Today, there is no shortage of personalities and brands touting DropShipping as ‘the next great way to become financially independent’ online. Now, they aren’t entirely wrong, but today I’d like to discuss why DropShipping isn’t the fly-by-night, get-rich-quick scheme it’s made out to be.
DropShipping isn’t a revolutionary idea – people have been doing it for decades. In its modern incarnation, you sell products online but, crucially, you do not have to hold the inventory.
When a customer places an order, it is automatically ordered from your supplier. You pay the supplier, the supplier sends the order directly to the customer, and most of the time, the customer is oblivious that they haven’t dealt with a ‘traditional’ store with its own stock or inventory.
Reality check – DropShipping is a ‘real business’, and you do have responsibilities if you want to succeed.
Most of the ordering and fulfilment process is automatic from your point of view. You’ll want to review your commercial numbers and check orders – anything less would be irresponsible, but that side of things all happens without you lifting a finger unless something goes wrong.
Despite this, DropShipping is not ‘money for nothing’. Your job is to maintain your website, develop your brand and explore new sales channels to bring in customers. You set the prices, so you still make a profit after all of your expenses. Your job is marketing and monitoring.
The Future of DropShipping Post-Pandemic
With this in mind, it’s worth us taking a sidestep to look at the sector as a whole. DropShipping is more popular than ever, no small thanks to the considerable growth in online sales during the ongoing pandemic.
The global DropShipping industry is expected to grow to $425 billion over the next 3-4 years. More than 25% of online retailers are already DropShippers, and the proportion is growing steadily.
Why is DropShipping so Popular?
Like anything popular, different people prefer the DropShipping business model for various reasons. A few of the strongest arguments for DropShipping include:
- Profit – DropShippers tend to make 50% more profit on each sale than traditional retailers.
- Low initial investment – It costs a great deal less to set up as a DropShipper than to set up shop in an actual shop.
- Low demand on time – Many DropShippers are not ‘full timers’. They have multiple income streams, which may include traditional employment as well.
- Flexibility – Most marketing and management responsibilities can be delivered online from literally anywhere in the world and at any time of the day or night.
What Does It Take to Run a DropShipping Business?
What are the practicalities of running a DropShipping business?
You’ll need to get a few technical things nailed down right from the start. For example:
- Choose a name and logo you can live with long term
- Buy a suitable domain name for your website
- Decide how your customers will pay you
- Write and design your website, or hire a copywriter/web developer
- Choose great products and set profitable prices
- Set a realistic budget for the business, then stick to it
- Form a plan for marketing your products and your brand
- Pick your business intelligence and analytics solutions
- Now – how do you make it all run profitably?
Well, there are several routes to success. You could build everything from scratch, micro-manage each one and zero, and build a thriving DropShipping empire through dedication and hard work. I’m not being ironic; you really can do that. However, most people prefer a somewhat easier path.
Choose the right businesses to partner with if you want to make your DropShipping journey far easier.