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Should you even reasons to start a dropshipping store?
Dropshipping is one of the best things that ever happened to the business community, especially those who are looking for ways to sell on retail online.
If you are torn apart between dropshipping and other business models, let me show you the reasons to start a dropshipping store.
The reasons are:
- Low capital is needed
- No inventory is required
- Low-cost business maintenance
- No corporate hassle
- You can work anywhere you want
- Lots of products to choose from
- Option to fully automate
- International selling opportunities
- Stable business model
- Multiple platforms
- Endless support from experts
- Customer behavior supports it
- Global economic ties make it possible
Before we discuss all the good reasons to start a dropshipping store, let us first talk briefly bout what this business model is.
What is dropshipping?
Dropshipping is a business process where the dropshipper—you—would sell a supplier’s products on your own website. Once a customer buys from your store, you have to go back to the supplier and make the purchase yourself.
In that purchase order, you have to tell the supplier to ship the item directly to your customer.
So, how do you make a profit?
The difference between the supplier’s price and the price you sold it for is your profit. Yes, this is a buy-and-sell business, but you do not have to buy the items upfront. We will talk more about the process later.
Take a look at the product below:
As you can see, I can buy this product from a supplier for $20.99 and then sell it on my website for $49. It is completely up to me to adjust my prices, whether to charge extra for shipping, or already include the shipping cost in my product pricing.
As you can see, I do not have to buy the product now. What I can do is to just put this product up for sale on my website, and wait for a customer to buy it from me before I order it from this supplier.
That is how dropshipping works. In a nutshell, it goes like this:
- You look for a product and a supplier
- You set up your website
- You market your products
- You order the product from the supplier once a customer has paid you
- You keep the profits
Now, that is a sweet process, isn’t it? Let us now move on to the 13 good reasons to start a dropshipping store.
1. Low capital is needed
You can start a dropshipping store for only $29. You do not have to learn how to code to build a website. Today, Shopify is the dominant platform for dropshippers.
Shopify is an e-commerce tool. With it, you can build a website by simply using a theme. You can change the theme’s appearance, upload photos, change the texts, add products, create collections, and so much more.
The most basic plan comes at $29 per month. At this rate, you can build a fully functional store, complete with a credit card payment processor. You have hundreds of choices as to how you want to bill your customer.
Shopify offers a 14-day free trial plan. On this plan, you can build a dropshipping store, tinker with the tool, and see how it goes.
If you like it, you can launch your store by paying the first month’s subscription. If you don’t, you can cancel and not pay anything at all.
If you are interested, you can read my blog post about the different price points of Shopify: Shopify Pricing: What Are the Different Features Between the Plans?
You can also check out Shopify’s 14-day free trial on their website or through the image below.
The other option requires a bigger capital but will cost less in the long run. This other option is to build your dropshipping store with WooCommerce and WordPress.
How does it work?
To do this, you need to sign up for three things:
- Web host provider – around $6.95 per month
- WordPress – free
- WooCommerce – free
What I recommend for the web host provider is either Bluehost or Siteground. Both offer web hosting services for as low as $4 per month.
If you register, you will be billed for one year. The best option is the WooCommerce program, which only costs around $7 per month.
After signing up, you have to install WordPress and install WooCommerce. Both are free. You would then build your store from both WordPress and WooCommerce.
WordPress is your content management system or your website builder. WooCommerce is the platform that allows you to turn your website into a store. With WooCommerce, you can charge your customers’ credit cards or their PayPal account.
If you want to know more about Bluehost, read my blog post: BlueHost Review: Is this affordable host the best for you?
Now, let us do the math:
- Shopify: $29 per month x 12 months = $348
- Bluehost: $7 per month x 12 months = $84
Bluehost is charged annually, while Shopify is billed monthly.
2. No inventory is required
In a brick-and-mortar or a typical e-commerce store, you have to buy your stocks and put them in your warehouse. If you are operating a home business, these stocks would typically end up in your room or basement.
Can you imagine the amount of money you need? If you are selling clothes, one design requires that you have different sizes for it so you can serve all types of people with different body sizes.
Here is an example:
- Small – 5 pieces
- Medium – 5 pieces
- Large – 5 pieces
- XL – 5 pieces
- XXL – 5 pieces
If you have ten shirt designs, you would get lost and overwhelmed with stocking these shirts!
With dropshipping, you do not have to do this. The supplier takes care of stocks and product availability. You do not have to pay for any item upfront.
All you have to do is to post the products and wait for someone to buy. After the customer purchases the items from you, then that is the only time you need to buy from the supplier.
