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Internet businesses have made many business owners focus on making money through the Internet. There are different types of these businesses, and we have discussed some of the best and most common internet businesses in the articles related to internet business. Another internet business is drop shipping, one of the most profitable and least risky ways to earn money from the Internet.

In the rest of this article, we will explain everything we need to know about drop shipping. By reading this article, you can see an income generation method with an excellent profit; on the other hand, it removes the costs of storage and product supply from your shoulders. If you want to know the concept of drop shipping and its importance in today’s world, stay with us until the end of this article.

The general definition of drop shipping

Dropshipping is a type of retail where goods are shipped directly from the supplier’s (or manufacturer’s) warehouse to the buyer. The customer buys the product from the retailer but does not have that product in its warehouse. So the retailer buys the product from the supplier and asks him (the supplier) to ship that product directly to the buyer.

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What happens to the retailer in the meantime? Where does his profit go? Suppose a customer buys a product from a retailer for $100. The retailer accepts the product from the wholesaler or supplier for $80 and pays $5 for shipping the product to the buyer. Ultimately, $85 is the retailer’s cost, and $15 is the profit.

As you can see, there are three parts or three units involved in the drop shipping process:

• Customer
• retail store (you)
• Supplier

Also, three tasks are performed in the Dropshipping process, which are:

• The customer enters your store’s (retailer) site and buys the desired product.
• Now that the customer has paid, you purchase the desired product from a supplier or wholesaler and ask the wholesaler to ship the product directly to the customer by mail.
• The supplier goes to the post office and sends the product to him by giving the customer’s address.

Now that we are familiar with the definition and process of drop shipping, it is time to take a step further and see what other characteristics this internet business model has which bring good profits.

Advantages of dropshipping

Many people want to get income from this method but may not be thoroughly familiar with its advantages and disadvantages. Therefore, for your information, we have summarized some of the advantages and disadvantages of drop shipping:

1. It needs little capital

One of the essential advantages of starting a dropshipping retail business is that it requires little capital. All you have to do is set up an online store.

2. Your hand is open to sell

One of the advantages of this type of retail business is that the choice of everything is with the drop shipper, and his hand is completely open. Some drop shippers prefer to sell only one product or a specific series of products.

Some people want to sell products related to each other (such as a cosmetics store). Some other people offer all kinds of products in their online stores. That’s why we said in the title of this section that your hand is open for sale, and you can sell anything you want in your online store.

3. The risk of drop shipping is shallow

One of the most critical advantages of the drop shipping business is its low risk. Take a closer look at the dropshipping process once again.

You run an online store, and customers buy one category of products and ignore another type. Does the drop shipper hurt? Dropshipper does not impair in any case. If the store does its job correctly, there is no reason to lose money. This low risk is one of the reasons why dropshipping is attractive to many people.

4. Dropshipping does not depend on time and place at all

The difference between dropshipping and other online stores is that some online stores are forced to create a small warehouse and put a series of products in it to be ready for sale. Therefore, this category of stores depends on the location. This is even though there is no dependence on dropshipping sales.

In other words, you buy the product from a wholesaler or supplier and ship it to the customer. Therefore, you don’t need any place and warehouse, and you don’t have any extraordinary dependence in terms of time; Because the customer can buy from you at any hour of the day or night.

5. Dropshipping does not require much thought or work

When there is no news of the warehouse, you will no longer be busy and have a particular conflict. All you have to do is check and update the prices daily. There is no need to check the inventory and shortages; therefore, time is saved, and you will not have much thought and work.

 

• What is retention marketing?

 

Disadvantages of drop shipping

This business, along with its desirable and exciting advantages, can also have disadvantages, some of which are mentioned below:

1. Many competitors are waiting for you

The benefits of drop shipping are clear to everyone, and many people are looking to start such a business. Therefore, there are many competitors in front of you, and you should be able to compete with them healthily and draw the audience toward you. Competing with other drop shippers is not easy, and you may be unable to beat them. So you must enter the field of competition that is very new and challenging and fight with all your heart. When the competition is high, you may have to minimize your profits.

