DROPSHIPPING make money with a low invesment part1

What is dropshipping?
dropshipping is a popular way of selling online in which the store does not need to have its products in store. When a store sells a product, it buys it from a third party and sends it directly to the customer. With this method, the owner of the store never sees the product and much less comes to have contact with him. It serves only as an intermediary.

Dropshipping is a method of sending and delivering retail orders in which it is not necessary for the store to have the products it sells in the store. Instead, when the store sells a product, it buys it from a third party and sends it directly to the customer. As a result, the merchant never sees or manipulates the product.

The biggest difference between dropshipping and the standard retail model is that the seller does not need to own or store their own inventory. Instead, the merchant purchases inventory as needed from a third party (usually a wholesaler or manufacturer) who completes the orders.
LEAST CAPITAL REQUIRED: The biggest advantage of dropshipping is probably that you can launch an e-commerce store without having to invest thousands of dollars in inventory in advance. Traditionally, retailers have had to commit large amounts of capital to purchase inventory.

With the dropshipping model, you do not have to buy a product unless you have already sold it and received payment from the customer. Without major investments in inventory, it is possible to start a successful dropshipping business with very little money.

EASY START: Managing an e-commerce business is much easier when you do not have to deal with physical products. With dropshipping, you do not need to worry about the following:

Manage or pay the expenses of a deposit
Pack and send your orders
Control the inventory for accounting purposes
Dealing with internal returns and shipments
Having to place product orders continuously and manage inventory levels.
LOW FIXED EXPENSES: Since you do not have to deal with inventory purchasing and warehouse management, the fixed costs are quite low. In fact, many successful dropshipping businesses are handled from a home office with a laptop for less than $ 100 a month. As they grow, these expenses are likely to increase, but they will still be low compared to those of a traditional business.

FLEXIBLE LOCATION: A dropshipping business can be handled from almost anywhere you connect to the Internet. As long as you can communicate with suppliers and customers, you can manage and manage your business.

WIDE SELECTION OF PRODUCTS: Since you do not need to buy items in advance to sell, you can offer a wide range of products to your potential customers. If the suppliers have it in stock, you can include it in your sales list on your website at no additional cost.

EASILY SCALABLE: With a traditional business, if you receive three times more orders than usual usually you will have to triple the work. By having dropshipping providers, most of the processing work for additional orders will be made by suppliers, allowing you to expand with lower costs and less work. Sales growth will always involve additional work, especially in terms of customer service, but businesses that use dropshipping are easily scalable compared to traditional e-commerce businesses.

All these benefits make dropshipping a very attractive model for both beginners and established traders. Unfortunately, not all that glitters is gold in dropshipping. All this convenience and flexibility comes at a price.

Disadvantages

LOW MARGINS: Low margins are the biggest disadvantage of operating in a highly competitive niche of dropshipping. As it is so easy to start and fixed costs are minimal, many merchants set up their store and sell the items at very low prices in an attempt to increase their income. They have invested so little in opening their business that they can withstand operating by tiny margins.

It is true that these merchants usually have poor quality websites and very unsatisfactory customer service (if they have one). But that will not prevent customers from comparing their prices with yours. This increase in ruthless competition will quickly destroy the profit margin in a niche. Fortunately, there is plenty you can do to mitigate the problem by selecting a niche that is suitable for dropshipping. We will discuss this in more detail in Chapter 4.

INVENTORY MATTERS: If you have all the products you sell in stock, it is relatively easy to control which items are available and which items are gone. But when you are taking products from multiple stores, which in turn also complete orders for other merchants, the inventory changes day by day. While there are ways to better synchronize your store inventory with your suppliers' inventory, these solutions do not always work perfectly, and vendors do not always have the technology they need.

SHIPPING COMPLEXITIES: If you work with multiple vendors, as most dropshippers do, the products on your website will come from various dropshippers. This complicates your shipping costs.

Let's say your client orders three items, all of them are available but from different suppliers. You will have to pay three separate shipping costs to send each item to the customer, but it is not advisable to pass this charge to the customer, as they will believe that you are charging an awful lot for shipping. And even if you wanted to pass this cost on to the customer, calculating it automatically can be difficult.

PROVIDER ERRORS: Have you ever been blamed for something you did not do, but you should have made the mistake responsible anyway?

Even the best dropshipping providers make mistakes when completing orders; Mistakes for which you must make yourself responsible and apologize. And mediocre and poor vendors will cause you countless headaches when you lose items, ruin shipments, and use poor quality packages that can damage a company's reputation.

Worth it?

As we warned you initially, the dropshipping service is not perfect nor a stress free way to build a successful business. The model has some indisputable advantages but comes with certain complexities and problems included that you must know how to handle.
In future post I will mention wholesale and retail suppliers and ways to buy products safely and more tips on how to make droppshipping a business that you can live with

We will examine these problems, and the best way to solve them, in future chapters. The good news is that with detailed planning and consideration, most of these problems can be solved and should not prevent your dropshipping business from growing and being profitable.