The Ultimate Guide To Dropshipping | Dropshipping For Dummies
What is Dropshipping?
Dropshipping is one of the most cost-effective way of doing e-commerce business today. Since all the day to day activities are moving to the digital plane, consumer’s shopping habits have also shifted from the physical to online platform. Need for physical intermediaries are ending and wholesalers are directly selling through dropshipping.
Drop shipping allows a seller to simply earn profit on sales of products without having to handle the inventory or shipping of the products. You don’t need to invest a single dime in goods to start your dropshipping business. Also, there is no physical presence required for your shop.
The best aspect is that you buy the product only after you have received an order from your customer online.
How Dropshipping Works?
Lets understand how Dropshipping works with the help of an example :-
Suppose you were to start an e-commerce business the usual way,
- First you would select a few products
- Then you would order in bulk from a wholesaler or a distributor
- You would list your products on e-commerce marketplaces such as amazon and then wait for orders to come in
The only issue with such a model is that you are not sure whether your products will be sold. You might end up with blocked costs due to the inventory of goods no one wants to buy.
On the other hand, here’s how dropshipping works :-
- List the products on e-commerce websites without purchasing any stock (Ex- Shopify)
- Receive orders online and forward them to your Dropshipping seller.
- Get your products shipped to your customer directly.
- The difference in your sale and purchase price is your profit made.
How to start a dropshipping business?
Lets go through the process step by step :-
Step No. 1. Choose a niche for the products you want to sell.
It is advisable to pick a category in which you have market knowledge and some kind of experience. It will give you an edge against your competitors. If you are passionate about the products you are selling then you won’t be giving up easily, in case of low business initially. For example :- If you are tech savvy and up to date with the market, consider selling gadgets and accessories.
Step 2: Sign up with a Dropshipping Portal
There are various dropshipping websites who help you source products from Wholesalers and Distributors located globally such as :-
Your choice should be based on the following factors:-
- Warranties offered on the goods sold
- What are the quality control procedures they use
- Do they have good quality photos of the products and whether you’ll be able to use them to advertise on your e-commerce platform
- Which website is used most by the sellers in your country to source goods
Step 3. Register for a Sales Tax ID (or GST in India)
Sales tax (also known as retail or resellers license, tax ID, resale number, resale certificate or vendor’s license) is a tax levied on all sales of physical goods to consumers in almost all countries.
Though this is not required for all categories of products. For example – GST registration is not required for selling books in India.
Some wholesale dropshippers might ask you to upload your vendor’s license so it is always advised to register with the government.
Step 4. Sign up on the E-Commerce website where you want to sell.
Flipkart and Amazon.in are the most reputed e-commerce marketplaces available in India. Ebay and Amazon.com are globally famous
You should diversify your product listings across various marketplaces according to the type of buyers present.
Sites like Shopclues have more demand for generic products while Flipkart sells majorly branded products.
Then there are websites like Shopify where you can create your full online store.
Step 5: Marketing and Selling
This is the final step. Your marketing efforts will help you outshine the competition online. Try to be as innovative and creative.
- Offer a first order discount to new customers
- Invest some money in email marketing as it really helps in converting potential customers
- Share your online store link on all social media platforms.
- Try to create engaging content for your audience on social media and slip in your store URL in between the posts, so that your auidience becomes your customer.
- Send free samples to the internet influencers. Influencer Marketing is a trendy thing today where the influencers post your products images and write about it on their accounts.
Once you develop good image and reputation as a seller online, then sky is the limit! You can further diversify into as many different niches as you want and make a handsome amount of money online.