What is dropshipping and how do you start?
Dropshipping continues to be an important topic in e-commerce circles. But what exactly does the term actually mean, how can you start with it and which drop shipping providers are there? In this article, we clarify these questions so that you can decide whether you should use this sales opportunity for your shop.
Dropshipping is a type of online trading in which online retailers offer products in their shop without having them in stock themselves.
As with any other business model, there are advantages and disadvantages.
On the packaging, there is (usually) no reference to the wholesaler, but only the seller's branding - if at all. The wholesaler takes care of all the formalities related to the shipping formalities, customs and distribution costs.
Likewise, drop shippers do not have to worry about excess products that simply cannot be sold and then dust in the warehouse.
Because of the low initial costs, the dropship model is a practical way to test new products or to test the e-commerce water before you jump in completely. Another advantage offered by the dropshipping solution is that a much larger range of products can be offered since goods do not have to be stored in a complex manner. The absence of a warehouse also allows you to manage the dropship shop from anywhere in the world - all you need is an internet connection. But even if this business model offers some excellent advantages, there are of course disadvantages that have to be considered ...
This is by far one of the biggest disadvantages that this e-commerce model has: you can have little influence on customer satisfaction!
It is irrelevant how good and user-friendly the online shop is if the wholesaler does not send the package in time, the shipping takes too long, the product is damaged or in the worst case the shipment does not even arrive, you can spoon out the soup. Alone.
Solving the problem is also much more difficult if you do not know where the delivery is stuck and the wholesaler is not available. Often the easiest option is to accept the refund and setback.
Free e-book: reduce returns and sell more. That's how it's done!
lp Minder_retouren-NL
The thing about e-commerce: there are always problems, one way or the other.
Therefore, you should not put off any problems with customers if you want to be successful in e-commerce. Because you cannot avoid complications with shipping or customers even with the classic e-commerce model, where the goods are stored in the warehouse.
The shipping factor is, therefore - to a large extent - not in your hands, unfortunately, there is another disadvantage.
Now you could bill the customer for the increased shipping costs (and thus very likely lose it) or bite the bullet and pay the increased shipping costs.
This brings us to the next disadvantage, perhaps the biggest one: the problem with the low-profit margin. In Kylie Jenner's cosmetics shop, for example, you can find a make-up set for $ 360.00, the purchase price at Alibaba is around $ 15.
Kylie-Jenner-dropshipping.png Of course, you can also try to sell products at a huge premium and thus generate a high profit.
However, this only works in very rare cases, since at least drop shippers have over 1 million followers on Instagram.
There will often be enough competition to sell the same product at a significantly lower price and thus convince potential customers.
In order not to get into a price war, you have no choice but to claim a little competitive market or to invest time and money in marketing and branding in order to build a brand with loyal customers.
So you have to stand out from the competition if any. One way to achieve this is storytelling or improving the ranking of your website.Conclusion-blogpost.png
The online marketplaces have the advantage of enormous customer frequency, which ensures that the products can be seen by a large number of buyers. But it also has the disadvantage that you play on foreign terrain. You can set your own rules in your own e-commerce, but in an e-marketplace, you have to stick to what is prescribed. For example, if you sell on Amazon, you are likely to be prohibited from selling certain products depending on the product category or country in which you plan to sell them. Tip: Of course, it should be borne in mind that the marketplaces cannot be used free of charge. For the sale, you have to pay a commission or even an additional monthly fee.
Offline in stationary retail: There are more and more traditional stores that drop shipping their products. Instead of having all products in stock, there are exhibitions or catalog items that are then ordered and sent by the dropship provider. A furniture store can display a lamp or a sofa but does not need to have it in stock. This saves high storage costs and avoids the shipping of bulky goods like this.
blog text-guide assembly shop Shipping
Even if it seems simple and profitable to sell products that are up to date (e.g. Game of Thrones cups, Star Wars clothing, Super Bowl merch), you risk a warning letter and other unsightly consequences.
blog title-abmahnung-1040x540-gina.jpg This should always be the first step: Find a product and the right supplier. What sounds simple at first can be a big challenge.
If you are looking for inspiration about which products you can dropship, there are different providers and marketplaces. A few are free, but most are only accessible for a fee
It is definitely worth exchanging ideas with other online retailers, whether drop shippers or not - whether at a trade fair, networking events, in Internet forums or relevant Facebook groups.
