Written by Raúl Carrión
Índice
Dropshipping is an online business alternative for those entrepreneurs who want to get started in e-commerce with the minimum possible investment. In this article we will explain what it consists of and analyze its advantages and disadvantages.
What is dropshipping?
Dropshipping is a type of sale where the retailer does not have its own stock. Upon receipt of an order, all information is sent to the supplier of the goods, who then sends the order directly to the customer.
What do I gain from dropshipping?
In a dropshipping transaction, the profit results from the margin that we assign to the products offered.
What are the advantages of dropshipping?
Cost savings
With dropshipping you don’t need to invest in stock, warehousing or transportation. All your efforts should be focused on choosing the right product portfolio, getting good deals with suppliers and attracting customers to your online store.
Cash flow
When a customer purchases a product in our online store and makes a successful payment, we will forward the order to the supplier company, crediting the goods with part of our customer’s payment.
What are the disadvantages of dropshipping?
Poor stock control
In the best case, our suppliers will provide us with product stock data through XML files, depending on the scheduled update frequency, we will have more or less recent information.
Other suppliers upload to an FTP account the list of products and stock at the end of the day. This system is in clear decline because it offers information that in a few hours is considered obsolete.
Reduced margins
Dropshipping providers allow you to charge the margin you consider appropriate to the products, however the market is not so permissive, and if you work with higher margins than the competition it is possible that the number of sales drops drastically.
No control of delivery times
Once we pass the order to the supplier we lose control of the management of the order, being the supplier the only party responsible for the correct delivery of the orders.
Contents to be improved
Dropshipping suppliers provide product descriptions and images, however if we want to stand out we will have to work on this aspect, since the rest of our competitors will start with the same initial material.
How to have a successful e-commerce with dropshipping?
Choose the right product
I recommend that you choose products that meet the following premises:
- Products you like, to increase your involvement in the business.
- Products that you know, so that you can easily generate related content.
- Products in demand, to ensure that they will be sold.
- Products with sufficient margin to compensate for the effort made.
Getting good suppliers
A good dropshipping supplier is one that offers products with attractive margins to a small group of retailers and provides adequate product information.
Looking for dropshipping suppliers on the Internet we will find companies that are dedicated exclusively to the management of dropshipping and manufacturers and importers looking for alternative ways to place their product on the market. This second group is usually the one that offers products at a lower price and therefore we will be able to work with a higher margin.
High-performance online store
Once we have decided that we want to sell, we will have to work on doing it with the maximum guarantees.
Having a good online store is essential for two reasons:
- It will attract customers through on page positioning.
- It will convert them into customers, through usability and conversion.
Quality content
Work on quality content oriented to usability and conversion of your products: descriptions, comparisons, images, etc. This will help you position yourself better and show potential customers that your online store knows the product better than others.
Online marketing strategies
Don’t just work on search engine optimization, customers can come through alternative ways: Google Ads, email advertising, social media advertising, etc.
Depending on the product and customer profile, you will have to decide which traffic sources to invest in.
Quality of service
Shopping in our online store should be a pleasant experience during all phases of the sale, from the first visit to the online store, through the generation of the order, delivery, subsequent consultations, etc.
Is dropshipping better than conventional e-commerce?
It is not better, nor worse: it is different. With dropshipping you minimize risks, but you play with much lower margins. Whereas with conventional e-commerce, margins are higher but you must invest in a minimum of stock, manage logistics, etc.
What is the final recommendation?
To succeed in a business, whether online or offline, it is necessary to invest a minimum of time and money. Even if you don’t invest in stock you will have to invest in a good online store and in strategies to attract traffic to the website, so the margin of the products must be large enough to cover the monthly costs and the amortizations of the initial investment.
Take the necessary time to obtain information and design possible scenarios with spreadsheets to know the possibilities of the business before starting to invest.
Dropshipping can be a very interesting system but first of all you have to make numbers.
