Dropshipping is an excellent opportunity to start trading on the Internet without investing in wholesale goods, warehouse rental, logistics, etc.
Sample dropshipping work plan:
- find a supplier of goods working on the dropshipping system;
- upload to your online store a list of goods from the supplier, indicating the balance in the warehouse and the cost, taking into account your markup;
- the buyer places an order in your online store, pays the cost of goods and delivery;
- you transfer the order to the supplier, pay for the goods and delivery;
- the supplier collects the order and sends it directly to your client;
- the customer received the goods; the supplier sold his interests, you received the difference from the cost.
As you can see, the scheme is quite simple and convenient for all parties. Some dropshipping suppliers may work with a slightly modified plan: for example, asking you to pay in advance for several orders or redeem several items. In any case, the advantages of dropshipping are apparent and allow you to launch online sales without significant investments.
Advantages of Dropshipping
- Initial investments are minimal or non-existent;
- easy start – just create an online store and fill it with goods from the supplier;
- a wide range of products – both from one supplier and from several;
- no storage and logistics costs. Including all the following are removed: shelf life, illiquidity of goods, etc.
- No regional binding. You can carry out sales from anywhere in the world, controlling all stages of the transaction remotely.
Cons of Dropshipping
- difficulty in returning the goods. Each supplier has its principle of working with returns; before starting work, it is necessary to clarify the responsibilities of the parties and the possibility of resolving disputes that have arisen;
- control over the remainder. The supplier works not only with you; therefore, situations may occur when the goods ordered from you are not in the supplier’s warehouse. When choosing a supplier, be sure to specify: how often data on balances are updated and how you can track it.
- Suppose you work with several suppliers at the same time. In that case, a situation may arise when the buyer orders several goods from different suppliers, delivered from other places, and, accordingly, an increase in delivery cost.
- Inability to control all stages of the transaction. The supplier packs and ships the goods on his own. But force majeure is always possible: delivery delay, damage to the goods, incomplete equipment, etc. You also receive all claims since you directly sold the goods to the buyer.
- Revenue will be lower than sales with bulk purchases. If you don’t invest in buying back a large number of items at a low price, you get the opportunity to list an item at an inflated price. Yes, it will be less than the market price, but not by much. Consider this. To earn income, you need to sell in large volume.
Some systems make it easier to work with suppliers. These are dropshipping services UK that act as intermediaries between you and suppliers, which allows you to solve some problems.
How these services work:
- agree with the service;
- Place a list of goods from several suppliers with which the service works. Typically, services provide the ability to control the balances of suppliers accurately;
- having received an order from the buyer, transfer it to the service together with payment;
- the service purchases goods from suppliers and sends them directly to the client. One order;
- the client received the goods; the supplier sold his interests, the service received a percentage from you or the supplier, and the difference from the cost.
Please note that the receipt of payment depends on the scheme of work: you can receive it immediately when ordering (price in the online store) or after the buyer receives the goods (it is transferred to you by the service). When working according to the second option, you are relieved of worries under 54-FZ (online cash desk, electronic checks, etc.) – this is what the dropshipping service from reliable dropshipping sites UK does.