Drop shipping business is currently the best option to start an online business. It offers you the ease to carry out an e-commerce business without even going into any hassle of production, stocking, shipping or anything related to maintenance.
All you need to do is choose a few suppliers, partner and start selling your products.
It’s easy to start the business, but there are a few things you should know about.
No one tells you what you need to do to run a successful dropshipping business. A ton of things are involved, and in this article, we will discuss everything you need to know about a dropshipping business.
From costs to shipping to marketing, we have will cover every aspect of a drop shipping business.
Drop Shipping for Dummies – Questions & Answers
1. What are the Startup Costs Involved
To start a drop shipping, you will need some sort of investment. It’s minimal, but not nil. The startup costs primarily involve what you need to establish an online business.
If you choose to sell via eBay or Amazon, you’ll need pay for the listing and then commission for sales.
In case you choose to run your own online store, you need to host a website and pay your suppliers for their drop shipping services.
2. What are the Legalities for Dropshipping Business?
This may vary from country to country. You may have to obtain a tax ID and local business licenses. Make sure to go through all the local legal requirements you need to start your dropshipping business. If you are from India, you need to register a company with ROC.
3. What are Marketing Costs for Drop Shipping?
The marketing costs will depend on the scale you want to carry your business. For small businesses, social media is easy and free to reach option.
You can even add a blog to your site to promote your products via blogging and use email marketing to market your products.
4. What are the Benefits of Dropshipping Business?
If you break it into parts, the benefits of drop shipping business are:
Run your business from anywhere
Sell whatever you want to
Change products as you like
Chances of losses are very low
5. What Profits Can I Expect From Dropshipping Business?
Dropshipping can be hugely profitable as you make it. Do remember the competition is high, and there are big players everywhere.
If you can pick a good niche, you can easily make good money out of drop shipping business.
6. What are the Disadvantages of Drop shipping Business?
There are a few disadvantages in spite of its risk-free business model.
Discounts will differ compared to wholesale buying
Bulk orders only come with extra discounts
No control over product quality
Choosing a good supplier is very important. The buyer is expecting the orders from you, not your supplier.
So ensuring good service is important, and that can only happen when you choose a good supplier.
7. How To Price Your Products In Dropshipping Business?
You need to keep the profit margins depending on the product’s availability and competition. There’s already plenty of competition out there, so you need to keep your prices low to grow your sales.
It’s better to follow a low-profit-margin and higher volume sale model for general products.
While for the niche you can follow a lower sales volume and higher profit per sale model.
8. How To Choose A Dropshipping Supplier?
Once you finalize a product category, go through all the suppliers who offer products in that niche. Read reviews and check their costs, compare and if possible see from how many years they are into the business.
It’s better to keep a few suppliers handy rather than just one or two suppliers.
9. How To Order From Suppliers?
Once you partner with your supplier, you just need to forward the order you have received. Small orders can be submitted directly by forwarding a confirmation email.
For higher volume, you may have to generate a daily sales sheet with all the necessary data.
You need to provide the item, shipping address and payment details.
10. What Are The Shipping Charges Involved?
You need to pay your supplier for the shipping. If you have large orders, the supplier will charge a flat fee per item or a cumulative amount. You can list your product with ‘Free Shipping’ tag and can add up the charges to the product.
Free shipping results in higher sales. It attracts more customers, especially during sales.
11. Who Will Pay The Shipping on Orders?
Your supplier will arrange everything to ship the product, and you will pay the charges decided beforehand. You can choose to show the shipping charges separately in the invoice or hide them in the listing price.
12. Can Packaging Material Be Customised?
You can make your orders appear like they have been directly shipped by your company. Dropshipping suppliers offer customized packaging but will charge extra for it.
You can pay the additional charges to have your own packaging, shipping labels and item tags with your company’s name and logo on the dropshipped items.
This also brings in a sense of confidence among customers that they are actually ordering from a good e-commerce store.
13. What If My Customer Wants To Return The Drop shipped Product?
The return will depend on the supplier. While many drop shipping suppliers accept returns for certain items, most of them don’t accept returns for certain items. You should make it clear with the supplier, and list up the return details on your site accordingly.
Once a product is returned, the supplier will identify the item and process a credit to your bank account once verified.
14. Who Will Pay For The Return Shipping?
This depends on why it is being returned. If a product is damaged or defective, the supplier will reship the product at his own expense. But if a customer wishes to return a product, either the customer or you will have to pay the return shipping charges.
Establishing a profitable drop shipping business takes time. You need to research on the products you choose and pricing them smartly is important in such a competitive market.