3. Low-cost business maintenance
If you are not going to advertise, you do not have to pay for other costs. The only thing you have to pay for is the monthly subscription to Shopify. If you chose Bluehost, then you have already paid for one year of service.
Consider this subscription as your rent.
The only other cost of dropshipping is marketing, but this is completely optional. You can market your products on Facebook groups, Pinterest, Twitter, and other platforms for free. All you have to do is to post your items with the link to your product page.
The other cost that you have to pay is the transaction fee. This is not a maintenance cost, but a fee for using the service of an online payment processor. For example, PayPal charges a fee of 3.9% + $0.30 per transaction.
If you have no sale, then you do not have to pay. Shopify also charges a transaction fee of at least 2% for every sale. This is on top of the monthly subscription of $29, and also on top of what the payment processor (like PayPal) charges.
As you can see, the cost is manageable. If you build a brick-and-mortar store, you have to pay rent, salaries, utilities, and so much more.
In dropshipping, you would only spend extra money if you hire someone to operate it for you. But since you would be starting out a small business, I strongly recommend that you run it yourself. Once it gets big, hire helpers who would manage your business.
4. No corporate hassle
I worked in the corporate world for 14 years.
Despite me climbing the ranks, I know that nothing really beats being your own boss. You do not have to go through a series of corporate bureaucracy. You do not have to seek approval for your ideas.
You do it yourself.
You are your own boss, and you are accountable for all your decisions.
5. You can work anywhere you want
Since your business is online, and you do not keep an inventory, you work anywhere you want. All you need is your laptop and an internet connection.
You can process orders while at the beach, on a train, in a hotel or restaurant—you can manage your business anywhere?
In dropshipping, you have a dashboard where you manage your sales. It is within this dashboard where you add products, remove them, contact customers, fulfill orders, and so much more.
Whether you use WooCommerce or Shopify, both platforms allow you to install plug-ins or apps that have separate dashboards, and yet these added tools are embedded in the same environment.
Heck, you can even manage your business with your phone because all of these have apps built for mobile devices!
6. Lots of products to choose from
How many products can you choose from?
Now, this can either be a boon or a bane. There are thousands of suppliers out there, and they are selling a wide array of products.
Your challenges are:
- Selecting a niche
- Deciding what products to sell
- Choosing who to supply you
- Picking the right dropship supplier tool
Well, it is not hard to find products, but it is hard to decide which one to sell. This is why dropshipping is bad for some entrepreneurs.
They are like those people who spend 45 minutes looking at Netflix for movies to watch—they can’t make a decision.
This is a problem with dropshipping; you are inundated by millions of choices that you are left paralyzed, unable to make a decision.
Here are some examples of what you can sell:
- Sporting gear
- Hobby items
- Print-on-demand items
The list is practically endless.
But where do you find these dropshipping suppliers?
In dropshipping, there is a thing called dropship supplier tool. Some call it a supplier directory. It is a company that has a directory of dropshipping suppliers from around the world.
Some examples are:
- Oberlo – free and pay to upgrade
- Spocket – free and pay to upgrade
- Dropified – paid
- SaleHoo – paid
These companies have software that you have to install in your web platform. From there, you can:
- Search for products
- Import the products to your store
- Change prices automatically
- Be notified if there is a sale
- Fulfill the order
- Communicate with the customer
Why do you need these companies?
These companies have created an automated system to make your work easier. They also have a process of weeding out bad suppliers from their databases.
Without these tools, you would end up:
- Looking for suppliers the manual way
- Calling these suppliers and asking if they do dropshipping
- Copying and pasting product phots and descriptions one by one—manually
- Going to their website every day to check if the product is still available
- Ordering the product from their website, manually, if you sold an item
With these four tools, you do not have to do all these. You do not have to use all four—one is enough. Oberlo is owned by Shopify, but you have to pay if you want to get better services.
Spocket is free to use, with an option to upgrade if you store has already grown in size. Dropified and SaleHoo require an upfront cost to be able to use them.
If you want to learn more, I have reviewed three of these supplier directories. My dropshipping blog posts are shown below:
Note: There are successful dropshipping stores because the owners picked the right suppliers.
As a dropshipper, you are not in control of logistics and product quality—choose the right supplier, and you can expect repeat orders from your customers.
7. Option to fully automate
What does this mean?
If you use a supplier tool, all of these offer automation. You can set global pricing rules where the prices on your website would automatically change if the supplier changed his price from his end.
If the item is out of stock, your store will automatically update to show that it is out of stock. On top of that, there are dropship supplier tools where you can automate the order process.
In the normal process, this is what happens:
- Customer orders from your store
- You get notified
- You have to log in and order the item from your supplier
- You change the status of the order from “pending” to “being processed.”
