What is dropshipping?

Dropshipping is a retail fulfillment method where stores do not hold any stock on hand, instead it buys the product from a third party company and has it shipped directly to the customer. It’s almost like the seller is a middle-man, advertising a product and selling it to customers, then taking a small cut per product sold.

Because the seller doesn’t need to hold any stock on hand, dropshipping is very cheap to get into – you don’t require massive upfront costs, and only buy a product from the supplier once someone purchases it from you. It also means that you as a seller don’t have the massive burden of fulfilling the product – you don’t need logistical systems in place to ship the product because all of that is done by the suppliers. You never touch the product, as it ships directly from supplier to customer!

How do I make money?

As a seller, you won’t be producing the product, or holding it in stock, therefore it is sometimes confusing to how you actually provide value within the dropshipping method in order to make money. Within dropshipping, you are buying from a wholesaler/manufacturer, the same way Walmart and Tesco supermarkets buy from suppliers and then sell for a higher markup since they actually present the products to the customers. Compared to supermarkets, you don’t show the products in a physical store, but you advertise the products on your e-commerce website using digital marketing methods such as Facebook Ads and Google Ad words.

In other words, you find customers that will benefit from and buy that product, who without you, would have never knew or been able to get the product in the first place! That is where you provide value; you find customers which your manufacturer could not/cannot, for which you charge a markup price by selling the product for more than you originally bought it for, factoring in the costs of the advertisements and all of the running costs of your business.

What are the main dropshipping platforms?

The most popular platform to create a dropshipping store on is Shopify. With shopify, you pay a monthly subscription and are able to customize your store with custom plugins that help you convert/sell better with reviews, count-down timers among other things. Why Shopify? Shopify provides a quick and easy way to create a store without any knowledge of programming or UX (User Experience) design, being able to use templates and themes that are already working for thousands of stores.

Benefits of dropshipping

  1. Its easy to get started – as mentioned, you don’t need to have any business background to get started as majority of the work is done by the manufacturer in terms of product delivery and design. Your main goal is to find the customers, and make the page appealing to buyers in order to get sales.
  2. Less capital is required – Running a store is very cheap, and as explained previously, you don’t need to buy or hold stock until you actually get a buyer for it. The most expensive part of dropshipping is product research and digital marketing, which we will delve into later on.
  3. Sell from anywhere – Since you are selling on the internet, your e-commerce store can reach anyone anywhere! Unlike traditional brick-and-mortar stores, you are not limiting yourself to a location, therefore you can reach more people around the world!

What are the challenges, and how does Ecom Pilot help?

  1. Very competitive – As e-commerce grows as an industry, so do the amount of sellers and dropshippers around the world. This means that in order to stand out, you have to have a great store, often know what you’re doing, and most importantly have a killer product. Finding a great product used to be difficult, however thanks to our platform, Ecom Pilot tools aim to help you reliably find winning products and help you along your drosphipping journey. The tool was built by sellers, for sellers, therefore we understand what you’re looking for, and aim to provide a powerful tool, at an affordable cost of $26 a month. Read more about the tools here – www.ecompilot.net.
  2. Limited branding – When ordering from a manufacturer, unless you put in a bulk order, it is unlikely for a supplier to customize your product for low order numbers. This means that the product usually won’t have your branding or customizations, whereas bigger retailers can.
  3. Shipping internationally – With most suppliers being based in China, it is often that shipping orders is difficult to places all over the world, with packages sometimes taking longer than 4 weeks to arrive, which is not ideal for any customer. It is important to make sure that the supplier/product you choose to sell can use e-packet delivery methods which will greatly speed up the time it takes to deliver. Our tool www.ecompilot.net lets you filter for products with e-packet shipping to make sure you choose a reliable supplier.
  4. Advertisement costs – Advertisement costs are the most expensive part of your dropshipping business. This is because you need to spend money on ads in order to show and sell your product. The uncertainty of whether your product will succeed means that you need to usually spend a couple hundred dollars in order to test the product in front of an audience to see if it is in demand or going to get sales. Our tool mitigates this issue by showing and tracking thousands of products, their orders and more so that you focus on expanding your store and selling.

Summary

Dropshipping is enabling entrepreneurs all around the world sell products online. The low startup costs and no need for stock/business expertise makes it extremely easy to get started in, however in order to succeed, having a good product that people want, has a reliable supplier and a proven track record of demand/orders will make your dropshipping journey much easier and less expensive. If you need a place to find winning products, then Ecom Pilot is the place for you.

PS. Thanks for reading our first blog! We aim to release a blog once every week, relating to topics on dropshipping, digital marketing, entrepreneurship and more. Sign up for our newsletter in order to get notified of new blogs and here!


By Jakub Lenski

Date published: 8th December 2020