In fact, dropshipping is directly related to trade and most often it is with online sales. If to translate literally, dropshipping are direct supplies . But in itself this, probably, says little about what.
What is it in practice? Why is everyone now burning about this? Why is this method of doing business profitable? And how, finally, can you join the community of dropshippers to get the most out of this? And most importantly – is it worth doing at all? Let’s take everything in order.
What is a dropshipping supplier’s eyes?
The fact is that in a modern, very fast-changing world, in order to be successful, one should not cling to everything at once and pull the whole heap of concerns from production to the sale of goods or services. You can even break even before you start. It is much more effective to divide all this with someone in order to give themselves up to their part of the task as much as possible.
So, dropshipping is essentially one of the options for implementing outsourcing . Look, Suppose that you are the producer of some product or group of goods. You are completely focused on the release of quality products at an affordable price. Also, you are ready to ensure the delivery of goods (the benefit of mail now allows you to do it quite cheaply within almost the entire globe) and its financial support. And what else is necessary?
Yes the most trifle – to find buyers . But often this becomes a stumbling block, for the search for buyers translates into huge additional costs and in fact has little in common with your main occupation – the production, storage and delivery of goods. This is a completely different field with its tricks, problems and nuances. And then the manufacturer thinks about it – rather than giving it all away to outsourcing? And gives, calling this way of cooperation with future sellers of his goods – dropshipping.
The Essence of Dropshipping
So what is it? Oh, this is a very interesting form of outsourcing that allows you to join almost any interested person in this business. And I’m not exaggerating. Dropshipping is only required to sell (most often they do this via the Internet – create online stores, use social networks, trading platforms, Ebay-type auctions , give contextual advertising, etc.).
Neither the storage of goods, nor its delivery, nor its payment for a dropshipper, is of concern to the manufacturer . They earn on the difference between wholesale and retail prices. And those who are involved in dropshipping, do not risk buying lots of goods, trying to guess whether they can realize them. All is stored in the warehouses of the manufacturer – you are only informed about the number of goods present. Once you find a buyer, all further problems become seller’s problems.
Thus, those who are engaged in dropshipping do not spend their money on the preliminary purchase of goods, do not spend money on delivery, and do not deal with claims (return, refusal, marriage, etc.). They just find a buyer and that’s it. Thus, financial risks are minimized. Wonderful, right? Take and sell anything you want without risking anything. That’s why this type of cooperation is now very popular in the world and slowly begins to gain popularity in runet.
But by itself, dropshipping ( direct delivery of goods from the manufacturer without their prior purchase by the seller) is not as simple as it might seem from the above description.
There are a lot of nuances and peculiarities of doing business of this kind (especially in runet), but the fact remains that it is a significant step towards making it as easy as possible for anyone to enter this business, and success will depend solely on the choice of the supplier that is optimal for you and The ability of a future dropshipper to sell goods by any available means.
A typical example of implementing the principle of drop shipping
- You find the supplier (s) of the necessary goods working according to this principle
- Create an online store for this business
- You start in one way or another to attract visitors to the store ( SEO , contextual or targeting advertising , trading platforms such as Yandex Market , social networks, etc.)
- Receiving money for the goods purchased in your store, you give part of them to the supplier, earning the measure of your greed and impudence on the difference between the wholesale price of the supplier and your retail
- All further is no longer your business, because the delivery of the goods, ensuring the guarantee and acceptance of claims is borne by the supplier
A few more nuances associated with dropshipping and stemming from its essence:
- If you want, you can not even tell visitors to your store that it’s someone’s product. Those. you can start selling it under your brand . You can very much invest in not only promotion of the store, but also in promotion of the brand, which sometimes is very profitable in the long run (for example, runetovskie brands like Prolodzhi, Polaris, Bork, Misteri, etc.).
- To start a business, almost no investment is required . The idea is that the store can be unleashed in a year or two, spending mostly only its time. If you want to get a return at once, you’ll have to use the so-called traffic artifact (contextual and other types of advertising), but the profit from sales with a competent approach will immediately cover the costs. Well, you can start with small amounts of advertising, increasing them as you earn a profit.
And what is dropshipping for us?
- You do not need a product, so you do not need to invest in its purchase, delivery and storage
- White label – it is possible to sell goods under its own brand
- No problem to expand the range of the store
Here the keyword “beckons.” But there is such a proverb – it was smooth on paper, but forgot about ravines.
The trouble is that the disadvantages of drop shipings are not visible to everyoneinitially, but for beginners, they are generally even difficult at first. But from this they do not become less likely.
