What is dropshipping?
<Dropshipping is a trading model (roaming) in which the seller does not share stock and simply orders goods from the supplier when he receives an order from the customer. The supplier does all the shipping and delivery work for the seller. The seller can trade without significant capital because he does not have to hold stock and does not bother with delivery. However, he has to find suitable suppliers.
Does the dropship method still work?
Yes, dropshipping is an effective trading model and always will be, because people have bought and will continue to buy otherwise it is impossible. It is popular because it allows you to start trading without a lot of capital, or even without any capital at all. It also allows you to trade online even from home. Many e-commerce platforms, such as Shopify, offer a dropshipping option, so there are plenty of opportunities to search for suppliers and choose your products. In addition, dropship is also useful for those who want to start their own business but do not have much experience or knowledge of trade and logistics. It allows them to find suppliers who already have experience and knowledge and use their services to help them trade successfully. In addition, dropshipping allows you to test different commodities and markets without high risk. If one commodity or market doesn't work, you can quickly replace it with another without significant loss.
Dropshipping is therefore an efficient trading model that can be useful for those who want to start their own business but do not have much capital or experience. However, it should be noted that it also requires a lot of work to find good suppliers, to advertise your products well and to prepare for ordering and delivery in an orderly manner.
Wholesale or Dropshipping?
The first step and the main objective is to choose a business model (Dropshipping or wholesale?). So, the question is which method to choose? There are several options, one of which is to buy goods wholesale and resell them. A second way is to start retailing without warehousing the products and sending them directly from the manufacturer or supplier to the customer ("dropshipping"). A significant amount of capital is needed to be able to engage in wholesale. This point is also subject to the rule that describes the balance between quantity and price - the more you buy, the cheaper you buy. Thus, large quantities of products imply that warehouse space must be available for storage. And the heavy workload inevitably means that warehouse or packaging staff are useful.
Dropshipping is a slightly simpler approach and arguably one of the most popular business models. This way of doing business does not require a large investment, buying goods in bulk, owning a warehouse or hiring employees. In other words, it is possible to work for one person without a large investment directly from home. Well, the biggest and most common problem of dropshipping is finding suppliers, good prices and shipping. Although it is quite often the case that a supplier quotes favourable prices, but shipping is expensive, which is why the cost of the product rises so much. Once you have decided which principle shops you want, you will need the most favourable suppliers to consult on price and shipping issues.
A little about the pluses and minuses
The pros of dropshipping are;
- Low start-up costs - you don't need to invest in initial inventory or warehouse rent.
- You don't need to manage products or suppliers, you simply order products from the supplier when you receive the order.
- A wide range of products - you don't need to invest in initial product purchases, so you can offer a wide range of products.
- The ability to trade via an online shop or platforms - you don't need to have your own physical shop to trade.
- Focus on marketing and sales strategies - don't worry about delivery and logistics problems, the supplier sends products directly to the customer.
The disadvantages of dropshipping are;
- Highly competitive - it can be difficult to find competitive products and dropship suppliers.
- Unreliable suppliers - some suppliers may be unreliable or unsuitable, which can cause problems with delivery or product quality.
- Legitimacy of suppliers - you need to check the legitimacy of suppliers and verify that they meet the required safety and environmental standards.
- Problem solving - because of the direct nature of the products, problem solving issues may arise, for example when refunds or product changes are needed.
- Time and effort consuming - it takes time and effort to find reliable suppliers and products, and to monitor your supply chain to avoid problems.
Pluses and minuses of wholesalers
The pros of wholesaling are:
- Controlling the entire supply chain - you need to contact producers or suppliers and you are entrusted with controlling the entire supply chain, from purchasing products to delivering them to consumers.
- Ability to trade in bulk - you don't have to worry about small orders, wholesale allows you to trade in large quantities, which can be cost-effective.
- Cheaper products - wholesalers often get products from manufacturers or suppliers cheaper than consumers, allowing them to offer products cheaper than competitors.
- Passive trade - if you have managed to negotiate with trusted producers or suppliers, you may be able to trade efficiently, which can benefit your business
The downsides of wholesaling are:
- High start-up costs - you need more capital to start wholesaling as you need to buy large quantities of products.
- Inventory management - you need to manage and store products, which requires more time and effort.
- Risk - Wholesaling involves a higher level of risk because you need to buy large quantities of products, which means you may have problems with unsold products.
- Highly competitive - wholesaling can be more competitive than dropshipping because you need to deal with suppliers and compete with other wholesalers.
Dropshipping and wholesaling are different business models that need to be evaluated based on your business goals and capabilities.
<Dropshipping is a good solution for those who want to start trading online or want to increase their existing product range, but do not have a large initial capital or want to avoid the high costs of buying products. In addition, because the supplier sends the products directly to the customer, the seller can concentrate on marketing and sales strategies rather than delivery and logistics problems.
Wholesaling is a good solution for those who want to control the entire supply chain, have a large initial capital and want to trade in large volumes. Wholesalers often source products from manufacturers or suppliers at a lower price than consumers, allowing them to offer products cheaper than competitors.
So which of these approaches is better depends on your business objectives and capabilities. If you want to start trading with a low start-up cost and focus on marketing and sales strategies, dropshipping is a good solution. If you have a large start-up capital and want to control the entire supply chain, wholesaling may be the best solution