What is Dropshipping? – A Business Model for Online Entrepreneurs

Do you have struggles understanding what dropshipping is? Are you curious about how you can manage it successfully in the new decade? Read the thorough guide below where we try to shed some light on what this business model really is about.

Dropshipping is a business model that became known and popular worldwide in less than a decade. There are different versions of this sales method that people like to represent, but at the core, they are all the same. Maybe you are lost and don’t know what to believe from those stories you can find on the internet about dropshipping. You really do have to take care of which sources you trust. At our company, we have more than 20 years of experience in ecommerce, and know dropshipping really well. We don’t want you to burn money just because fancy stories are going around on the internet. It’s not easy to learn how to run your business safely and successfully.

We can notice a growing number of online purchases by consumers and it has enabled the emergence of new ecommerce businesses. All of this led to the size of the global dropshipping market to start growing rapidly.

We make sure you get a clear view of the meaning of dropshipping, then we will elaborate on how you can do it right. You can read a comparison of the old-fashioned and the new, modern way of the model as well.

What is Dropshipping?

Dropshipping is a business model for those merchants who run their business online. With this method, retailers can manage their online store without having real, physical inventory, without upfront investment in product stock. They are having virtual stock and fill their online store with their suppliers’ product data. The capital investment in the business is much less than it would be when purchasing products initially.

Moreover, you can also save on logistics. The suppliers send only that product to the customer, or to the retailer that the customer just ordered from your store. Products travel one-by-one from the supplier. The retailer doesn’t stock them in bulk. The customer pays for the item for the retailer, then the retailer pays for the supplier.

Please note, you cannot start an online store without investing any amount of money in it, even if you are planning to work with the model of dropshipping. You need to pay for the subscription for the ecommerce platform, for applications, and you need money for marketing activities as well. Besides all these, you have legal responsibilities and fees to pay too. Of course, it is still a cheaper solution for your ecommerce business than any other kind of business model.

There are many people who are afraid of dropshipping being dead. However, it is not! You just need to do it well. Try to avoid selling products the market is oversaturated with, also avoid cheap, low-quality items. This is one of the keys to success. Find real suppliers!

How to Succeed with Dropshipping?

If you want to be successful in the long run with your online store using the dropshipping business model, you need to take our advice into consideration. You have to think outside the box and learn more about the opportunities you have. You won’t need to stock real inventory and keep your money in the products. You will have the products “virtually”—your supplier will provide product data of their selection. Make sure you are using a service that helps you keep the product data up-to-date day-by-day in your store.

How can you have suppliers’ product data in your online store? Use reliable marketplaces where the product data is already available, or ask for a product data feed file from the supplier itself, and update them automatically with the best app.

1. Products Should Arrive at Your Place First

Usually what retailers do is ask their suppliers to deliver the products directly to the final customer. Have you ever thought of what happens if you work with more suppliers, and a customer orders three of your products that are actually from three different suppliers? In this case, the customer will receive three different packages on three different days. After receiving the first box he will contact you with a complaint email that he didn’t receive all of the products he paid for.

It is one of the reasons why we recommend you to ask the suppliers to ship the products directly to your place if you are working with more partners. Items will still arrive one-by-one, and you do not have to invest money in stock in advance. However, time must be devoted to it.

You will have to put the right products into the right boxes and you have to start cooperating with a delivery service. In the beginning, you can arrange these things in your garage or living room. It is possible that after a while you will need to start working with a warehouse, a fulfillment center. By that time it will happen, you will be able to afford it for sure.

We also recommend you place some gifts in the bag or box you will send to your customer so you can surprise them, make them happy, and be able to make them be your fans. Oh, and one more advantage of asking for the products to arrive at your place first: you can check their quality and condition.

2. Work with Real Suppliers

We suggest you find suppliers in forums, reliable marketplaces, B2B platforms, in social media groups, or by just browsing Google for dropship suppliers. You can also check which suppliers/brands your competitor-to-be companies are cooperating with. Try to avoid getting cheap, boring, and low-quality products from platforms where the sellers are often disappearing without a trace. The items these places have can be already found in every second online store. Not to mention that customers can find these items themself on the original seller site and get them at a lower price.

Make sure you are getting products from reliable sources, suppliers, manufacturers, and not from a seller who is the third, fourth reseller of an item adding the third, fourth markup/price margin on a product’s price.

3. Suppliers from Your Location

When you are looking for suppliers to cooperate with, make sure you choose partners who are in your country, or in your neighborhood. Why? Because like this you can offer quick delivery to your customers even if you ask for the products to arrive at your place first. If customers have to wait more than a week for a product to arrive it is not a good business anymore. This is another disadvantage of working with sellers from overseas and poor marketplaces as the delivery time can be 30-60 days. It must be a really patient customer who waits for such an item from an ordinary online store.

4. Quality, Unique Products Customers Are In Need Of

The best you can do is to find manufacturers for the product category you are planning to have in your online store. Make sure you are about to sell products for your target audience which they are really in need of, or there is a high potential you can awaken their interest in it with an outstanding marketing strategy. The segments of Fashion, Electronics, Toys and Hobbies, Furniture, Food, and Personal Care accounted for the largest market shares in the previous years globally.

Why do most dropshippers fail? Because they are still believing they can be rich without investing any money into their online business and marketing, and they focus on cheap, low-quality products. They have the wrong mindset when starting with dropshipping. Retailers have to make sure they are selling products from reliable sources, and also not from a company that is the third-fourth reseller of a product, and not the manufacturer of the item! Moreover, it is also a disadvantage that they do not run any marketing processes and are having poor webshop designs that lack every kind of creativity.

The only way how it is worth trying a dropshipping business is by following our advice. Do not start a business to be just one in a million. Make sure you will stand out from the crowd and you do not just burn money for nothing. Also, make sure to have a unique dropshipping store instead of copying everyone else.

There has been a change in consumer purchase behavior in the last years, more people decide to buy products from online stores as a result of more reasonable prices, better shipping conditions, safer service e-stores can provide, and bigger product selection.

Old-fashioned VS New Way of Dropshipping

On the left side, you can read about the old-fashioned dropshipping which is really popular but awaking false expectations in beginner merchant’s minds. There are many success stories on the internet about how someone became a millionaire without making any kind of investments, but you need to know, without making any effort money will not come to you.

The new way of dropshipping is something we like to call remote warehousing as well. As for the business model, the structure of it is the same as its old-fashioned version, but here the products are arriving from reliable, real suppliers, manufacturers.

Actually, within dropshipping, we can mention two ways of the model. The low-ticket, and the high-ticket dropshipping. From these models, we mostly recommend the high-ticket version, but of course, it is not impossible to succeed with the low-ticket model as well. You just need to be sure you know your market very well. Find a niche that is preferably a high-ticket item. In this model, you can sell fewer items but can earn more in parallel. The market you are working on would be smaller, and the number of people in your target audience is fewer as well, but you also have fewer competitors, and you can target your potential buyers more efficiently with your demanded items.

Where to Get Products From, Where to Find Suppliers?

If you run your online store on Shopify, Wix, BigCommerce, WooCommerce, Squarespace, EKM, Jumpseller, Ecwid by Lightspeed, KMO Shops, or Shoprenter we recommend you to try Syncee Marketplace. Here you can find millions of products from pre-vetted, reliable suppliers from all over the world. Furthermore, this B2B platform makes sure you will not oversell in your online store. It has you covered regarding the daily, automatic product data uploads and updates, and it offers automated order data synchronization as well.

Try Syncee Now for a Great Dropshipping Experience