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How Does Dropshipping Work?

Just 10 years ago, no one could have imagined that soon retail would become an important part of the global network. Websites of small retail outlets and online stores of large chains can now easily stand side by side in Google searches. The digitalization of society and the increase in Internet users have changed the business world. It’s possible to select a product online and pay for it in just a few clicks. 

One of the most notable trends of our time is mobile devices, and everything related to them. Mobile commerce is especially popular in Asia: in countries like South Korea, mobile traffic accounts for more than 72% of total online transactions.

Well-known businesses, large and small manufacturers, dealer networks, distributors, and popular online platforms are interested in constantly increasing their product channels. They need both large markets and retailers who will work on the dropshipping scheme.

Do you know what is dropshipping? Probably already heard this term more than once? Dropshipping is a popular e-commerce business scheme in which the seller does not need to buy the product, arrange its delivery and storage. He sells goods on his site, which are physically in the supplier’s warehouse. The online store acts as a storefront.  The dropshipper partner sends orders to clients directly on behalf of the seller.

The principle is simple: the owner of the internet-store receives an order from one of his customers, sends the information about the order to the supplier who sends the goods from his warehouse directly to the customer. 

Dropshipping: what is it?

1. Dropshipping is a business model that allows entrepreneurs to sell goods online by operating without a warehouse.

2. The customer places an order on the seller’s website, the product itself is actually in the supplier’s warehouse, who then sends it directly to the customer. 

3. The seller sees the product only in a picture and may not actually come into contact with it, he does not have to worry about inventory management or warehouse costs associated with traditional retail models.

4. The salesman is solely focused on marketing. His business is selling goods by dropshipping. He outsources what is usually expensive and complicated: storage, delivery and order processing.

5. Dropshipping can also be useful for large businesses, as it allows them to quickly add new products and thus expand the range. 

6. Popular CMS platforms (Shopify, BigCommerce, Hlts ltd, WooCommerce, OpenCart) offer templates for e-commerce sites. With their help, a dropshipper can create an online store from scratch, fill it with goods of his choice and discretion.

7. Dropshipping optimizes delivery processes, saves customers from having to wait a long time before receiving their orders. Goods are shipped directly from the supplier. 

8. Dropshipping initially requires minimal capital investment. Its main costs are a website and domain hosting. This business is quite easy to manage on your own, in any case, at the initial stage it is not necessary to hire staff. 

How does the dropshipping system works?

Dropshipping is not a scheme for getting rich quick. Advertising and attracting traffic to the site, finding interesting offers and checking suppliers, working with orders and customer complaints – all this is part of the system of business model development, it requires effort and time. If you offer the same things as other retailers, don’t change anything in your marketing and approach, your business will be little different. Nor will your profits grow. Your ideas may not be demanded or interesting, then you won’t sell anything. So how to make dropshipping business successful?

Success in dropshipping depends primarily on the product that you sell. From the personality and integrity of the supplier, from the popularity of the site on which you sell your goods. And also, on how many customers: will come to the site, want to stay on it and make an order. 

Marketing your products and business in general can be expensive and time consuming. You will need to have a good understanding of how Google advertising works, understand if social media advertising is beneficial, and study influencer marketing.

To analyze the information and combine all the processes into a single whole help proven companies that develop marketing measures to promote the dropshippers’ business, thoroughly check both the suppliers and the goods they offer. For example, the company Hlts ltd has been uniting suppliers of agrosector, electronics, machinery and equipment for pharmacy on its online site for many years.

Why is dropshipping profitable?

– Low initial costs. Dropshipping is economically advantageous, says Adobe’s blog: the seller does not need a warehouse, he does not invest his own money in the goods, does not pay for shipping.

– Fast turnaround time for orders. If the supplier is reliable and responsible, delivery times are minimal, sales chains and logistics are optimized.

– A wide choice of products. This business model gives an opportunity to try your hand in different niches and directions. Large and small markets. These can be popular and fashionable goods: computer and household appliances, equipment for construction and repair, raw materials for pharmaceutical industry, textile products and goods for smart home. 

– Easy order management. All orders are processed by the vendor, it’s up to the vendor to work with site traffic, increase the number of orders, retain customers. 

– Scalability. As your business grows, dropshipping makes it easy to expand the range of products on your site without investing in the product.

– Increased lifetime customer value (LTV). Dropshipping allows you to maintain a wide range of products, customers come back and make repeat purchases.

Disadvantages of dropshipping

Of course, like any online commerce model, dropshipping has its drawbacks. Before you start a business, study them.

The seller and his online store can’t: 

– Control the supplier. Can’t keep track of the timing and quality of products sent by the supplier, according to Nor can they control the packaging process, even if the goods are sold under the vendor’s brand name.

– Receive prompt and complete information on the quantity and renewal of goods in the supplier’s warehouse. This means that the dropshipper can sell goods that are not in stock.

– promptly solve problems that affect the reputation of the entire business: to control the timing of the order, packaging, shipment.

– influence to lower the margin when the price competition in the chosen market is high, it reduces the expected profit of the dropshipper.

Conclusion: is dropshipping worth it?

So, dropshipping allows you to start a business with low initial and ongoing costs. With this business model, expand the range of online and offline stores, find new niches and test unfamiliar markets. But don’t expect instant profits. HLTS dropshipping company and its online marketplace work directly with dropshippers, suppliers and online stores. The network partners can easily keep track of prices, inventories, coordinate joint work and make profitable deals.

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