What is the significance of dropshipping? How does it work? A world with only advantages?

Do you want to learn more about dropshipping or do you want to get started but want more information?

Are you wondering if dropshipping is a world with only advantages.

You are just in the right place ! Appvizer explains in this article everything about the meaning of dropshipping, how it works and its advantages and disadvantages.

Read to the bottom you will have all the answers 😜

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What is the meaning of dropshipping and what is it used for?

Dropshipping is a new sales model that has been developing in recent years. This sales model unlike the traditional one does not involve the need for a warehouse, so it is much easier to start. The dropshipper does not have to stock or handle the goods directly. The sale takes place on dropshipping sites.

How dropshipping works

Dropshipping is a supply chain model in which a product is shipped directly from the manufacturer's warehouse to the end customer.

This model therefore offers the dropshipperthe opportunity to focus only on the sales and marketing aspect. The dropshipper therefore does not have to devote time to managing the logistics aspects.

If you want to become a dropshipper you need to know that your income is a commission for each product sold, you will have to transfer the information to the manufacturer who will take care of sending the goods and give you your commission.

Dropshipping has 3 main players: the entrepreneur or dropshipper, the supplier and the customer.

• Entrepreneur or dropshipper: he is the one who runs the e-commerce, his role is to find a niche market where there are not many players yet and trade the products. He also has to choose one or more suppliers to work with and enter into a contract, in which the commission for each sale and the maximum shipping time are defined.

• Supplier: is the one who is in charge of managing the warehouse, shipping the products and labeling and packaging them.

• Customer: is the user who orders on the e-commerce platform. The whole sales process is aimed at delivering the product to the end customer.

What are the benefits of dropshipping?

Dropshipping is a business model suitable for those who want to start selling online and but do not have a high budget. This model has numerous advantages:

• Allowing you to try new business ideas: learning marketing techniques.

• No need to buy the goods: you will be able to save on both the purchase of the goods and the cost of renting the warehouse where you would have to store the goods.

• Lower risk:since you won't have to invest on the purchase of goods, you won't have to worry about having unsold products.

• Easy business to start and manage:you won't have to manage, buy or rent a warehouse, plus you won't have to take care of order shipments; the supplier will do that.

• Handling returns: you will not have to deal with handling returns, but the supplier will do that.

• Stock management: since you will not be managing the warehouse, you will not have to worry about stock management

• Minimal expenses: you will not have to look for a place to work, but you will be able to work directly from your home. Although as your sales increase, your expenses may also increase, the latter will always cost less than traditional selling.

• You can work from anywhere: while having a computer and an internet connection you can work from anywhere, the important thing is that you can communicate with suppliers and customers.

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What are the disadvantages of dropshipping ?

Certainly dropshipping has many advantages, but this does not exclude the presence of disadvantages:

• Low earnings:Certainly the initial costs are relatively low, what makes the business easily accessible, but on the other hand the earnings are also relatively low per product sold especially when it is a highly competitive market.

• Difficult to identify product availability:since the products are in the supplier's warehouse and he is in charge of inventory management, it is difficult to know the amount of goods available.

• Problems in shipping costs: in your store you will have several products each from a different supplier, so shipping costs can be very high, in most cases when the shipping costs are high and in order not to make the customer appear to have a very high shipping price you will have to pay a portion to alleviate the cost. In addition, it is difficult to negotiate with the supplier about shipping costs since the supplier wants in most cases to ensure his profit.

• Supplier errors: Sometimes suppliers make mistakes in shipping, or the products once they arrive at the customer are damaged. If these issues recur you will have to change the supplier to avoid losing customers and ruining your reputation.You also need to apologize to customers, as you are the one who has a direct relationship with them.

• You cannot customize items: One of the limitations of dropshipping is that you cannot customize the products offered since you are limited only to selling products already available in a supplier's warehouse. Even if you would like to improve a product or improve the quality you cannot because only the supplier has control over the product.