On the contrary, than you have less experience, the more problems you will get on your own. For those who have already come across this and something similar, a part of the “rake” will already be passed and they will not attack them.
Disadvantages of the scheme of work called Dropship
- When you create an online store, then naturally you will have to promise what you can not guarantee with the help of this scheme of work – excellent quality of the goods, fast delivery and wonderful packaging. But in fact, you have not seen the goods in the eye, you can judge the real speed of delivery only from the words of the supplier (which you also do not know much about), and you can only guess in what form the product will come to the post office. And you will have to answer for all the dislocations, because the buyer does not know about the sly scheme of dropshipping and you are extreme for him , but nothing depends on you.
- If you have a store that is more or less serious with a large nomenclature, then there will be a lot of suppliers. Do you think it will be so easy to keep track of whether this or that product has ended with a particular supplier? He may forget to warn you or not consider it necessary to do it.Similarly, the price of a commodity may change. And you should clearly know what, how much and at what price is left in the warehouse of each supplier. A difficult task, when you can not rely on the binding of all suppliers.
- The buyer, having ordered from you the goods, can change his mind to pay it at the post office (in runet popular delivery by mail with cash on delivery). Why? Well, think about it. You screwed up the price of the vendor for the amount needed to cover advertising costs plus your margin.The goods will go by mail for at least a few days. And during this time, the client can catch up with contextual advertising based on his interests with the same product, but at a significantly lower price (from the supplier itself or from your competitor who works at high turnover and, therefore, carries less expenses). Do you think he will not refuse to pay the parcel?
- When dealing with an ordinary online store, you probably could, in order to avoid payment failures, create and somehow encourage (or at least pleasantly surprise) the buyer so that he becomes your fan and tells you about his acquaintances. But dropshipping completely deprives you of this opportunity. You can not even add a postcard to the parcel, not to mention some more substantial gift or bonus.
- Also, when dropshipping, you are essentially deprived of the possibility to do an after sale , which is almost the only thing that allows modern online stores to stay afloat at such high prices for advertising. After the sale (immediately or with a repeated application of the buyer) will not cost you advertising budgets (in fact, they are free). Many stores bring the percentage of end-sale up to thirty or higher, but in the case of dropshipping it’s all quite difficult to organize, because the goods chosen by the buyer can be from different suppliers and you are not free to play especially with the prices. Well, it is difficult to calculate for a repeated order because of the reasons described above.
- The online store has another great opportunity to cut advertising costs – to use the newsletter on the accumulated customer base. But in the case of drop shipping, the customer base will not be for you, but for your supplier. If he wants, then he will intercept all clients from you like there is nothing to do, for he will always be able to make a more profitable proposal (he did not need to spend money on advertising). And in the parcels the supplier can invest their advertising, so that they then buy from him for a lower price, forgetting about you forever. Only business and nothing personal.
- Dropshipping attracts the lack of investment in the goods, its delivery and logistics. But after all, attracting customers is worth the money and not small. A newcomer in arbitration in general is destined only one thing – to step on all possible rakes, paying for science with his money. You think it’s so easy to immediately choose what will work best for this product – context, targeting, teasers, social networks or something else. Yes, nothing like that. But all these experiments require money and time, and you will have a lot of goods. So the newcomer will spend (in vain) in this scheme of money much more than a seasoned arbitrator. Actually, this may all end.
Minuses of drop shipping when working with suppliers from China
All of the above applies primarily to the realities of this type of business in runet. If you want to step outside the borders of this space and begin to hoard foreign goods (most likely Chinese because of their low price), then in addition to most of the above points will add a few of their own, but not less (or maybe even more) problematic:
- One of the advantages of dropshipping (which were listed above) is that the customer essentially does not know anything about the real supplier – he thinks that you store the goods in your warehouse. Therefore, the buyer will be guided by the terms of delivery, which are common when forwarding within the country. But the goods will in fact be delivered from China. Know the customer in advance, he might be ready to wait, but he thinks that the warehouse is in your country.Thus, plus this scheme turns into her fat minus when working with suppliers from China.
- Suppliers from China work on an advance payment. You will have to persuade the client to trust you and pay in advance at least the cost of the goods from the supplier and its delivery. Do you think many people in our country will risk paying ahead? It’s necessary to earn such a reputation, as, for example, the organizers of the recent pyramid with the iPhone. But they at first honestly traded themselves at a loss, then all at once throw. And you need to immediately be in the black.
Who benefits from Dropship and is it a place for beginners in this business?
