Launching an e-commerce business requires a lot of work, from managing inventory to handling upfront costs and ensuring everything runs smoothly. Luckily, there is a solution that many entrepreneurs are now adopting: dropshipping. This dropshipping business model enables anyone to build their e-commerce business with little to no investment, which is ideal for anyone looking to work from home or grow a business without spending a lot upfront.

What is Dropshipping?

Dropshipping is a business model that enables you to sell products directly to customers without having to deal with purchasing or storing the actual inventory. Instead, when a customer orders a product, the shipment is sent directly from the supplier to the customer’s address. You do not get to see or touch the products. Your main responsibilities include marketing and managing the customer experience.

An excellent example of dropshipping is Mr. Mahesh’s digital dukaan. He operates a simple online store showing off products but there is no need for him to stock any of them. It is very easy to set up and run. All anyone needs is a laptop and internet connection, and the business can operate from anywhere.

Benefits of Dropshipping

For new business owners, dropshipping has a couple of unique opportunities that can be very attractive:

No Need for Inventory: One of the greatest benefits is not having the upfront investment which can include stock on hand. Because you don’t need to manage stock on hand, your complexity increases only slightly. You can purely concentrate on marketing and customer relations while your suppliers do the fulfillment.

Low Overhead Costs: Much money is saved when no inventory needs to be handled. Often a dropshipper will open a business with very little financial risk which allows for experimentation with various products and niches.

Work from Anywhere: A dropshipping business can be managed from virtually anywhere with the aid of a laptop and the internet. People working from the office, home, and everyone in between will benefit from this flexible opportunity.

Scalability: As with any business, there comes a time when expansions grow. With dropshipping, new products can be added as well as new markets without needing to manage stock. This shallow escalation barrier permits easier leaps into new opportunities.

The Struggles of Dropshipping

Even with its perks, dropshipping poses its own set of challenges. Here are some hurdles every dropshipper will encounter and need to solve.

Limited Profits: When it comes to dropshipping, low profit margins are the main blocker. Competing sellers lower the price point, thus eliminating maximizing profits. You can overcome this by selling higher value items and providing excellent customer care alongside superb marketing.

Stock Shortages: As there is no physical control of the stock, a merchant may deal with stock shortages causing delay or cancellation. To cope with this, it is vital to communicate efficiently with suppliers and have other options readily available for items that are frequently out of stock.

Slow Package Delivery: Since dropshipping suppliers are located internationally, the chances of slow shipping increase significantly. Providing customers with realistic expectations and delivering parcels with tracking information can help alleviate some of the pain. Also, working with suppliers who offer quicker shipping is extremely beneficial.

Incorrect Shipment: Some customers may receive incorrect products when they place an order. One way to greatly minimize cases of wrongly delivered products is to have an SKU code system for each item so there is proper order tracking in place to minimize confusion.

Minimal Flexibility: There are restrictions in the offerings because you only deal with external vendors. However, sourcing from more than one vendor allows you to expand and offer your client more options.

How to Start

If you’re set on beginning the process of dropshipping, here is what you can do:

• Research the Dropshipping Sites: Dropshipping is simple when you use platforms such as Meesho, SHOP101, GlowRoad and many others. These platforms will help connect you with suppliers, provide product listings for your store, and ease setting up your store.
• Inform people around you: One of the easiest ways to branch out and promote your business is by letting your friends and family know. Create groups on WhatsApp or pages on social media where you can share your products and start selling through social selling. In this stage, it’s all about spreading the world so get creative and alert those around you.
• Business Promotion: If you wish to use this approach, you need to adjust your marketing strategies, as your inventory is much smaller when compared to traditional businesses. Spend some time designing ads, and don’t forget to contact your potential buyers directly. Use social media platforms to inform customers actively about the products.

Insights

Go in with $0: The dropshipping business model allows for entry into e-commerce with zero risk financially. There is no need for bulk purchasing or even a storage space, and you can start with a unit to test the waters.

Rise In Size Effortlessly: With a growing business, dropshipping allows expansion without further investment in inventory or physical locations.

Face Issues Head On: Although dropshipping is simple and low-cost, one must manage the stock, delivery, and support services. Using SKU codes, verifying the supplier’s reputation, and setting proper expectations can alleviate most of these problems.

All in all, dropshipping is one of the best routes for starting an online business with minimal initial investment. Though not challenge-free, dropshipping has the potential to be the easiest and most effective, scalable solution to profitable business with the right attitude.