Dropshipping – what is it and where to start?

Dropshipping is the direct delivery of goods from supplier to buyer, in which the seller (intermediary) does not store the goods in his warehouse, or does without him at all. The goods are shipped directly from the warehouse of the manufacturer, supplier, wholesaler or distributor.

How dropshipping works

The scheme of work on the dropshipping system is as follows: the intermediary finds customers, sends their order to its partner – supplier of goods, the supplier, in turn, sends the order directly to the end consumer. The intermediary’s earnings are the difference between the wholesale price set by the supplier and the final price at which the goods were sold (the seller’s mark-up).

How to start dropping

Now you understand the system of dropshipping, you know what it is, we can safely move on to the question of starting sales.

Find suppliers who are ready to work in dropshipping. Let’s warn you right away that this isn’t easy, because it’s a very complex and risky sales scheme. Let’s talk about it in more detail. So, look for suppliers and study their terms. Dropshipping suppliers sell at a wholesale price, so the markups are already up to you.

The next step is to create an online store. If you don’t have the funds and the ability to open an online store for dropshipping yet, then create groups on social networks. Then you should start placing products from your supplier’s catalog (or several), but remember that the prices should already be specified with your markup.

Run ads on all available channels: contextual advertising, social media advertising, affiliate programs, search engine promotion – all that your budget allows. More information about the promotion of the online store can be found here: Strategy for promoting the online store: a guide of 20 steps. If you approach this stage competently, you will soon have the first customers with the first orders.

Next, you need to order the selected product from your partner (supplier) and inform him the address of the end user. You pay for the goods at the wholesale price set by the supplier, and take the markup.

The supplier, without your mediation, sends the order to the client.

If everything went smoothly, the customer received his goods on time and was satisfied with them, consider that your first transaction was successful.

Difficulties of dropshipping

Where to start dropshipping, we’ve made it clear But sales are not always as perfect as we described above. Sometimes there are problems and difficulties in this form of cooperation.

As an intermediary, you may not have enough information about the status of your suppliers’ warehouses. Therefore, the information about the products you provide to your customers may not be completely accurate. To avoid misunderstandings, you should obtain access to inventory from suppliers and personally monitor the flow of goods across all suppliers.

You cannot fully control the course of a transaction, as its success does not depend entirely on you, if there is a third party (suppliers). At the same time, you will receive all the customer’s complaints about the delivery of goods, their quality, equipment, etc., as the customer has placed an order with you. In order to influence this process, you can track the delivery of goods to Ukraine (or another country) on the site of the carrier by the number of declarations, which you will receive from the supplier.

It is possible that the customer will place an order for several goods, which are at different suppliers. Then he will receive his order in several different deliveries. And this promises him extra expenses, if the delivery is paid not by the sender, but by the recipient.

Financial risks are also possible in case of return of goods. The solution of such disputable situations depends on your agreements with suppliers.

These are the reasons why not all suppliers are willing to work under this scheme.

But there are many positive aspects of such business, which make dropshipping popular and popular way of sales. In the list of CIS countries, where dropshipping is very common, there are Ukraine and Russia. If we put these risks aside, the supplier, agreeing to such cooperation, expands the geography of its sales. An intermediary does not risk staying in stock with unsold goods. And the buyer, in turn, can buy the goods through the seller, whom he trusts.

More and more entrepreneurs are thinking about starting a business with minimal investment and a system such as dropshipping allows them to succeed in business without extra costs.

In our age, more and more products are being sold and bought online. The reasons for the development of such online stores are many: accessibility to the target audience, high demand, data transfer and processing fast, accurate and at a low price. Finding customers is a lot easier and faster. Customers do not overpay and do not waste time on shopping malls.

More and more entrepreneurs are thinking about starting a business with minimal investment and a system such as dropshipping allows them to succeed in business without extra costs.

Dropshipping in simple words

Dropshipping is an online business, based on an online store that sells from a supplier rather than from its warehouse. Roughly speaking, a store is a middleman who “takes” the buyer and the seller in his space online store.

This sales system is not so long ago widespread, but increasingly popular with suppliers and entrepreneurs. This system is driven by three components: supplier, entrepreneur and buyer.

Online shop acts as an intermediary between the buyer and the supplier. Its task is to implement the product, marketing, receiving orders. The benefit is that there is no need to invest in the office, warehouse, buy the product itself and pay for courier delivery. The seller’s profit is the difference between the purchase price of the supplier and the price of sale of goods.

The supplier receives orders from an online store and sends the goods directly to the buyer. By establishing cooperation with drop-shipping intermediaries, the supplier increases turnover, sales, and sales boundaries, as virtual outlets are opened in other countries as well.