The decision to launch a business should never be taken overnight. It is important for an entrepreneurs to weigh all the pros and cons and assess the potential risks before taking the plunge. While proper planning is without doubt essential for launching a successful business, it is also true that one of the key differences between “wantrapreneurs” and “entrepreneurs” is the latter’s ability to take the plunge without wasting too much time in deliberation.
That however can be tricky because it is not always easy to set up the various systems and processes required to start your business. If you are an eCommerce retailer, you may be required to establish partnerships to source your products, find distributors and work out your logistics well before you sell your first product online. That can be several months of work. For a bootstrapped entrepreneur, this can be a huge barrier to entry.
Dropshipping is a fantastic model that helps entrepreneurs do away with all the red tape and launch a business quickly and efficiently. This is essentially the use of third party businesses to make and sell your products. In other words, your job, is to merely promote your dropshipping business and get the sales going. The responsibility of making the products and fulfilling these orders lies with the dropshipper.
How To Start A Dropshipping Business
The biggest challenge in launching a dropshipping-based eCommerce business is finding a good and reliable dropshipper. This is because the reliability and trustworthiness of your dropshipper can directly make or break your brand. You could start by searching Google for dropshippers for your industry. Alternately, you may also look up for suppliers on websites like Alibaba and ThomasNet and call them up to know if they can dropship your product. It’s a long, boring process, but can be done.
Alternately, you may also make use of third party tools to look up dropshippers for your industry. Shopify recently announced the acquisition of an app called Oberlo that makes it extremely easy to click and add dropshipped products to your eCommerce store. This can bring down the time spent in researching dropshippers from several hours (or days) into a matter of minutes.
Once you have identified the right products to dropship, it is merely a matter of aggregating these products on to your eCommerce store. You are ready to promote your business from here.
Promoting A Dropshipping Business
Promoting a dropshipping store is not very different from marketing any other type of business. But there are a few caveats to keep note of. Firstly, your brand equity hinges a lot on the dropshipper you work with. If you are sourcing products from a Chinese supplier, you must be aware of the lengthy shipping times from China to your customer in the US, UK or any other part of the world. It is important to keep your customers in the loop about the shipping time in order to protect yourself from high number of chargebacks.
If you see a steady number of orders from your customers, a good idea is to hire a domestic freight forwarding company to hold the inventory from your dropshipper and fulfil orders from this domestic warehouse. This can increase your costs and in a dropshipping model where your margins are already thin, this strategy is however not recommended to all dropshipping businesses.
A lot of eCommerce entrepreneurs look at dropshipping as a stop-gap measure before they procure and fulfill orders themselves. But it needs to be pointed out that eCommerce can be a logistical nightmare that can suck in a lot of working capital and bring down your profits significantly. Dropshipping can keep your overheads low and help you scale your business seamlessly. As an entrepreneur, you must however keep an eye on your contracts and make sure that you get a price that is commensurate to the order volume. This is the only way to scale up a dropshipping business while increasing your margins at the same time.
Author Bio: Andrew Morris is the founder of Flicmedia, a UK based business marketing agency that helps small and medium businesses improve online reputation and grow their business.