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Home » Cloud Hosting » What is Dropshipping? How to Dropship

What is Dropshipping? How to Dropship

Dropshipping is a method of trading in which a shop or a retailer buys a product from a third party and delivers it to the customer without even placing a finger on it.

In most cases, sellers purchase items, then organize their inventory and put the products on sale. Whereas, dropshippers usually buy and sell products without any physical contact with them.

We have given you a detailed explanation on topics such as what is dropshipping, why it is done, how it works and last but not the least how to do it.

  • What is Dropshipping?
  • How does it work?
  • Reasons to Dropship;
  • How to Dropship?

What is Dropshipping?

Dropshipping is a method by which people fulfill orders, but instead of keeping the products, sellers of such type pass the order they have already accepted to a third party. The third party on the other hand, delvers the items straight to the buyer.

When utilizing this method, the seller is expected to take care of the marketing and sell the item, the thing is, these people often have not much or even zero control upon the quality of the product, shipping, storage, or the inventory management.

Dropshipping has raised in popularity in the area of growing business online. That’s why a lot of entrepreneurs and businesses decide to put it into use.

One of the reasons it is being used is usually the cost. Wholesalers often have expenses such as maintaining a warehouse and store showcase, purchasing inventory and placing it into storages and as expected, hiring the needed staff. The goal of dropshippers though, is to avoid those costs and sell products as risk-free as possible.

It is simpler to make profit from dropshipping than most of the other business methods just because it is cheap and easy to start. Another thing to take into account is that a dropshipping business can turn into one very rewarding job. Especially since the retailers and stores aren’t paying any shipment or manufacturing fees.

How Does Dropshipping Work?

Basically, when you are dropshipping, you act as the mediator between the wholesaler and the buyer. It’s perplexing, isn’t it?

In order to make it easier for you to understand, we have put the process into separate parts. They are as it follows:

  • A store advertises a product and then puts it up for sale;
  • A client buys the item;
  • The order is being processed by the store;
  • A third party which could be a wholesaler, the manufacturer, or a fulfilment house receives the order with its shipment details;
  • Then, the order is being directly delivered to the client.

In spite of the process being simplified, dropshipping might still have some obstacles that need to be overcome.

In order to run a successful dropship business you must communicate well enough with all parties involved.

Reasons to Dropship

It doesn’t matter if you are a brand new shop or you are a retailer that has been around for a while, you can benefit from dropshipping in various different ways.

Down below we have mentioned the most popular reasons why people start to use dropshipping.

  • Easy to start: As we said earlier, other business models are much more expensive than the dropshipping. It does not require any large investment to get into it. In addition to that, with trustworthy companies such as CooliceHost, adding dropshipping to your website is too easy not to do, so why wouldn’t you get into it?
  • Expand your product catalog: Dropshipping makes it incredibly easy to make your product catalog wider without the need of making any physical investment. When you have larger variety of items, it is more likely that the customers will make more purchases every order. With dropshipping around, you are given the ability to test whether a product is suitable for your store without purchasing huge quantities of it.
  • Maintain brand integrity: Branding materials such as inserts, packaging slips, and boxes are taken care of by the supplier most of the time. This essentially means that the package will look as if it came straight from you. When you work with different suppliers, your inventory is spread all over the globe, which makes it so that you will have more places to deliver from, and your clients will receive their orders much faster. If your customers are convinced that their orders came directly from your store, they will probably visit you again.
  • Building your online marketplace: This method will help you not only to build, but also to expand your own marketplace. If you have wondered why Amazon has such a various catalog, well, it’s because of them utilizing dropshippers in order to increase their sales. While you are constructing your business and finding third parties to work with, you can also utilize them to create a marketplace of yours.

With all of those advantages we have talked about, you might think that dropshipping doesn’t have any disadvantages. Dropshipping is not perfect and here is why.

Most of the troubles that appear in dropshipping are in the areas of hidden fees, inventory issues, heavy competitions, and low margins. Supplier errors and inventory issues are often caused by the lack of good communication.

When your business is connected to dropshipping you need to be certain that you maintain excellent communication with everyone you work with. Another thing to take into account is the fees, please, make sure that you are aware of all of them if there are any.

The usage of suppliers who have earned your trust is one of the best thing to do when it comes to dropshipping.

How to Dropship

Before choosing a business idea, you have to make sure that you are ready to dedicate a lot of time and attention to dropshipping.

When you have found your place in the market, your next step is going to be a research on who and how many businesses you are competing against.

When you are done with the previous steps, you will have to pick suppliers. When you do so, you need to be certain that the supplier you pick is worth your trust and won’t scam you. We strongly advise you to pick suppliers with good reputation, that way you won’t have that many problems in the future.

Down below we have mentioned the two most popular methods of finding suppliers for your shop.

  1. You can utilize s supplier database, such as AliExpress or Alibaba;
  2. Another way is to add at the back of your website a supplier directory, such as SaleHoo or Oderlo.

When you have completed all the steps above, it would be a good idea to set up your own online shop. Our advice is to choose a hosting provider who you trust. Get yourself a reliable, fast, and safe ecommerce hosting with CooliceHost.

Dropshipping is a various business method by itself; it is easily accessible not only for beginners, but also for already grown businesses.

If you are working hard enough you can turn a small dropship business into one of the most profitable stores out there.

Before you put your store online you have to do your research first.

Have a detailed look around and decide what your area of business will be and research who you are competing against. Carefully research the manufacturers and suppliers you will be working with in order to run your store smoothly with as less problems as possible.

It doesn’t matter who you are working with, having a good communication is essential.

If you work with suppliers who you can trust and maintain excellent communication, nothing can stop you from having a high-profit business.

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