What Is Dropshipping? Everything Business Owners Should Know

Dropshipping is nothing new, and it's been around since the 60s or 70s. However, dropshipping has evolved over the past 50+ years and it now offers numerous benefits to businesses. It's a win-win situation for businesses as well as dropshippers, enabling them both to earn more in profits than ever before. However, dropping must be managed strategically in order to be successful.

Getting started with dropshipping is easy, and all that's necessary is to locate a dropshipper that you would like to do business with and then take it from there. In fact, you can partner with multiple dropshippers if you feel it would be more lucrative for you. Dealing with more than one dropshipper simultaneously gives you more options to offer your customers. Here is a complete overview of dropshipping so you can get started with selling significantly more products today.

What exactly is dropshipping?

Dropshipping is an easy way to sell various amounts of unique and popular products without the need to contend with the storage or management of inventory.

In fact, you don't even purchase the items that you're selling in advance when you become involved in dropshipping. Dropshipping is a business deal between a business and a dropshipper (another business that has an unlimited warehouse full of products.) The business will list products for sale on their website, and when a customer purchases products through that business's site, the dropshipper will fill the order using products from their inventory and ship it directly to the customer.

The business obviously makes money by making the sale itself, but since the dropshipper actually fills and ships the order to the customer, the dropshipper earns a percentage of every sale. Other dropshippers merely charge a monthly fee instead of earning a percentage of every sale. When the order is shipped, the dropshipper labels the package with the business's name on the label, so customers never become aware of any third-party involvement.

Dropshipping is a very exciting way for many businesses to make money, because you have access to these amazing, low-priced, high-quality products, and businesses can set them at whatever reasonable price that they desire. Once a business gains a regular customer base, they can raise the prices slightly for increased profit.

What are the benefits of dropshipping?

There are many notable benefits of dropshipping, with the top benefit being that it frees up a great deal of space for businesses. Since you're likely to offer multiple products for sale to your customers, there is no need to contend with storing any products whatsoever, because the dropshipper will store the products in their warehouse. Therefore, you could have a 400-square foot office, with no overhead, if that's all the space you wanted. Many small businesses start out in garages and other small spaces before becoming successful and better able to afford a larger and more adequate workspace.

Packaging and shipping multiple products can sometimes be a real pain. However, another benefit of dropping is the fact that the dropship manages this aspect of the sale, so you never have to manage shipping or packaging items that your customers purchase.

Furthermore, dropshipping also enables businesses to try out various suppliers to find the best one that is the most reliable and has the best products. If you want to partner with two or even three dropshippers because of the different varieties of products, then it's likely a great idea.

Another benefit of dropshipping is the fact that although you must invest some money when starting, startup costs aren't very much. As you check out the different dropshippers, you will find that their costs are very affordable, and since it's not necessary for you to purchase the products before they sell, dropshipping is a quick and easy way to earn mega profits as long as you're going about things in the correct manner.

What are some of the disadvantages of dropshipping?

As you will quickly discover upon searching for dropshippers, there is an abundance of different suppliers to choose from. However, you should take your time choosing a dropshipper, because choosing the wrong one could lead to a variety of potential problems that could ultimately cause you to lose customers or experience other issues.

Beyond the challenge of finding the right partner in your dropshipping endeavor, there are some disadvantages to dropshipping in general that business owners should be aware of. First of all, you're not going to earn as much money because there is a third party that needs to be paid, as well. You will likely need to make an immense amount of sales to meet any goals that you have.

Another disadvantage of dropshipping is the fact that you don't have as many chances to build your company's brand. Since the dropshipper is responsible for shipping the orders directly to the customers, you will have very little customer interaction, which prevents you from incorporating your own personal touch with your shipments.

Yet another disadvantage of dropshipping is the fact that you have practically no control over things once an item sells. From that point, everything is up to the dropshipper, and if you don't opt for Mailchimp or another reputable company, then things may not always go as smoothly as you expect. There could be problems with faulty products, late shipments, poorly packaged items, etc. You could even disagree with the design of the dropshipper's shipping material, but the dropshipper will likely not change it just because you dislike it.

When should I start dropshipping?

There is no specific time that you should start dropshipping, and whenever you feel you want to start, then go for it. While some companies believe that starting at certain times of the year increases your chances of being profitable, there really is no time that is better than any other.

What is going to make the difference between success and failure is which dropshipper you opt to partner with, which products you choose to sell, your marketing plan, and much more. It will be necessary to put some effort into gaining customers, because, with the amount of competition that you must contend with, you must make your company stand out.

Can you drop ship from any website?

It's so quick and easy to start dropshipping and start making money as long as you choose the right dropshipper, and you can drop ship from any website. If you have a free website and you haven't yet purchased a domain name, it doesn't matter, as you can get started regardless of the type of website you have. You might even opt to seek an online store, which has everything set up for your convenience. So, if you're just starting out in business and you'd like to start dropshipping immediately, then you can do so with little to no initial investment.

Can you drop ship for free?

While it is possible to start out with dropshipping for free, this service won't remain free and you will eventually have to spend some money out of pocket. It takes money to make money, so you should plan on spending some money in the future if you expect dropshipping to be successful.

In order to drop ship for free, you need to find a company willing to give you a free trial. While researching the different dropshippers that are available, you will find that many require monthly membership fees, many of which are quite affordable. Some of the dropshippers even offer free temporary memberships to allow new subscribers to try them out before committing.

Final thoughts on dropshipping

If managed properly, a dropshipping partnership can be a very lucrative deal for both parties involved. In order to increase the odds of being successful with dropshipping, a business needs to be sure to choose the best dropshipper, because choosing the wrong dropshipper could result in the late arrival of shipments, low quality products, and other potential problems.

After partnering with the perfect dropshipper, you need to come up with a great marketing plan, because the more customers that you're able to attract, the more lucrative dropshipping will be for you in the long-run.