Thanks to you, the vendor buys goods, but he does not spend money on advertising. At the same time, he is essentially not responsible (hiding behind your broad back and not visible to the buyer). Plus, he has all the client base you’ve collected, thanks to which he can start selling his goods quite profitably (“you do not need a violinist,” as you remember).
On your own share in this kind of unequal business falls all the most unpleasant that you can think of. And all this for not so much money, because in itself attracting customers is expensive and for a large margin can not be counted (with their own to stay). Those. you risk everything, but in the end you can not get anything but a huge heap of big and small problems. You can even undermine health or psyche in this matter, being between a hammer and an anvil (buyers and a real supplier).
I’m not saying that this scheme is not working. But this is clearly not suitable for beginners .Dropshipping requires teamwork and it is desirable that at least some of it has experience in this field. It will be necessary to work with clients, work with suppliers, work with advertising companies and do many more things that you do not even think about looking at the “marketing advantages” of this system of running an online business on the pages of suppliers’ websites.
Very much still depends on which suppliers you choose for cooperation. I will not take the liberty of advising anything, because in half a year a wonderful supplier can unexpectedly become profane.Search, read reviews on the forums, ask friends familiar with this topic, try and draw conclusions.But in any case (even with the ideal supplier), it simply will not be and, as I said, it’s better to work as a team.
More often than not, newcomers simply do not see all the problems described above for the time being, and if they get bogged down in them, they can lose all faith in the opportunity to earn money online . But this is not so. There are more sparing schemes of work and even in the same field of sale of physical goods.
Affiliate programs as the best alternative to dropshipping
I’m talking about affiliate programs . True, I myself mostly use affiliates to attract clients to various services , but also with the commodity programs are not familiar by hearsay. For example, a large number of them can be found in the well-known aggregator of affiliate pay-per-action (CPA) Admitad or the affiliate program of the world’s largest store, AliExpress ePN .
There are also partners for the sale (distribution) of services. For example, a hotel affiliate programcalled Hotellook. They pay here for filling in an application for a hotel reservation. As an advertising material you can get a hotel search form, a map widget, a mobile application, landings (landing pages with a high percentage of conversions, ie filled in applications) and much more. Conversion with proper approach is very good.
Just as with drop shipping in affiliate programs, you do not need a product (its purchase), there is no logistics and you do not need to deliver. Again, I’m not saying that this is an ideal option, but in comparison with dropshipping, the partners are deprived of a number of significant drawbacks:
- Most partners offer you a ready-made store (maybe for a fee, but rather symbolic) or a site (more often in the form of landings that you do not need to create yourself ) for sale from the goods. In any case, you will receive advertising banners or rotators for any of the shows.
- As with dropshipping, your main task in the affiliate program is to attract customers (customers), but in the partnership you do not need to mess with orders (this is completely taken care of by the supplier).
- In the affiliate, you are already hiding behind the broad back of the supplier (the owner of the dealership), because you are not particularly visible to the buyers, which means that you do not care about all the problems related to the quality of the products, its delivery and registration.
- Your reward for the action made by the client involved is fixed and stipulated at the stage of acceptance of the terms of the affiliate. The main thing is that it is higher than your costs to attract customers. In fact, the product is sold at the price of the supplier and you do not compete with it, as is often the case in the drop shipping scheme.
- In the partner almost everything is automated – the holding of orders, payments, the renewal of the offices, etc. There is no routine that needs to be manually disassembled by negotiation, correspondence, etc. You do not spend your nevros, sleep peacefully and live longer.
Those. the affiliate is basically the same Dropship, but it’s just easier (you just need to attract customers by authorized methods and keep track of the fact that the costs are not used to revenue), more automated (to communicate with anyone you do not need) and clearer. In addition, all sides benefit (both you and the buyer too, and not only the supplier).
From the disadvantages of partners :
- It is quite difficult for you to control the honesty of a partner in terms of paying for the leads you have committed (sales, registrations, orders, filling out forms, etc.). Something you, of course, can control, but it is the honesty of the partner here is the key. Therefore, his choice should be approached carefully, and sometimes you have to refuse to cooperate if you suspect that he is unclean. I have already given an example of an aggregator of a whole group of trusted partners – Admitad . There is still Actionpay , but here I can not say anything, because I did not test it myself.
- The partner will control the ways you use when attracting, and if they turn out to be unacceptable (cheating, etc.), then you can be banned without paying the money you earned earlier.
In any way, affiliates (and most other ways of earning online) will be easier to do (and at times more enjoyable) than raking up a bunch of problems with the seemingly first ideal dropshipping.And certainly one such burden can not be tolerated, especially if you are a beginner. It’s like sitting down to play chess with the mainstream master, only to figure out how the figures go.
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