2. Dropshipping does not have a very high-profit margin

Sometimes when you go to a supplier and buy the product from them, you find that the cost of purchasing and shipping the product to the customer is not much different than the price the customer paid. In some products, the profit margin is meager, but if you see that the number of sales of that product is high, you should keep selling it; Because through that product, you can attract customers and sell more products to them.

3. Your brand reputation may suddenly disappear

When you never see the goods or the product and the wholesaler or supplier sends the product to the customer himself, this shipment may be delayed, and the product reaches the customer very late. On the other hand, you have no control over the type of packaging. The product may be damaged on the way. It is also possible that this product does not have its usual quality or that a product with a different brand is sent to the customer, which can also bring problems.

The result of these mistakes is damage to your brand reputation. The customer may decide not to buy from you again and may even recommend others not to buy from you.

4. You do not have access to the supplier’s warehouse

One of the issues and problems of the drop shipping business is that the drop shipper does not have access to the supplier’s warehouse. For example, a customer (drop shipper) comes to you and asks you to give him 500 units of a particular product. He registers the request and pays the money, but when you visit different suppliers, you see that this number of products is unavailable in the market.

In such cases, you may have to apologize to the customer and send him the number you can provide. Also, sometimes you may have to give and ship the product to your customer at a break-even price (without loss) and sometimes even at a loss to prevent damage to your credit.

5. Branding through Dropshipping is a bit difficult

When you buy the product from the wholesaler and ask him to send it directly to the customer, it is no longer possible to brand or ship the product with your brand marks, and therefore branding in the dropshipping field is a bit difficult.

How can we overcome the disadvantages of dropshipping?

The first step in overcoming the obstacles and disadvantages of dropshipping is to increase your sales to the point where you are recognized as a wholesaler in your industry and even start a warehouse and act as a supplier.

Try to maneuver on a specific product and not go to various products. This strategy has been used for a long time and no longer works.
Try to find the best and most reliable suppliers so that you can be relieved of the way of transportation and the product’s health and know that the product will reach customer care in the best way. On the other hand, work with several suppliers simultaneously to always have peace of mind about the product stock.
If you can negotiate with the suppliers and ask them to send the product with your brand to the customer, it’s great because you can achieve branding through Dropshipping.

Different ways to build a dropshipping business

Suppose you negotiate with different suppliers, design, and launch a good online store. Now is the time to make a decision. You have to decide how you want to start and run your business. Below are the various methods available to create a dropshipping business:

1. Setting up a store with a specific product

You can choose and sell a particular product you are interested in or have many customers for, and you can earn a good profit margin from it. The critical thing in this regard is to do all the necessary research about this product first.

Setting up such a store can make you a reliable brand in that product field and attract an audience. On the other hand, you can have a lot to say about marketing and focus only on a specific product and achieve a perfect position in the field of that product both in social media and search engines.

The only downside to starting a store with a specific product is that your business goes out of business if that product doesn’t sell.

2. Setting up a store with several products

As the name suggests, the multi-product store has a variety of products. Most of the stores active in the field of drop shipping are of this type and have a variety of products for sale. Some of them have related products, and others sell unrelated products.

Setting up a general store is not a good idea and may not work. To have a successful dropshipping store with different products, you should focus on one corner of the market (niche marketing). It may be impossible to achieve success with a general and non-specialist view.

3. Setting up a store with a package or package of products

Another drop shipping method is to combine several different products (such as cosmetics and cologne) and then sell them as a package. This work requires creativity and complete familiarity with the mood of customers. By the way, if you offer this package reasonably, you can make a significant sale.

And finally

If you are planning to start an attractive and top-notch dropshipping business, the following tips will help you a lot:

• Focus on one corner of the market.
• Look for products with a reasonable profit.
• Try to think about reducing the shipping cost. The lower the side costs, the higher your yield.
• Try to choose a product to sell that is attractive to the customer.
• Think about branding through negotiation with the supplier and deliver the product to the customer with your brand.
• Do the necessary research on your competitors and their capabilities. Always make your price better than theirs and the quality of your product higher.
• Have a personal website and be active on social networks.
• Continuously analyze and optimize your business.