Dropshipping tip: Before you sell the product in your online shop, you should be sure that it does what it says on the tin! Order one for yourself and test it. This way you avoid angry customers. Likewise, better product images and videos can be produced if necessary.
Nevertheless, you should continue to research, inform yourself about new product trends and try out new marketing strategies (e.g. influencer marketing ). Cooperation and exchange with the wholesaler or manufacturer of your drop ship products are just as important as the topics mentioned above. Ask questions and try to learn as much as possible about the product in order to be one step ahead of your competitors and, if necessary, to be given preferential treatment if bottlenecks occur.
In some cases, a visit to the production site is also worthwhile in order to gain a feeling for the manufacturer and the people behind the product.
In the end, the supplier decides on the success or failure of the project, since it is largely up to the wholesaler whether the products arrive on time and in good condition. Below we have compiled some aspects that must be taken into account when choosing a good dropshipping provider:
There are drop shipping providers that specialize in certain industries, and others that offer a broader catalog. Depending on what you want to sell, you can choose one or the other.
Choosing a wholesaler with a catalog that includes all types of products will make your business much more scalable: once you want to sell a new product category, you no longer need to contact a new supplier. In addition to the variety of products, it is important to choose a company that recognizes the latest trends and constantly updates its catalog.
Internet sales are very much based on viral products and currents that can appear as quickly as they disappear. Just think of the Fidget Spinner hype! Dropship trend: yellow fidget spinner So it can be important to have a dropshipping provider willing to face these temporary trends.
It is also interesting if the customer service is multilingual and can offer you an individual service.
Therefore, we advise you to look for a dropshipping provider that has agreements with different transport companies and thus enables you to sell to many different countries.
However, keep in mind that selling in a new country also requires work on your part: you need to translate your website and define a sales strategy that is geared towards a different culture!
In the event that there is any problem with the customer's order, it is important that your supplier offers you a solution in good time.
Look for a provider that covers this aspect satisfactorily so that your customer doesn't get the wrong impression and you don't have to bother with it as much as possible.
Especially for newbies in the e-commerce world, it is a good opportunity to gain initial experience.
The current most proven method to win new customers and grow your own shop (whether via dropship or the classic e-commerce model) is Facebook Ads. You can find out how to use them in our free white paper.
What is dropshipping?
Let's start with the definition ...Dropshipping is a type of online trading in which online retailers offer products in their shop without having them in stock themselves.
Then how does it work?
If a customer orders such a product in the shop, the shop operator does not send the product himself, but orders the product (automated) directly from the manufacturer or wholesaler, who then sends it directly to the customer. The drop shipper therefore (usually) has no physical contact with the product. This e-commerce strategy is therefore in direct contrast to traditional retail, where a large number of goods are ordered, stored and then shipped to the customer. It sounds like a perfect merchandise strategy, but ... blog title-versand_online-commerce best dropshipping toolsShould you use dropshipping in your online shop?
After knowing what this sales method is and how it differs from classic retail, you may be wondering whether you should use it for your shop. The comprehensive guide to e-commerce Downloads the comprehensive e-commerce guide here for free.As with any other business model, there are advantages and disadvantages.
The advantages of dropshipping
Dropshipping has several advantages, especially for entrepreneurs who are just starting out with e-commerce. One of the biggest advantages is clearly the factor of the low start-up capital that is needed for the start. dropshipping-profit As already mentioned, with this business model, no products need to be bought and stored in advance.There are a total of three parties involved in this distribution model:
The end customer buys a product in an online or offline shop and does not know whether the delivery will be drop-shipped or not. At no time does he know who the wholesaler is because he is only in contact with the middleman. The seller manages the shop and tries to attract as many potential customers as possible. When he receives an order, he contacts the dropshipping wholesaler and sends him the details of the order and the customer. His profit on this transaction is the difference between the amount the wholesaler charges him for the product and the amount he charges his customer. The dropshipping provider who takes the order packs it and sends it directly to the end customer.On the packaging, there is (usually) no reference to the wholesaler, but only the seller's branding - if at all. The wholesaler takes care of all the formalities related to the shipping formalities, customs and distribution costs.
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In short: As soon as the end customer has ordered and paid for the product in the online shop, the drop shipper buys the product from the manufacturer or wholesaler and specifies the end customer as the recipient. The big advantage here is that the product does not go through the hands of the shop operator, and the goods do not have to be bought and stored in large quantities.Likewise, drop shippers do not have to worry about excess products that simply cannot be sold and then dust in the warehouse.
