7 Reasons to Try Dropshipping Ecommerce Business This Year

7 Reasons to Try Dropshipping Ecommerce Business This Year

7 Reasons to Try Dropshipping Ecommerce Business This Year

Dropshipping is the next big thing.

The reasons are clear and are forcing every business aspirant to try out dropshipping. For those planning to sell through ecommerce platform, dropshipping will definitely prove as a ticket to success. Dropship inventory and other features that come with it are the ones that aid business to gain greater ROI and profits.

Let’s explore dropshipping and why every business aspirant should try dropshipping ecommerce business this year?

What is dropship?

Dropshipping is essentially a business model that has changed the paradigm that only wealth, well to do people can afford business and that getting access to customers around the world was only a luxury that big multinational companies could afford. Dropship ecommerce stores and other enterprises proved otherwise. First, let us understand what the term dropship really means and signifies.

Dropship essentially means that when a dropshipping store selling a particular product receives an order for the same, it then purchases the product from a third party and this third party then ships the product directly to the customer. The shipping address and other details are provided by the store and the store in return receives some percentage for the sell. This whole process eliminates the requirement for a store to maintain an inventory and the dropship inventory is maintained by the third party.

Benefits of dropshipping:

The benefits of dropshipping are far and wide. Dropshipping suppliers enjoy various benefits and these benefits are enough to compel any aspirant to enter the business.

7 Reasons to try dropship ecommerce business

Low Startup Cost

This is perhaps the most important factor as it acts as a deterrent for all aspirants planning to enter into a new business. All businesses need profits, sustainability, great capital and upfront investment. Dropshipping business is an exception to this common phenomenon.

It is possible, to start fully functioning and profitable dropshipping stores without investing a lot of money. In traditional business models, retailers had to invest huge sums to set up inventory. Furthermore, large sums of money were also required to maintain and update this inventory. The dropshipping model is such that it wholly bypasses the need for inventory thus proving beneficial for new entrants.

Zero Need for Stock/Inventory

In dropshipping business, the whole onus of delivering the product in a timely manner is put on the third party thereby offsetting your compulsion of maintaining stock or inventory. In addition, you don’t need to spend time, efforts and money on setting up of a system that will help you to gauge your inventory levels and take necessary action to keep it up to mark.

In this era marked by constant changing of dynamics, a lot of new products are introduced in the market at any given point of time. Traditional business models have to ensure that they have these products in their inventories in order to better serve their customers. But, dropshipping business model does not have to worry about these things and can offer these new recently introduced products to the customers without worrying about inventory and stock maintenance.

Low Running Cost

The running cost is pretty low as compared to other business models. When it comes to running a fully functional dropshipping business you don’t need to worry about a lot of things. For starters, you don’t need to worry about maintaining an inventory as well as updating from time to time. Furthermore, you get access to better shipping rates as compared to other vendors who sell their products on their own.

You do not need to maintain resources for operations such as packaging, logistics and transportation thus substantially reducing the overhead costs to a great extent. Also, you also eliminate the cost of maintaining a system to track stock levels, and management of the same. This results in substantial cost savings as well. If new products are launched in the market, you simply have to take orders for the same rather than the traditional way in which the method was to first purchase them and then sell them to the customers. All these aspects of the business model result in great savings.

Ability to Work from Anywhere

The main thing that one has to ensure for successfully running a dropshipping business is that you have at all times proper communication with your customers as well as suppliers. An internet connection guarantees the same. So, the bottom line is that you can run your business from anywhere as long as you are connected to your customers and suppliers.

Ability to Automate

Automated software solutions as well as the tools that come along with it have changed the whole game of dropshipping business and have majorly contributed to the positive dropshipping success rate. These tools have completely eliminated the manual intervention required for tracking of orders, sending information about the order to the suppliers, handling the web traffic as well as request for information, thus greatly benefitting the dropshipping wholesalers.

Automation tools and software prove greatly advantageous when the flow of customer traffic is more and that the order generation goes up. By removing human intervention, the whole margin for error is also substantially reduced. Many software companies have developed software by taking into consideration the views and opinions of dropshipping suppliers and other stakeholders in the whole dropshipping business. This has enabled them to develop software that are easy to use, and are hassle-free.

Automation software easily manages the most complex tasks of a dropshipping store thus reducing the time spent by the owner in order to address these complex issues. Due to this reduce efforts the owner can focus on the scalability of operations and try to make his company the best dropshipping supplier among the competition.

Warehouse

Setting up of a warehouse and maintenance of the same is completely eliminated once you enter the dropshipping business. So you do not need to pay for the maintenance and setting up of a company workhouse. This cost is a major contributor to the overall capital investment required for setting up of a business and as this cost is eliminated, it proves as a major advantage of dropshipping business.

In traditional business models, a store has to maintain an inventory in order to serve the client needs. The inventory had to be large so as to provide the customers with a wide variety of options to choose from. Such maintenance would require a warehouse that would be large enough to accommodate a wide range of products. This further increased the cost of construction as well as maintenance of the warehouse. In dropshipping business, due to its unique mode of operations, this need is completely eliminated.

As the whole aspect of packaging and delivery is taken care of by the third party, they are the ones that need to construct and maintain the warehouse. Thus, the ecommerce stores are completely bypassed of the hassles pertaining to a warehouse and its maintenance and operations.

Plenty of Options to Choose From

Many of the platforms that offer assistance to build your very own ecommerce store as well as your dropshipping business offer access to a wide range of suppliers. This access can guarantee that a dropshipping business can offer a wide range of products to their customers thus enabling them to choose from a wide variety of options.

One has to understand that a dropshipping business does not have to purchase a product from the dropshipping wholesaler prior to selling it to the customer. He just acts as the interface between the customer and the wholesaler and does his duty for a percentage of sales.

This means that an ecommerce store can pitch an unlimited range of products to its customers as they need not worry about the stocking of the product, maintenance and updating of the product. In addition, these stores can source products from multiple wholesalers thus further resulting in the broadening of the product portfolio.

After reading and comprehending the above benefits of the dropshipping business, it is for the user to decide whether the business model is suitable for him or not. One must also give careful attention to the risks attached to each and every aspect of the business and must decide whether the benefits outweigh the risks or not.

Conclusion

Dropshipping is a highly useful and effective tactic if it is applied at the right time as well as the right place. But for a fact, if you are a new entrant and are looking for something that will help you cope with the challenges posed by established industry participants, dropshipping should be your business model of choice.

Posted by Shane Emerson

Shane Emerson
Shane is an American writer for various digital news publications. After being in the ecommerce industry for more than 15 years, Shane has a good understanding of what it takes to make an ecommerce business successful. He likes to cover newsworthy events related to business management software, customer relationship management (CRM) and Quoting software and Value Added Resellers. His articles give insights on the latest trends in the B2C and B2B ecommerce industry. His ecommerce coverage is robust and provides everything from best ecommerce platform to improving your website site.

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