What is dropshipping?
Dropshipping is a supply chain management method that doesn’t require a seller or a company to actually hold stock of the items they’re selling. Once a product is ordered, the seller buys the required inventory from a third-party supplier (manufacturer, wholesaler, etc) who then ships the product to the customer.
Dropshippers make between a 20% and 30% profit from each sale or up to $100,000 per year on average. This works out to be between $1,000 and $5,000 per month.
The remaining money goes to purchasing the product from the supplier, dropshipping fees, paying to host dropshipping websites, and marketing.
How to start dropshipping
1. Commit to starting a dropshipping business.
2. Choose a dropshipping business idea.
3. Do competitive research.
4. Choose a dropshipping supplier.
5. Build your ecommerce store.
6. Decide on a business structure.
7. Get your finances in order.
How dropshipping process works
The customer places an order online. The eCommerce store owner or the seller then forwards the order to his supplier.
The supplier accepts the order and ships it on behalf of the seller. Meaning, when the product reaches the customer, the seller’s name, address, and logo will appear on the bill.
Once the shipment has been initialized, the supplier sends an invoice to the seller containing a tracking number.
The seller then forwards the ‘order has been shipped’ message to the customer along with the tracking number.
On the face of it, drop shipping may seem like plain-sailing.
If an eCommerce store owner decides to adopt the drop shipping business plan, then all he needs is a laptop and an internet connection.