Dropshipping as a business opportunity

If you have been investigating online business opportunities I'm sure you will have come across the term dropshipping and without perhaps understanding it's business model. Here we set out the basics of how dropshipping businesses work.
Being your own boss, earning money from your own online business, working from home or anywhere in the world that has internet access, setting your own hours, is the dream lifestyle for many but how can it be achieved with out a huge outlay? Well dropshipping has provided the answer for many people and you can read here how dropshipping works and how you can get started yourself today with very little outlay.

So what is dropshipping and how does it work?

Dropshipping allows an individual retailer to advertise and sell products which are offered and held by a merchant or wholesaler(the dropshippers) without having to purchase them before any product is sold. After the retailer actually makes a sale the merchant or wholesaler(the dropshipper) is informed of the sale details and will then fulfil the sale i.e. package and dispatch the sold product directly to your customer.

You hold no stock, do no packaging or posting and only pay for products after they are sold!

You, as the retailer, will know before you choose to advertise any product, what your total inclusive outlay cost will be for any said product to be purchased, packaged and delivered to your prospective customers from the dropshipper. You then have to set your retail price to make a profit after taking into account your advertising costs and or fees.

The two main dropshipping business model options

Using a Marketplace as a dropshipping business model. With this model you do not need a website, instead you would use sites like Ebay and Amazon etc. to market your products. These sites attract huge numbers of visitors providing you with loads of potential customers instantly, commission, plus listing fees, are charged. The competition can be strong so there's need to be competitive and it may be hard to build a customer base as that really belongs to the marketplace itself. To get started, if you haven't already got one, open an account with one or more marketplace sites, select the products you want to sell from your dropshippers, see our dropshippers directory list, you then list your chosen products on the marketplace. The marketplace collect the payment and inform you of sales, you then past the details of the sales on to the dropshipper to process and fulfil the orders. The dropshipper will invoice you with their costs and the marketplace will deduct their fees and the balance is your margin. A lot of dropshipping companies now offer integrated tools to make listing their products to the well known marketplaces easy, these tools sometimes have to be accessed through a third party site, our directory page has more information.

Ecommerce platform for a dropshipping model. Ecommerce means a website with software to manage all aspects of online sales for your dropshipping business, stock, marketing, payment cart, order fulfilment, finances etc. This all may sound a bit daunting but these days many ready to use platforms are available and many offer integration with one or more dropshipping wholesalers and manufacturers. These allow direct access to all available products and make it very simple to browse, select and add products to your site. Payment, sale details and fulfilment is all automated so all you have to do is promote sales. But unlike the marketplace model, you will need to drive traffic to your own site, however there are no listing and commission fees to pay. You are not competing on the same site with other peoples products. Can be easier to build a customer base and brand. The dropshipping platform providers of course charge a fee, generally monthly, but this normally includes, site hosting and website templates which you can style and customised to suit your own niche or brand.

You could have 1000s of products advertised without any up-front payment.

Please do visit our dropshipper directory page for a good selection of dropshipping, wholesale and ecommerce platform companies that are integrated with dropshippers. We only list companies that are either based in and or will dropship products to the UK. Direct links are provided so you can compare services, see the huge variety of product ranges available, fees etc. many offer a free trial period which could help you get your dropshipping businesses underway.

Some of the key benefits of a dropshipping business...

• Very low start up costs ✔
• Run it from anywhere with an internet connection ✔
• You don't buy any products before they are sold ✔
• You can offer a huge variety of goods without the need for storage ✔
• Your money isn't tied up in inventory ✔
• No packaging materials required or posting out ✔
• No minimum orders ✔
• You don't get left with any slow moving stock ✔

Are there any disadvantages to dropshipping?

• Your overheads are very low but margins can be as well, particularly in highly competitive niches, so choose niches carefully and factor in seasons, market trends etc. ✗
• Little control over supply chain should there be any problems. ✗
• Lack of quality control as the products being sent out without you seeing them. ✗
• Customer service can be more of a problem if an order goes wrong. ✗

Most of the above potential problems can be overcome easily if you select reliable drop-shippers and build good relationships with them. Building any business always requires a certain amount of effort and drop-shipping isn't any different. The big difference with a dropshipping business against other options is the ease and very low cost of start up and with the potential of growing very quickly becoming a drop-shipper is certainly worth serious consideration.