What is Dropshipping?


Over the past decade, eCommerce has reshaped the way people do shopping. eCommerce enabled consumers to fluidly search, compare, and buy products and services online in just a few clicks. Basically, it introduced the most convenient purchasing journey that changed the landscape of retail.

With the rise of online stores, marketplaces, social sites, and mobile apps, more and more people of all ages are shifting towards online shopping. In fact, the US ecommerce sales is forecasted to reach $476.5 billion by 2024. The best news is that eCommerce is not stopping anytime soon, so you can very well still get a piece of the pie if you start now.

The best thing about eCommerce is the flexibility and mobility that it entails. As an entrepreneur, it allows you to sell to your customers anytime and anywhere. Essentially, you meet your customers at any time they prefer and wherever they are.

If you’re planning to build and grow your own eCommerce business, it’s important that you have a good understanding of the basics first. Starting an eCommerce business is simple, but it’s not the easiest. There are tons of things that you need to comprehend and learn first since eCommerce entails a lot of technicalities. For instance, choosing the eCommerce business model that fits your requirements and capabilities perfectly is vital to your business’ success.

One eCommerce business model that’s gaining much popularity now is dropshipping.

Photo by Roberto Cortese on Unsplash 

Dropshipping defined

Dropshipping is an eCommerce business model that enables you to sell products directly to consumers without keeping stock of the items you’re selling. In this model, when you receive an order from a customer, you simply forward it to your supplier, and your supplier will then fulfill and deliver the item to your customer. Simply put it, you function as the middleman or the sales person between the customer and supplier, and you gain from commissions and profits.

Dropshipping is perfect for those who want to run an online store but is not keen on handling product development, packaging, inventory, fulfillment, and all other logistic requirements.

However, dropshipping is different from the practice of searching for a trending product online on various eCommerce websites like Amazon, Walmart, Home Depot, AliExpress, or eBay, and listing it for sale on a different marketplace with a marked up price. Such practice is called arbitrage. The main difference between arbitrage and dropshipping is that with dropshipping, you have an “authorized dealer agreement” while in arbitrage you don’t. The risk with arbitrage is that your products may be taken down at any time since you don’t have the permission to sell such items. Drop shippers are on the other hand equipped with consumer protection policies including a standardized approach in addressing customer complaints for defective items, wrong delivery, and refund. Meaning, dropshipping will certainly provide better service and are most likely to sell only authentic products from legitimate suppliers.

Key Benefits of Dropshipping

Engaging in the drop shipping business has tons of benefits. Of course, it’s no doubt that this business model is the best option for beginners and aspiring entrepreneurs who have limited capital and are always on the go. But to convince you further, these are the top reasons why drop shipping proves to be a good choice for business.

Minimal Upfront Investment Requirement

This is probably the best thing about dropshipping. With this business model, you don’t need a huge capital to start running your business as compared to the capital requirement in launching a brick and mortar store. Once you’ve found the right product and a partner supplier, dropshipping will come easy. Since dropshipping only requires minimal setup, you can already start selling in just a few days!

No Need for Product Development

Since you’re capitalizing on your supplier’s products, the burden of continually creating and developing new products does not lie within your responsibilities since you can be sure that the supplier is handling that already. This is precisely why it’s essential to choose a supplier that does not only offer high-quality products and service but is also proactive in terms of keeping up with market trends.

The key to successful dropshipping is finding the best product to sell and the most reliable supplier to work with. When you have these two, your business will surely skyrocket. Here are exclusive tips on how you can spot the perfect dropship supplier.

Low Overhead Expenses and Location Independence

Since it’s dropshipping, you don’t need to set up your warehouse or hire as many staff as a physical store. In drop shipping, you can be up and running even if you can only afford to hire a single staff, to begin with.

Plus, the best thing about dropshipping is that you can manage your store from anywhere in the world and still generate massive sales.

Photo by Myriam Jessier on Unsplash

The Right Approach to Dropshipping

Study the Market

Market research is essential before jumping into dropshipping. Being able to identify what sells and what doesn’t will help you make smart decisions. Besides, any product can be a hit or miss. That is exactly why it’s important that you understand the market trends. Furthermore, having knowledge about your niche market and audience will help you craft the right campaigns to effectively target your market. It also guides you in terms of adding new products to your offering.

Find the Right Product

Once you have a good understanding on which niche is viable to penetrate, you can now choose which product to focus on. While your target market may be too broad, you can always drill it down further and limit your product offering. For instance, if you’re looking at selling entertainment equipment, then you can sell gaming tables or golf simulators. For more ideas, here are the 99 best products for high-ticket dropshipping.

Look for Reliable and Legitimate Suppliers

Finding a reliable supplier is as important as deciding on which product to sell. The main reason is simply because you cannot sell effectively if your supplier sucks. A good supplier is one that has great customer support, efficient management, and delivers correct items on a timely manner. Always remember that good products must be paired with a reliable supplier, absence of either of the two will just nullify the greatness of the other. It’s extremely important that you only work with the best dropshipping suppliers.

Employ the Perfect Marketing Strategy

Dropshipping does not require product development and logistics. Instead, it only requires customer support, marketing and a lot of marketing. Dropshipping relies heavily on marketing, this means launching tons of campaigns ads. With the competition in eCommerce nowadays, launching effective social media campaigns will generally pave the way for you to get to your customers.

Is Dropshipping a Good Business?

With all the benefits that we mentioned, dropshipping certainly proves to be a good business. It enables you to successfully penetrate into the eCommerce industry without hurting much of your savings. Furthermore, it gives you the flexibility that you need to scale your business from anywhere in the world, even if you have a day job.

Photo by Kuncheek on Pexels

Key to 7-digit Revenue: High-ticket Dropshipping

The common misconception is that dropshipping works best and is safer for low-cost products. There is some truth to that if you’re specially interested in a business that has a continuous stream of sales but has limited earnings due to small margins. But, if you’re looking for a dropshipping business that offers bigger margins and faster returns, then high-ticket dropshipping should be your top pick.

High-ticket dropshipping is all about selling high-cost products. These are the more expensive items that people tend to buy including gadgets, appliances, furniture, and more. Since High-ticket dropshipping sells products that are not entirely cheap, you can’t expect them to sell like hotcakes. However, the good thing with this kind of dropshipping is that you get bigger leeway for margins. Hence, better control of your profit-making capability. In addition, more expensive items automatically equates to bigger profits.

In order to make the most out of high-ticket dropshipping, my tip here is to find the manufacturer of your niche product and source your products from them directly. This allows you to get maximum margins and huge profits than dealing with a distributor / supplier.  To give you a better idea, here are the best niches for high-ticket dropshipping.

How to Jumpstart your High-ticket Dropshipping Business

Are you a late comer in the eCommerce industry? Don’t worry, it’s not yet too late! High-ticket dropshipping can help you earn up to 7-digit revenue when done properly. But always keep in mind that this will only be possible when you get things done correctly and efficiently by making the right decisions. Not sure about where to start? Check this article to know more about the things that you need to set up before launching your high-ticket dropshipping business.

What do you think of this article? Was this helpful? Leave us a comment below!

eCommerce Paradise was created by Trevor Fenner of Seattle, Washington in 2015 to help you, the entrepreneur, to start and scale your own eCommerce business. Trevor owns multiple 7-figure eCommerce stores and is a digital nomad, traveling the world while working remotely with the help of his team of virtual assistants from around the world. Trevor is currently located in Bali, Indonesia, and is a passionate skateboarder, surfer, scuba diver, photographer, environmentalist, outdoorsman, fitness and tattoo enthusiast.

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