With automation, you no longer have to order the product. Once a customer pays for an item, the system will detect it, and the supplier will be notified. The supplier will then now ship the item automatically.
Of course, this cannot happen if the supplier is not paid yet. In this case, you have to attach a credit card to the dropship supplier tool. The card will be charged once an item is automatically ordered.
One such tool is Dropified. You can read my review about this service here: Ultimate Dropified Review: the best dropship tool?
8. International selling opportunities
If you are selling your own goods, can you imagine the hassle you have to go through to ship?
What if you want to ship internationally?
Thankfully, logistics is not a problem you have to deal with in dropshipping; the suppliers have already figured this out.
There are thousands upon thousands of dropship suppliers who ship internationally. What does this mean for you?
It means that no matter where you are, you can offer these products globally! These suppliers have dozens of warehouses around the world, and they ship these items from their warehouse to the end-consumer.
The products will be shipped from the warehouse location that is closest to the shipping address of your customer.
Now, that is really neat, isn’t it?
And the best part? Both WooCommerce and Shopify allow you to charge credit cards from around the globe!
9. Stable business model
People will always have to buy something online. As a dropshipper, you have a stable business model. Since you are not buying inventory, you do not waste money on items that have lost their panache.
Let the suppliers worry about that.
For example, there was a time when fidget spinners were the craze. Can you imagine if you stocked up thousands of that in a physical store?
Today, nobody buys fidget spinners anymore. So what happens to your stock? That is lost money right there.
In dropshipping, you can sell fidget spinners if they are a trend, and then just take them off your dropshipping store once the fad is gone.
10. Multiple platforms
In dropshipping, you are not limited to selling on your website. There are plug-ins where you can sell on multiple platforms.
In Shopify, you can integrate your store to Amazon, Facebook, and Instagram. What does this mean?
Your followers on these platforms would see your products without going to your online store. If you update your store’s content, these platforms would also update.
This is great because apart from the potential sales you get from your online store, you are putting out your items for people to see in different platforms.
11. Endless support from experts
Dropshipping is a huge economy. As such, there is no shortage of experts in the field. You can take online courses on a lot of things, such as a course on e-commerce and how to start one.
You can buy books if you want, or you can participate in forums where you can get help.
Shopify has a forum. Oberlo, Spocket, Dropified, and SaleHoo have a massive database of learning resources. WooCommerce also has a huge knowledgebase.
All these huge companies provide adequate support for their subscribers. And you know what’s great? These companies offer customer service. Some offer chat and email, while some have voice support.
If you are having trouble with integration, setting up your website or anything at all, just drop a note to the customer service experts, and they will help you resolve your issue.
12. Customer behavior supports it
The world has changed, and we know it. As of 2018, more than 1.8 billion people made a purchase online. Don’t you want a share of that business pie?
According to Statista, e-commerce accounts for 22% of all global retail sales, and this will continue to grow.
Customer behavior has changed over the years. People are no longer interested in going to the grocery store or department store. They would rather buy online because there are more options. It is also cheaper to purchase products online.
Since online sellers do not have a brick-and-mortar business, they do not have to pay rent, utilities, and salaries. Without a huge overhead, they can sell their products for a lower price.
This is how suppliers can afford to sell you, the dropshipper, their products at a lower price. You have to take advantage of this—buy the products at a lower cost, and then sell them at a higher price.
13. Global economic ties make it possible
Dropshipping is made possible because of the relationship between nations. If you have not heard about it, China has multiple arrangements with various countries. The tariffs or taxes for Chinese products are low, and Chinese companies can ship their items globally for free.
This free shipping is called ePacket, and I discuss this further in my blog post: What is ePacket: Your Ultimate Guide to ePacket.
Basically, ePacket is a global shipping arrangement where merchants can ship their products for free.
Why is this important? Because as a dropshipper, you do not have to charge shipping fees from your customers! The lesser the cost, the more attractive it is.
Without this free shipping arrangement, dropshipping and selling at a global scale is going to be very costly.
Dropshipping is a lucrative business if done right. Before you get started, I suggest that you read my post about the possible reasons for failing: The Top 5 Reasons You Will Fail at Dropshipping.
While setting up the store is easy to do, the challenge really begins once the store is up. Marketing your goods is what you have to focus on, as you have to build credibility to convince your website visitors to buy.
Between dropshipping and affiliate marketing, the only deciding factor really is your passion and interest.
If you are undecided between the two, I can provide you with some guidance on how to make the decision through my blog post: Dropshipping vs Affiliate Marketing: What Should You Choose?
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