value. The lesson is, although dropshipping requires hard-working on sales to gain profit, sometimes, it can bring unexpected opportunities for merchants to earn huge profits. Don't be impatient for this; follow the criteria "Slowly but surely."
Although the nature of dropshipping means you don't have to keep an eye on the inventory, it comes with less control. Because you can not see the process of maintaining or shipping the product, something could happen, such as inventory damage or any issue with customers' experience. You have to take responsibility to make everything right. That's why the process of choosing a legitimate and professional supplier is essential.
Getting Started
As mentioned, to get set up for dropshipping with Shopify is pretty easy, but everything easy should be approached with caution.
Choosing A Business Idea
It should be the most critical step to start with every type of business. The first thing you should do is brainstorm your business idea and build everything around it, such as logo, brand identity, advertising content, and collection. Business ideas can come directly from hobbies and passions. Or for others, it may come from market trends, through what they research and learn. For many new to the dropshipping market, the concepts of business may not be solid. So you can gain more experience by studying, testing, and correcting your business ideas and repeating the whole process until you reach a high level of certainty. There are some tools to help you with this step.
Google Trend
Google Trend is a great tool for knowing if a market is trending up or down. It is not to assure that this market has potential in the future or not, but the numbers can help you to calculate and predict trends, thereby finding the right product for your business.
Google Keyword Planner
is the second tool that helps you learn more about a specific market. This tool can tell you beyond trends, what customers are learning about around them. It can give you insight into niche markets.
Niche markets are often defined and found by experienced merchants who understand the need and dropshipping process like a pro. But gaining knowledge about niche markets is also essential for long-term drop shippers.
Find out more about What is a niche market and How to find the right niche market.
Check the trading volume of goods
With Oberlo in the Shopify App Store, you can find the order volume of products. Thereby, finding out the popularity of that product on the market.
Announcement: On June 15, 2022, the Oberlo app was retired and handed over to DSers. Previously Oberlo users will not be able to access the app after this date, and the app will be removed from their Shopify store.
Choosing The Right Dropshipping Suppliers
Once you have a business idea and a detailed plan in place, the next thing you need to do is find the best dropshipping supplier for you. Finding the right suppliers is essential for dropshipping since they will handle the product's quality and shipping process, which can impact your store's reputation. Legitimate and quality suppliers often have the following characteristics:
Expert Staff and Industry Focus
A supplier needs to have a large number of experts in many markets. The help from them makes it possible for beginners to explore and ask suppliers questions about some of the markets they want to study.
Support Representatives
A quality supplier usually has a sales support representative ready to answer any questions merchants have. It is essential because problems such as return orders or trouble in the processes are real. In order not to interrupt the sales process, these problems need to be addressed immediately. Therefore, a sales support representative is required.
Invested in Technology
Investing in technology is extremely important because receiving orders to deliver to customers needs to happen as quickly as possible. Besides, investing in technology such as real-time inventory, a comprehensive online catalog, customizable data feeds, and online searchable order history to increase merchants' enjoyment of working is another way to increase the supplier's legitimation.
Organized and Efficient
Reputable suppliers often go hand in hand with a logical order and delivery process that ensures the order's speed and quality. You can try delivering test orders to check the smoothness of the process. Please pay attention to how they handle the ordering process. Tracking the delivery process should help you to test the shipping time too.
Build Your Online Store
To turn your plan into action, you will need an e-Commerce platform. With the help of services like Shopify, merchants can now open an online store within a few minutes. Also, the Shopify themes you use have to match with the store's concept. All of these are to improve every customer's journey and their experience while surfing your store. This part is the last of three essential factors to start dropshipping. Here are a few pointers on building a website:
Sign up for Shopify
Shopify is the most comprehensive e-Commerce platform on the market. With new features, tools, resources, and apps being added regularly, you'll find it easy to use and run a business on the platform. Furthermore, if you get stuck, you can reach out to a Shopify guru who will personally guide you through any steps for free.
You can try to start and open your Shopify store for 14-day free.
Shopify Theme
Shopify themes are a way for you to decorate your online store and are sold a lot on the Shopify Theme Store. While paid themes have more function and more attractive design, a free theme can still get the job done. Once you start making profits, you can invest in a paid theme or hire a dev to upgrade your dropshipping store's design.
Install Oberlo
Most people agree that the Shopify/Oberlo combination is the simplest way to start a dropshipping business. Oberlo allows you to find products online to sell from Aliexpress and import the product information to your Shopify store. If you have any questions, you can contact Oberlo for help, social media sites, or Shopify support.
Manage Everything You Have Created
When you finished your Shopify site, the supplier and Shopify store are integrated from a business perspective. Your next job is to market your product and start earning your first profits. Because many of you are a beginner, you should use simple tools at low cost and gradually familiarize yourself with the model, going up with certainty:
Setting Up Email Marketing
Shopify integrates this functionality through apps on the Shopify App Store. You may consider creating a list of sales emails using a combo of reasonable offers and a contact form (a pop-up window should be nice). Once you have a lead email list, you can start preparing content to advertise your product through your email. The content could be regular commercials, product reviews, or promotions.
Setting Up a Facebook Shop
Facebook is a social network with the most users and also an indispensable sales channel for any business. Create a Facebook page for your store, integrate product listings from Shopify. The last thing is to create posts to increase interaction and brand awareness within your community.
Setting Up Instagram and Pinterest for Shoppable Posts
It's the same social networks as Facebook but Instagram and Pinterest will help your customers buy products directly from your posts. This increases the percentage of orders received. Shopify App Store has apps that support this ability.
Learning SEO
Search Engine Optimization (SEO) will help your website rank higher on the search engines, and this is one of the essential tools to advertise your product. It would be best to learn SEO tactics because more than half of online sales usually start with a Google search keyword.
Is Dropshipping Still Worth It In 2021?
Finally, dropshipping is a business model that can help you make money while skipping the production and shipping process. But with its easy nature, the appeal to all those who want to make money is huge. High competition requires you to have the right tactics, and a quick thinking mind to change when unexpected situations may occur. In addition, though simple, it is necessary to acquire more knowledge about marketing tactics, sales tactics and customer needs to survive in this market.
The strengths and weaknesses of this model are outlined above. Refer to it and maximize on the strengths as well as transforming the weaknesses into opportunities. There are many good examples of Successful stores with dropshipping for you to look at and learn from. Dropshipping is a good model in today's e-commerce era and is well worth a try.
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