What is dropshipping and is it something worth doing?
Updated: Jan 24
The basic idea behind dropshipping is to sell products via a wholesale platform in order to buy items at a relatively low price and resell it to your customers for a profit. With dropshipping, you will not own or keep any stock. You are simply the middleman that utilises the power of advertising to sell a product from the wholesaler to your customer.
The process of dropshipping could be as follows:
Customer is interested in the product you are selling and makes a purchase
You fulfill the customer’s order through a platform like AliExpress or eBay
The product is shipped directly from the warehouse to the customer’s address
In theory, this may sound very simple to do but in reality, there will be some challenges you may face, especially in 2020. Here are the most common challenges:
1) Oversaturated Market
Dropshipping is as popular as ever so there is a lot of competition you will be facing. Many people have tested the water with dropshipping, which you may have realised with the vast number of ads related to dropshipping on social media. It is not as easy as before to convert the typical Instagram or Facebook user into a buying customer.
2) Getting traffic to your dropshipping store
By just using Facebook ads and Instagram influencers, hoping to get traffic and conversions is not good enough. You’ll just be wasting your money and not getting the results you desire. People don’t like ads and usually avoid them when they see one. To get the traffic you need to your store, you’ll need to change the way you showcase your ads. Instead of promoting just an image of the product itself, it would be more engaging to the viewers if there was a video of people using and interacting with the product. By doing so, it captures the attention of the viewer, making them pause and potentially clicking on your link to find out more. The ads that end up doing well are the ones that are creatively made and fit with the latest trends on social media.
3) Finding the right product
Literally, there are so many products to choose from and choosing the right product is a key component as to whether your dropshipping business will succeed or fail. Remember when fidget spinners used to be a thing. Everyone wanted one, which is why it was a good product to sell at that time. It was heavily trending and almost every social media account was displaying one.
The best way to find out which products are currently trending is to message wholesale sellers and ask them what they’re top ten most selling products are. This will help narrow down your options when deciding the perfect product for you to sell.
We’ve discussed some of the challenges with dropshipping. Now let’s move on to the actual benefits:
1) Very easy to get started
The process of creating a dropshipping store is very easy thanks to websites like Shopify that allow you to build a fully functioning dropshipping store in less than an hour. There are a vast number of plugins that have been made to help optimise your store and also help automate order fulfillment.
2) You don’t need much money to start
Apart from setting up your store and spending money on advertising, you don’t have to worry about buying an inventory of products. This means that there will be no risk of losing money from unsold products.
3) Package and posting is done by the supplier
Your supplier will be responsible for packaging the product and shipping it from their warehouse to the customer.
4) Dropshipping can be done from anywhere around the world
You only need a computer and an internet connection to be able to run a dropshipping business. Not only does this benefit affect you but also the customers. It allows people from many different countries to purchase your product and get it shipped to them, allowing for an international market.
5) A lot of money can be made
With the right product and the right ad, your store can be scaled up to earn you a lot of money. Some of the most successful dropshipping businesses can rack in hundreds of thousands of dollars every month in profit.
Here’s an example of a successful dropshipping business:
Honnebox - This is a huge dropshipping business that sells wooden music boxes.
The price for the wooden box on the Honnebox website is £22.86.
The price for the wooden box on AliExpress is £2.87.
That’s a whopping £25.37 profit margin!
They also have an Instagram account with over 100k followers so they are definitely getting a lot of sales.
By no means is dropshipping a get rich quick scheme. It takes patience and hard work to overcome the challenges of building a successful online business. But it is 100% worth it when the results start to show.