Because of the low initial costs, the dropship model is a practical way to test new products or to test the e-commerce water before you jump in completely. Another advantage offered by the dropshipping solution is that a much larger range of products can be offered since goods do not have to be stored in a complex manner. The absence of a warehouse also allows you to manage the dropship shop from anywhere in the world - all you need is an internet connection. But even if this business model offers some excellent advantages, there are of course disadvantages that have to be considered ...
fb-negative_reviews_1200x618 v2
The disadvantages of dropshippingThis is by far one of the biggest disadvantages that this e-commerce model has: you can have little influence on customer satisfaction!
It is irrelevant how good and user-friendly the online shop is if the wholesaler does not send the package in time, the shipping takes too long, the product is damaged or in the worst case the shipment does not even arrive, you can spoon out the soup. Alone.
Solving the problem is also much more difficult if you do not know where the delivery is stuck and the wholesaler is not available. Often the easiest option is to accept the refund and setback.
Free e-book: reduce returns and sell more. That's how it's done!
lp Minder_retouren-NL
The thing about e-commerce: there are always problems, one way or the other.
Therefore, you should not put off any problems with customers if you want to be successful in e-commerce. Because you cannot avoid complications with shipping or customers even with the classic e-commerce model, where the goods are stored in the warehouse.
The shipping factor is, therefore - to a large extent - not in your hands, unfortunately, there is another disadvantage.
blog title-title_LieferungZeit.jpg
If you offer goods from different manufacturers and wholesalers, it can quickly happen that the shipping costs also add up if a customer orders several products.Now you could bill the customer for the increased shipping costs (and thus very likely lose it) or bite the bullet and pay the increased shipping costs.
This brings us to the next disadvantage, perhaps the biggest one: the problem with the low-profit margin. In Kylie Jenner's cosmetics shop, for example, you can find a make-up set for $ 360.00, the purchase price at Alibaba is around $ 15.
Kylie-Jenner-dropshipping.png Of course, you can also try to sell products at a huge premium and thus generate a high profit.
However, this only works in very rare cases, since at least drop shippers have over 1 million followers on Instagram.
There will often be enough competition to sell the same product at a significantly lower price and thus convince potential customers.
In order not to get into a price war, you have no choice but to claim a little competitive market or to invest time and money in marketing and branding in order to build a brand with loyal customers.
So you have to stand out from the competition if any. One way to achieve this is storytelling or improving the ranking of your website.Conclusion-blogpost.png
In which areas can dropshipping be used?
This sales method is possible for almost all types of companies. Here are some ideas: This sales method is used most in an online shop since it is a very good option for e-commerce companies, where the necessary processes are greatly simplified. In addition, the synchronization of the online shop with the dropshipping provider reduces manual work to a minimum. This sales method is used most in an online shop since it is a very good option for e-commerce companies, where the necessary processes are greatly simplified. In addition, the automatic synchronization of the online shop with the dropshipping provider reduces manual work to a minimum. For e-marketplaces (such as Amazon or eBay), this strategy is also used by a large number of online retailers. dropshipping toolsThe online marketplaces have the advantage of enormous customer frequency, which ensures that the products can be seen by a large number of buyers. But it also has the disadvantage that you play on foreign terrain. You can set your own rules in your own e-commerce, but in an e-marketplace, you have to stick to what is prescribed. For example, if you sell on Amazon, you are likely to be prohibited from selling certain products depending on the product category or country in which you plan to sell them. Tip: Of course, it should be borne in mind that the marketplaces cannot be used free of charge. For the sale, you have to pay a commission or even an additional monthly fee.
Offline in stationary retail: There are more and more traditional stores that drop shipping their products. Instead of having all products in stock, there are exhibitions or catalog items that are then ordered and sent by the dropship provider. A furniture store can display a lamp or a sofa but does not need to have it in stock. This saves high storage costs and avoids the shipping of bulky goods like this.
blog text-guide assembly shop Shipping
How to start dropshipping
After knowing the main advantages and disadvantages, have you decided to start dropshipping?Even if it seems simple and profitable to sell products that are up to date (e.g. Game of Thrones cups, Star Wars clothing, Super Bowl merch), you risk a warning letter and other unsightly consequences.
blog title-abmahnung-1040x540-gina.jpg This should always be the first step: Find a product and the right supplier. What sounds simple at first can be a big challenge.
