What's dropshipping? How does it work in 2024?
What's dropshipping
The definition of dropshipping
Dropshipping is an e-commerce fulfillment model that enables storekeepers to start a business without buying inventory in advance. Instead, a manufacturer or a third-party agent will ship the product directly to the customers.
Many businesses are based on price arbitrage just like a retail store in your neighborhood. Dropshipping makes the process happen online and even expands the margin because most of the products are imported from China suppliers for a more competitive price.
The difference between dropshipping and the standard retail model is that you are playing the role of a middleman who does needn’t touch any items when carrying on a sale.
Is dropshipping legal?
Yes, dropshipping is legal and legitimate. It's an order fulfillment method that so many business owners have been using worldwide.
The number is increasing from the picture below.
It should be pointed out that dropshipping is nothing new and nothing complicated. Overview of the history of dropshipping, you’ll find dropshipping was started by mail Order Catalogues before the Internet was invented.
You need to be careful, like any business, not to get involved in intellectual property disputes.
How does dropshipping work?
Let's make it simple.
- You open a store and list products after some research
- You run ads and draw traffic to your store
- One visitor places an order in your store
- Then your store will automatically sync the order to Goshippro Dropshipping once you finish the connection
- After you pay for the order, we will fulfill and ship the order directly to your customers
You are playing the role of a middleman who needn’t touch any items.
Dropshipping has a low threshold, but it also has many problems, such as long shipping time, difficulty to guarantee product quality, serious homogeneity, etc., which may make independent sellers return without success. Let's take a closer look at the pros and cons of Dropshipping.
Pros and cons of dropshipping
Benefits of dropshipping
- Low threshold
It’s much easier to start a dropshipping business when compared with traditional retailers. There’s no need to build a team, prepare goods, and package parcels. You are only responsible for product publishing and traffic attraction.
- Less capital investment
Dropshipping requires very little capital investment because it doesn't need to stock up, lease warehouses, or buy facilities. In terms of delivery, we provide one-stop fulfillment services such as sourcing, warehousing, packaging, and shipping.
- No inventory pressure
Dropshipping model is order-oriented. You purchase only when you have an order. So you can make good use of your cash flow to spend your money where it counts the most.
- Simple to operate
Platforms like Shopify allow you to customize your store with just several clicks. You can also carry your business on your phone. No fixed workplace to draw you back from enjoying the world. And Goshippro provides automatic fulfillment for you.
Cons of dropshipping
- Slower shipping
The Dropshipping model makes independent sellers smaller and less involved in the transaction process while increasing the overall operation process, making the overall delivery of packages slower, especially for the sellers who do not use sourcing agents. They need to source goods, contact suppliers, wait for the arrival of goods, pack, paste documents, and deliver goods on their own.
- Unable to control product quality
Unlike Amazon sellers, who choose carefully and control the quality of products. Dropshippers don't have a chance to evaluate the quality of a supplier's products. This may lead to a high product defect rate and many after-sales problems.
Some newbies may think about buying an item on Ali Express and eat the expense. We think this approach is feasible. You can check the delivery, and the product quality and make creatives of your own. But Ali Express is not recommended. We’ll talk about this topic in the next post.
We will check the product twice before we ship it to the buyer. For quality problems due to our carelessness, you have the no-worry refund privilege.
- Severe homogenization
There are not only independent sellers doing dropshipping, but also Amazon sellers, Aliexpress sellers, eBay sellers, Shopee sellers, and so on. As more and more people rush into this field, they are likely to meet with sellers who sell the same product at the same time. And the product may be saturated in the market.
We provide custom packaging to alleviate the problem. You just need to send the design and requirements to your manager. The material cost is minimal.
- Unstable profit
Although dropshipping is easy to start, you will face the challenge of logistics, product quality, homogenization, checkout, order management, and other aspects. Any missteps could result in no sales.
Work with Goshippro Dropshipping
Reading this, we believe you must have a clear and objective understanding of Dropshipping. You can mitigate these risks by optimizing and simplifying the process. We provide an all-in-one dropshipping solution for you. So you can focus on pre-sale issues. We’ll take care of the after-sales instead. We’ll also serve as a loyal partner to produce high-value content for this blog.
See you in the next post.
