If you’re considering starting a business without much initial investment, we’re sure you’ve heard about dropshipping and its advantages . We’ve created this article to answer any questions you may have about what dropshipping is and how this currently booming business model works.
What is dropshipping?
Dropshipping is a form of online sales that involves creating an online store to sell products you don’t need to stock. This way, you avoid an initial investment in inventory, as stock and storage costs are completely eliminated.
It’s a business method in which the retailer doesn’t actually own the merchandise, but instead transfers the order information to industry email list the manufacturer, along with the shipping information for the purchased product. In this process, the supplier earns a profit margin or commission on the sales. When we talk about the manufacturer or supplier, it can be another retailer or wholesaler who is responsible for shipping the merchandise directly to the customer.
The dropshipping business model is a huge advantage for entrepreneurship and self- employment , as it allows you to create a business with less investment and risk. This is why the number of online stores created with dropshipping ideas continues to increase .
From the supplier’s perspective, dropshipping is a business model in which a wholesale company, globalized, usually international and with a large distribution capacity , has a group of retail companies that are responsible for promoting the products or catalog among users or end consumers.
It’s a distribution system created and designed for online stores, a new e-commerce model that is gaining ground in our country.
Figures involved in dropshipping
The operation of this online sales system is quite simple, although it requires a high level of coordination among its agents to automation tools play a critical achieve a successful purchasing process. Three factors will be involved in implementing this model :
Seller or retailer:
Therefore, they must maintain ongoing communication with suppliers.
The retailer is responsible for receiving the order data and collecting payment from the end customer. They then send the product order and customer data to the wholesaler to complete the order.
Dropshipper or wholesaler:
The manufacturer or supplier of the products to be marketed carries out the wholesale sale . The wholesaler must make their available products available so that the retailer can sell them from their online store.
The dropshipping company receives orders from the retailer for prepaid orders. They prepare the products and handle the logistics for shipping them to the address indicated by the customer. They are also responsible for issues related to the warranty on the products sold or returns.
Customer:
The process is complete when the customer receives the product in the retailer’s name, but with the supplier’s logistics.
How does the dropshipping business model work?
To begin the process of your new business, we recommend following these steps:
- Study the market and potential niches . Choose a product you want to market. It should be easy to sell and deliver good results so customers are satisfied.
- Research several dropshipping powder data suppliers that have the product you’re interested in selling from your online store in their catalog .
- Maintain ongoing communication with your suppliers to keep their products up-to-date. At All Cloud, we’ll help you create your online store and add value to your business.