What is Dropshipping? Where to Find Suppliers and Much More

What is Dropshipping? Where to Find Suppliers and Much More

Dropshipping is a very successful e-commerce business model. It can be an excellent way to launch an online store at the lowest cost. Many people wonder what dropshipping is. I’m going to give you my own definition and explain how it works. I will also tell you about the top dropshipping providers. Are you ready? Let’s go there!

Definition of dropshipping

It is an electronic commerce format in which the seller does not have a product stock. When a customer places an order in the online store, the seller in turn orders the item from his supplier. The latter sends the product directly to the customer.

Previously, the seller has reached an agreement with the supplier so that the shipment does not bear any mark, or even bear the mark of the seller’s online store. For the customer, everything happens as if the product had been sent by the page to whom it was purchased.

Advantages of dropshipping for an e-commerce entrepreneur

  • I just explained how dropshipping is a non-stock e-commerce model. It follows that the main advantage for the seller is that he does not have to invest in buying a lot of stock.
  • Nor can you go wrong buying products that you will not be able to sell later. He always plays it safe.
  • It is an ideal format to test an online store concept. Suppose you have decided to specialize in a niche market. You can see if you can attract customers, without the need for a significant investment. It allows you to test various niches until you find the right one.
  • You free yourself from most of the logistics process. You just have to pass the order from your client to the supplier. You do not send. You are merely an intermediary.

Disadvantages and obligations of dropshipping

  • First a warning to sailors. The fact that you do not send the products does not exempt you from responsibility. Customers buy from you, and therefore you should fulfill their orders, like any other online store. It is important to insist on that because dropshipping is an online store out of stock and is just an organizational detail.
  • The main drawback of dropshipping is the delivery time. Then we will see which are the main dropshipping providers. You will realize that many are in China. In other words, weeks can pass between your client’s order and the product delivery date. And that doesn’t give a very good shopping experience for your customer.
  • Another drawback is the profit margin. I assume that when you choose your dropshipping providers you will negotiate prices. But since you are going to buy little by little, at first you will not have very high margins because the volumes will be small.
  • You advance the money for purchases, but usually, for a very short time (one or two days), the time that the customer’s payment appears in your account.
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How dropshipping works specifically

Those are the main steps of a dropshipping business model.

  • The client places an order on the web and pays by credit card (or Paypal).
  • Immediately, you pass an order to your supplier and pay for it. You get an estimated delivery time and communicate it to the customer, along with the order confirmation.
  • The supplier sends the product to the customer.
  • The customer receives the product in a neutral container or with the corporate image of your store.

Top dropshipping providers

Aliexpress

It is a Chinese portal almost as well known as Amazon. Let’s say it’s the retail version of Alibaba (which is more of a wholesale platform). One of the advantages of opting for Aliexpress is that if you have your online store on Shopify, you can install the Oberlo plugin. It is a tool that allows you to easily import all the products that you want to sell in your online store to your website.

DH Gate

Another Asian portal that you surely know if you read my article about the pages to buy in China. There are many Chinese suppliers registered on the platform, and you can find practically any product. However, as I will explain later in the dropshipping tips section, you must test the seriousness of the companies and their delivery times.

BigBuy

It is a company with Spanish capital, and a European leader, specializing in dropshipping. They operate in more than 20 European countries. They have a wide catalog of products, so if you work with them, you can choose both a general sales strategy and a niche market.

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SaleHoo

New Zealand company that offers a platform with thousands of wholesalers and dropshipping providers around the world. It may be a good idea to visit it to find the companies that may interest you.

Other companies and portals

You can create your own agreements

Don’t get obsessed with the list of portals that I just shared with you. If you want to offer something different from your competition, you should go find your suppliers elsewhere.

I give you an example. Let’s say you want to sell some typical crafts such as Toledo swords. It’s the first thing that has occurred to me now. Your customers will be collectors who are not going to worry so much about price, but rather about quality. Now, if you establish agreements with some artisans, you can perfectly set up an online store using dropshipping.

You will receive an order, you will pass it on to the craftsman, and he will send the product directly to the customer on your behalf. The customer is happy, you earn your margin, and the craftsman just got more business. Everyone benefits.

In fact, in some segments, dropshipping can be a great way to promote local production through these types of agreements with the industry in your area. You don’t have to just buy things in China.

Important tips before setting up your dropshipping store

Test vendors and products

Don’t even think about starting to accept customer orders without having at least tested the supplier’s services and product quality. There are quite a few dropshipping suppliers, and there are also many platforms where very different suppliers work. Usually, most of them are legit, but you can’t go on an adventure.

  • Test the delivery time. That is a fundamental element. It is not the same that the product takes 2 weeks to arrive or that it takes 2 months. And let’s not forget the possibility that it never comes.
  • Analyze the main products that you are going to sell. Remember that you want your customers to have a good shopping experience. Your goal is to build a brand image, build loyalty, and become a benchmark company. For that, you have to have proven that what you sell has the value for money that is expected.
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Choose a market niche

One of the great temptations for online entrepreneurs is to opt for a large market because they think it will be easier to get a slice, even a small one. That is why many try to get into the sale of telephones, computers, electrical appliances, and so on. In theory, they are products that leave good margins, so it is very tempting to want to sell them. Actually, for this type of market, there is a lot of competition, and it is very difficult for a small online store to sell something. People go to Amazon and other big sites.

On the other hand, if you choose a niche, you will have less competition. I’m not saying it’s going to be easy, because it won’t be. But at least you have a chance to beat your competition and get sales. Specialize in something. Sell ​​ukuleles or record players. In other words, something intended for a very specific segment. And become an expert on the subject.

Use dropshipping as a gateway to traditional e-commerce

I think dropshipping doesn’t pay off in the long run. It is a good tool to test an online store and get some benefits. But if you want to set up true e-commerce, you have to change the model. And the change will come naturally.

When you see that you make several orders a day for certain products, you can decide to buy them to have them in stock. You will probably get them cheaper. You can offer a much shorter delivery time. And so, little by little, you will turn a dropshipping business into a classic online store.

 

Do you see it? If you were wondering what dropshipping is, I think I have answered your questions. Also, now you have a list of providers, and you know how this form of electronic commerce works.

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