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!
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.
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.
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