Beginning with the Dropshipping Business

Shalmoli Sarkar — Tue, 09 Feb 2021 01:35:03 +0000

An Inventory - less business model for the Newbie Entrepreneurs

Is it possible to operate a full-fledged online business without having to think about warehouse rentals, inventory storage, and logistics? Yes, you read it right. Now, anybody can open an online business without needing to store the inventory or holding stocks. But what is more intriguing is the business model that eliminates the need of storing an inventory. It is called Dropshipping. Dropshipping is an inventory-less business model, where one does not need to keep stocks of the product. The customer selects and orders products from the online store. The online product catalogue showcases the product line from the suppliers. Once an order is generated, it is informed to the dropship supplier. After the supplier receives the order, it takes all the efforts of shipping the product to the customer.

The increasing love for online shopping in India and the tendency to try out unique products has brought newer avenues of private online labels in India. The pandemic has accelerated the growth of online shopping in India and saturation is a far horizon.

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Dropshipping is a streamlined form of retail business wherein the seller accepts customer orders but does not keep goods sold in stock.

How does the retailer earn in dropshipping business?

A retailer in the dropshipping model has the freedom to set the resale prices for the products and earns profit from the difference between retail price and wholesale price. Also, in some cases, a retailer earns when a wholesaler pays commission with every sale made.

Why is dropshipping popular?

Buying, stocking, and storing inventory increases the operating expenses of your business. Dropshipping business is risk-free from a financial standpoint as one has to bear only the cost of website hosting and other digital marketing initiatives. In dropshipping business, an entrepreneur does not begin with an enormously big budget or a high capital. Also, if stocks don’t sell, the entrepreneur or retailer does not have to buy the stocks or watch them devalue if they fail to sell. You only pay for that product to the supplier if the customer has purchased it. This mode of inventory-less business model is gradually gaining momentum in India among the budding and wannabe entrepreneurs.

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Dropshipping business is risk-free from a financial standpoint as one has to bear only the cost of website hosting and other digital marketing initiatives.

Benefits of Having an Inventory-less Business Model

Low overhead costs

Since dropshipping eliminates the need for a warehouse to stock inventory, you can operate your business at your comfort from home using a laptop.

Sell new products without fear

Retailers need not hesitate to add or experiment with selling new products to the store product catalogue. Since for unsold products, one does not need to pay for it. We can add new products to sell in our online store.

Offer a wide range of products

In dropshipping, the owner can offer a plethora of products without worrying about different colours, sizes, or variants, since it is the supplier who will deal with the rest. In business models other than dropshipping, we can sell and advertise only when we know all the stock has been shipped, but this model of business lets us decide when we want to showcase a product on our website and can start advertising immediately for instant selling.

Save on logistics cost

An entrepreneur can save a lot of money from logistics. In a conventional online business, a retailer would incur the cost of ocean freight, air freight, and other transportation charges while delivering the product, which would increase the operational expenses.

Reach new markets

Selling products overseas can be expensive and challenging. By partnering with strategically located suppliers we can expand our store reach to our customers and ship them quickly. This allows us to understand the market and validate if a product is worth importing.

Reasons why dropshipping can fail

No business is fail-proof. However, apart from the benefits, a dropshipping business brings to the table, there are a few challenges to know why a dropshipping business might fail:

Poorly designed website

You would never step into a brick- and- mortar store if you find the products are improperly arranged if asked for a product nobody is there to assist, unhygienic floors, etc. The rules are no different for your online store as well. In dropshipping, the winning strategy is to know how to present the products. As the barrier of doing online business is low, there are many online stores for a single product. If you are thinking that just by predatory pricing you can ace the dropshipping business, then the misconception here needs to be clarified. Dropshipping products are generic and are available at every online store, so you cannot sell them for less than your competitors as your profit margins will become thin. To win, business entrepreneurs should use a combination of great product copy and alluring images of high quality.

Selecting the wrong niche

Selecting what will sell on your platform makes or breaks your business. People generally decide to open a dropshipping business on industry verticals that are trending, which is good. But, operating business on too trending products has high competition and sets a barrier for any other newbie entrepreneur to set business firmly in that vertical.

Hence, the selection of niches should be decided based on what problems the product can solve, and develop the need around it by developing meaningful marketing content. For instance, think of reasons why people buy a roti maker, then move to create a niche store around the need and target audience, for example working mothers or bachelors with no time to make Rotis on Tawa and for a quick way to get circular rotis.

Poor customer support

The responsibility of a dropship entrepreneur does not end with the dispatch of customer orders. Keep in mind that the supplier is not in direct contact with your customer. One needs to have robust customer support to solve the queries until they are satisfied with the products. Generally, dropship business in the fashion vertical has a high rate of return. Sometimes, the sizes of the ordered apparel might not fit the customer, they would like to return the order and ask for a refund. Thus, it is a pain point of customers that needs to be addressed by offering smooth reverse logistics.

From Shopify, we can operate dropshipping business

From Shopify as well, one can run a dropshipping business. Shopify has multiple Apps that will connect you directly with the most reputed dropshippers. Interesting isn’t it? Half of your hassle is gone if you have created a shop on Shopify. So, without much ado begin with your dropshipping business now.

Below are the top five industry verticals where dropshipping in India is popular:

Fashion and Apparel
Beauty and Wellness
Food and Beverage
Consumer Electronics

The reason behind these industry verticals being so popular is India’s population that majorly consists of youngsters who are tech-savvy and find online shopping convenient, resulting in a healthy e-commerce way of life. Dropshipping business requires hard work and patience. An individual cannot earn money within a fortnight. Initially, the margins might be low, since dropshipping operates in a highly competitive market. Strategizing innovative ideas on digital marketing, our job as entrepreneurs or business owners is to maximize the reach of the online store and remain undeterred to make it big in the e-commerce world. Hence, stop thinking and kickstart your dropshipping business now.

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