Dropshipping providers
If you have done your research and decided on a product, you should contact the manufacturer or provider. In the event that the manufacturer sells the product only in large quantities, in most cases, you will receive a list of wholesalers who offer the product or send a sample. Contact the wholesalers on this list and find out who is the most suitable for your project.If you are looking for inspiration about which products you can dropship, there are different providers and marketplaces. A few are free, but most are only accessible for a fee
Wholesale Central is a free example.
SaleHoo ($ 67 a year) or Worldwide Brands ($ 299 for a lifetime membership) are examples of marketplaces that charge a fee. Another alternative is BigBuy, which is also active in the German market. blog title-page-produit-ideale.jpg Trade shows at the manufacturer are also another possibility to collect product ideas and to close important dropshipping partnerships.It is definitely worth exchanging ideas with other online retailers, whether drop shippers or not - whether at a trade fair, networking events, in Internet forums or relevant Facebook groups.
Dropshipping tip: Before you sell the product in your online shop, you should be sure that it does what it says on the tin! Order one for yourself and test it. This way you avoid angry customers. Likewise, better product images and videos can be produced if necessary.
Nevertheless, you should continue to research, inform yourself about new product trends and try out new marketing strategies (e.g. influencer marketing ). Cooperation and exchange with the wholesaler or manufacturer of your drop ship products are just as important as the topics mentioned above. Ask questions and try to learn as much as possible about the product in order to be one step ahead of your competitors and, if necessary, to be given preferential treatment if bottlenecks occur.
In some cases, a visit to the production site is also worthwhile in order to gain a feeling for the manufacturer and the people behind the product.
What should you look for in a dropshipping provider?
The first decision you need to make after choosing this business model is to choose a good provider.In the end, the supplier decides on the success or failure of the project, since it is largely up to the wholesaler whether the products arrive on time and in good condition. Below we have compiled some aspects that must be taken into account when choosing a good dropshipping provider:
1. A comprehensive catalog with constant innovations
There are drop shipping providers that specialize in certain industries, and others that offer a broader catalog. Depending on what you want to sell, you can choose one or the other.
Choosing a wholesaler with a catalog that includes all types of products will make your business much more scalable: once you want to sell a new product category, you no longer need to contact a new supplier. In addition to the variety of products, it is important to choose a company that recognizes the latest trends and constantly updates its catalog.
Internet sales are very much based on viral products and currents that can appear as quickly as they disappear. Just think of the Fidget Spinner hype! Dropship trend: yellow fidget spinner So it can be important to have a dropshipping provider willing to face these temporary trends.
2. Different synchronization options
One of the main factors when working with a dropshipping provider is the synchronization options that are offered. Because there are many aspects that need to be synchronized (orders, catalog, inventory, carriers, etc.). The most rudimentary method is CSV files, but they mean more effort and manual work that many sellers want to save. For this reason, some dropship providers offer further options: From options that require a certain technical knowledge (e.g. an API to automate the synchronization) to existing and synchronized dropshipping shops.3. Accessible customer service
Make sure that your supplier offers good conditions and is transparent when it comes to reacting to incidents, sending faulty products or handling returns and canceled orders.It is also interesting if the customer service is multilingual and can offer you an individual service.
4. Multiple shipping options
The internationalization of a company is much easier with dropshipping than with a traditional sales method. If you have a dropshipping provider that covers deliveries to different countries, all you have to do is worry about the sale, with no geographic issues to worry about.Therefore, we advise you to look for a dropshipping provider that has agreements with different transport companies and thus enables you to sell to many different countries.
However, keep in mind that selling in a new country also requires work on your part: you need to translate your website and define a sales strategy that is geared towards a different culture!
5. Provide good customer support
Returns are an integral part of e-commerce and it is important to plan ahead.In the event that there is any problem with the customer's order, it is important that your supplier offers you a solution in good time.
Look for a provider that covers this aspect satisfactorily so that your customer doesn't get the wrong impression and you don't have to bother with it as much as possible.
Conclusion
Dropshipping has advantages and disadvantages, but at the same time, it also has enormous potential to attract a large number of customers, generate solid sales and grow your own shop.Especially for newbies in the e-commerce world, it is a good opportunity to gain initial experience.
The current most proven method to win new customers and grow your own shop (whether via dropship or the classic e-commerce model) is Facebook Ads. You can find out how to use them in our free white paper.
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