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Dropshipping: 6 Essential Facts You Need to Know

Are you thinking about starting a dropshipping business but are skeptical about its success rate? Check this post to find out if dropshipping is a suitable business for you.

What is dropshipping?

Dropshipping is an e-commerce method that lets you sell products without managing an actual store, doing inventory, and shipping the product to the customer. In dropshipping, you will need to sign up on an e-commerce site that allows dropshipping. And then, you need to create product listings. From there, when customers place orders, you forward the request to a third-party supplier. Lastly, the supplier will do the packaging and shipping of the product, directly to your customer under your business name.

Unlike the usual e-commerce, dropshipping skips the flow of stocking and shipping the product to the customer. Here is a quick flow of how dropshipping works:

  • Sign up in an e-marketplace that allows dropshipping.
  • Choose products to sell (1-3 different products are enough for beginners).
  • Choose reliable suppliers that encourage dropshipping.
  • Create product listings.
  • Set prices according to the margins.
  • Accept orders from the customers.
  • Forward order request to your supplier.
  • Let your supplier do the packaging and product shipment on your behalf.

How do you get profit from dropshipping?

In dropshipping, you pay the supplier’s wholesale price, while the customer pays the retail price that you set; the rest is your profit.

Who pays for the shipping fee?

Similar to traditional e-commerce, the shipping fee is paid by the customer. But as a beginner, wouldn’t you want to attract more consumers? You can offer a free shipping fee by slightly increasing the price of the products. Nobody wants additional fees, but everyone loves free stuff.

How do you pay the supplier?

Once the customer has placed an order on your e-store, you need to purchase the product from your supplier. Also, it is not advisable to put an order request to your supplier on hold until your customer’s payment has reached your bank account. Instead, forward the customer’s product order to the supplier after receiving one.

Now, to have the product packaged and shipped directly to the customer, you need to pay the supplier according to their payment method. Some suppliers will provide bigger deals than the others, allowing you to gain more profit. So, look for suppliers you can trust.

How much money do you need to start up a dropshipping business?

In dropshipping, you will need zero to minimal capital. To have a better future in dropshipping, you will need to sign up for a dropshipping store at a reliable e-commerce site. Thus, you are required to pay a sign-up fee, which is too low compared to the capital used to start an actual store.

The only time you need to spend in dropshipping is placing a request order to the supplier, after receiving a product order from the customer. In other words, you do not need to spend too much on stocking up your products since handling inventories does not happen in dropshipping.

Is dropshipping legal?

If you are currently asking whether is dropshipping legal or not, it is safe to say that dropshipping is legal.

In contrast to what you read online, several supporting facts say dropshipping is legal. Plus, like other e-commerce, dropshippers need to follow dropshipping policies that protect both the consumers’ and sellers’ rights.

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