What is Dropshipping and How Does it Work – 2024 Beginners Guide

With the huge boom of online shopping in these modern times, there has also been a huge increase in both online and physical stores. All of these new companies offer unique ways of purchasing or selling products, shipping, delivery, and so on. But, what is becoming more popular these days is something that is called dropshipping. There is a good reason why many businesses start to implement this new method of retailing. It is easy to start, it’s easy to manage and helps a company grow.

All of these benefits I mentioned seem great, but if you want to implement this in your business, I think you should first understand how all of this works. You will also want to know how to implement it. Well, don’t worry because in this article I will guide you and tell you about everything there is to know about dropshipping. With the right knowledge, you will be able to utilize this new retail fulfillment method which will push your company toward growth and more profits. And if you don’t like it, you can just switch to a different method with almost zero repercussions.

How does it work?

The first thing you should know about dropshipping is how it works, what does it mean to you as a business owner and what would it mean to your future customers. It is quite simple. By implementing this method in your store, you won’t have to bother about ordering inventory and storing products. You won’t even need a warehouse or a brick-and-mortar store. You will be directly ordering the products through a third-party company and then delivering those same products directly to your customer.

Think of it as you are the middleman which makes things simpler for the customers while making a profit for yourself. The reason why many business owners tend to switch to this method is that it’s much easier to set up and it can save a lot of money from the company’s budget. You won’t have to worry about storage, won’t have to own a physical store and you won’t have to stock up on products.

Of course, the profit will mainly come from marking up the prices of the products that you sell. If customers appreciate the benefits of using a middleman, they will always pay for those marked-up prices. It’s a pure and straightforward profit.

Benefits

Now that I have you a bit more interested in this new retail fulfilling method, I’m sure that you want to know about all the different benefits you will be able to reap. Don’t worry, because you will notice that your company will definitely benefit from this.

Easy start

I personally believe that the best thing about dropshipping is the fact that it does not require any kind of previous retailing experience. Just setting up the online shop can take a couple of hours or even a few minutes. Creating online content and websites these days is easier than ever.

Although, you will still need to invest a bit more time to understand how all of this will work if you truly want to make some serious profit out of using dropshipping. But, don’t worry because learning everything about this new method will take you no more than a couple of days if you dedicate all of your attention to it.

Flexibility

Another great benefit of dropshipping is having control of everything that goes around your company. No one is going to tell you what or how you should do things because you are the one who will make the most important decisions. The flexibility of this retailing method is quite impressive. If you want, you could work from home, you can work on your phone and you can work at any time in the day. It makes things so easy that you can do your job exactly how you want.

It can work with a smaller budget

Most start-up businesses have trouble handling the budget because it is usually very small. As a business owner, you have to carefully plan out the expenses to push the growth of your company. This is not an easy thing to do. The smaller the budget, the more difficult it is. Finding the right expenses to take the path to success is not simple at all.

Fortunately, dropshipping does not require a lot of capital which is why it such a great option for start-up businesses. With just a few dozen or hundred dollars, you can really get things going when utilizing this new method of retailing. What’s even better is that maintaining this new method also has low costs.

Lower Risks

Since implementing drop shipping in your company costs only a fraction of the usual expenses and its maintenance is cheap too, the level of business risk is quite low as suggested by GoTen, a leading dropshipping platform with great offers. Even if you do fail to properly implement this type of retailing, you have only lost a couple of hundred dollars which is almost nothing when compared to a typical brick-and-mortar store. Setting up a brick-and-mortar store requires up to tens of thousands of dollars. The difference in risk is astonishing and I think it is quite obvious why people see so much potential in dropshipping.

Disadvantages

Not everything is perfect, especially when something brings in so many benefits to your company. And yes, dropshipping is not perfect and it does have a couple of disadvantages that you should know about. For example, one of the biggest disadvantages is that you can’t handle very high margins, especially when just starting out. You can only handle a few dozen customers compared to a brick-and-mortar which could easily handle hundreds of customers a day.

Processing a larger amount of orders is difficult too. Since you act as a middleman, you must maintain good contact with both the supplier and the customer.

Personally, I believe that the cons outweigh the pros by a whole lot and you shouldn’t worry about them.

After reading through this entire article, I think it is safe to say that you know everything there is about dropshipping and now you can finally implement it into your business.