When you have an e-commerce business, one of the most important considerations to factor into your operational model is fulfilment. There are different routes to fulfilling your online customer orders, and each has its own advantages and disadvantages.
For example, you might choose to have your fulfilment in-house, and oversee the process yourself. This can be manageable if you have a relatively small business and wish to absorb the costs of your time. It also guarantees quality control to a degree that suits you. But, there are risks in housing your own stock, including damage and theft. There are also costs associated with buying and storing your own inventory. For these reasons, many e-commerce entrepreneurs prefer to use a dropshipping model.
What is Dropshipping?
In this method of fulfilment, the store owner doesn’t actually need to store its own products. In fact, it doesn’t hold the stock at all. When the e-commerce store sells a product online, the business owner will then purchase it directly from the third party, who will then ship it to the customer.
The key points of this are:
- The seller doesn’t hold any stock themselves
- The seller will buy the inventory at the point where a customer makes a purchase
- The third party is usually a manufacturer or a wholesaler, who will hold the stock.
- The third-party will deliver the item to the customer directly.
- The process is highly automated using digital technologies. This allows the e-commerce store’s website to integrate with the dropshipping provider to make the process fast and seamless.
What are the Benefits of Dropshipping?
There are various benefits to this kind of model for e-commerce businesses. For example:
- It allows for a low-cost entry into your market – without the need to create your own fulfilment model or to have warehousing space for inventory.
- It lets the business owner focus on customer marketing and satisfaction, rather than needing to handle parcels and deliveries directly.
- The right dropshipping partner offers cost-savings and efficiencies of scale thanks to an established, refined operation.
- Quality control procedures give e-tailer confidence in the finished result and customer experience.
Which Industries tend to use Dropshipping?
Dropshipping can be used in practically many types of eCommerce business that sells tangible products that aren’t unique. Hugely popular sectors in the dropshipping world include vaping and CBD, health food, bespoke clothing, phone and car accessories and gadgets and pet and fashion accessories. All these business models can fit perfectly to dropshipping’s convenient and affordable solution to customer fulfilment.
These types of business tend to be newer and keen for innovation and they evolve using the latest digital technologies. For these types of flexible and nimble e-commerce operations, it is easier to embrace a dropshipping model from the start. Other more traditional businesses that already have a physical retail and distribution infrastructure may need to migrate towards dropshipping as part of a digital transformation programme.
How to Get Started with your own Dropshipping Business
If you are an existing business, then do your research to find the right partner. There are multiple commercial dropshipping businesses to choose from, so look at features such as great customer reviews, competitive pricing, quality controls and so forth. Weigh up your choices using an objective methodology and a ranking system that assesses your most important features.
If you are considering starting a dropshipping business, then create your eventual model around this option. Look for a product which offers a high-profit margin in a market with high levels of customer demand. The ideal product will be attractive to an online customer who likes to purchase spontaneously and who has a high level of disposable income. If you can offer something that isn’t available locally in your geography, then all the better.
Do your market and competitor research to see how viable your proposition will be. Carry out careful due diligence to find your dropshipping partner and then build your e-commerce website, incorporating the technologies that your new logistics partner offers. Some will even offer website builder services to seamlessly integrate your online sales and fulfilment procedures between your two businesses.
Create your customer marketing plan and launch your e-commerce shop, and then constantly analyze and track your metrics to see where adjustments need to be made to your strategy.
With the right dropshipping partner – one that balances low costs with high quality of fulfilment – you can enjoy all of the benefits of this modern way of operating an online business – and build a healthy and profitable online store as a result.