The power of dropshipping and what to look out for

E-commerce is booming, in recent years we cannot ignore the growth of the online market. The number of online shops grew every year in recent years and consumers spent more on online purchases every year in a row (Thuiswinkel.org, 2021). One of the strategies used in e-commerce land is that of dropshipping, but what is it?

What is dropshipping

You may have heard of the term, but what exactly does it mean? With dropshipping you sell products through your webshop without having them in stock yourself. The products are sent directly from the wholesaler or supplier to the customer and you resell them, so to speak. On the products sold you will receive a margin. The dropshipping process is visually depicted in the image below.

Fair dropshipping

There is still some misrepresentation of dropshipping. Perhaps you have read about webshops that offer items from AliExpress at high prices or where products often do not even arrive at the customer. This is then referred to there as dropshipping. Although these companies use the strategy of dropshipping, this is not its essence. Dropshipping is selling online without stock, nothing more, nothing less. If you handle this in the right way, you will not disadvantage your customers.

Work for it

Dropshipping is also sometimes portrayed as a way to make a lot of money easily and quickly. Dropshipping is a good business model for a successful webshop, but not a golden formula for getting rich sleeping. You have to put in some effort and do it the right way. Therefore, we do not only highlight the advantages here, the points of interest are perhaps even more important. Want to know how to set up a dropshipping webshop? Then take a look at the roadmap in the dropshipment brochure.

The benefits

Why should I start dropshipping? That’s probably one of the things you want to know first. The dropshipping strategy has a number of advantages over the classic webshop model. We have listed them here.

Minimal risk and room for experimentation

First of all, you can start your own webshop with a relatively low risk. There is no need to build up a stock first, so you don’t have to make large investments beforehand. In addition, because you outsource the logistics process, you don’t have to rent storage space or hire staff to pack and ship products. Also, you have no purchasing risk because you only pay the supplier when something is sold in your shop. This also allows you to experiment with various products and see which ones catch on.

Less stress

By outsourcing the logistics process, you save yourself a lot of hassle. All the issues involved in running your own warehouse are not your concern. You don’t have to worry about shipping and keeping track of inventory. In addition, you don’t have to hire staff for the logistics part, which saves you a lot of hassle. In addition, the returns are usually arranged by the supplier, so that is one less worry. Please note that this does not apply to all suppliers so always check your supplier’s terms of delivery.

Happy customer base

With dropshipping, you are more flexible and can experiment more with your offerings. In this way, you can offer your customers a diverse range of products. This way, the customer is more likely to find the desired product in your webshop. Result: a better customer experience.

More time for marketing

Because you outsource the logistics, you have time to focus on marketing your shop, and that is certainly not an unimportant part! Establish a good marketing strategy for your business and use a marketing mix that is tailored to your target audience. This is also the part where you can completely unleash your creativity. For example, consider a poll on Instagram stories for more engagement or YouTube videos in which you provide your target audience with helpful explanations about the products.

Working from anywhere

Another advantage is that you can actually work on your business from anywhere in the world, you are not tied to one place. So do you like to travel the world or just like to be flexible? If so, dropshipping is a perfect fit. As long as you have a laptop, internet and a workspace, you can get started!

Points of interest

In addition to benefits, there are also some things to consider if you want to start dropshipping. We’ve listed them for you below.

Supplier dependency

As a dropshipper, you are responsible for the delivery and quality of the products. Because you are outsourcing the logistics process, you just don’t have any control over it yourself. So you are dependent on the supplier in this one. If it doesn’t have its logistics in order, your customer satisfaction suffers. So make sure you choose a reliable supplier and make good arrangements. These include suppliers such as VehGro and Van der Meer, who have been personally approved by Webshopimporter.

Customer satisfaction

Whereas dropshipping offers opportunities for customer satisfaction, it can also cause you to go wrong. If your supplier does not have the logistics in order or the products are of poor quality, this will have a negative impact on your customer satisfaction. In addition, there is nothing more irritating than poor to unreachable customer service. If you want happy customers, make sure you have a supplier you can rely on and an easily accessible customer service department where employees are knowledgeable. In this, see for yourself whether you can handle it alone or with a single employee or whether you need to set up a customer service department.

Distinguishing yourself

Competition among dropshipping providers is often fierce and profit margins can be low. So it’s important to distinguish yourself. This can be done by choosing a niche rather than a generic product. This is a defined and specific market segment with often little competition. An even more effective way of distinguishing yourself is through a private label. In doing so, you market products under your own brand name. So you are also the only one selling that exact product while non private label products can be sold by any dropshipper.

Information management

It is important to always have real-time insight into product inventory. With dropshipping, automating stock changes and stock availability is therefore desirable. This saves time and reduces errors. For example, this prevents a customer from ordering something that is out of stock and having to disappoint them. This is where product synchronization software comes in handy. This automatically updates your suppliers’ inventories. Webshopimporter offers complete solutions for this so you don’t have to worry about it.

Clear agreements

According to Ictrecht, one point of attention with dropshipping is that as a webshop you remain legally liable and responsible towards the consumer. The fact that the products come directly from the supplier and so you have not seen them does not matter. To avoid unpleasant situations, it is therefore important to make good agreements with your supplier. For example, make arrangements for the return of products. The consumer can make use of his or her right of withdrawal and as a webshop you have to take back the products. Even if the supplier does not accept returns, you will need to take care of this. Make sure you have made agreements with your supplier about this in advance otherwise you will be stuck with products.

Is dropshipping something for me?

Due to its low threshold, dropshipping is a good strategy for many starters to start their own webshop. It has lower risks, offers room to experiment, and saves a lot of arranging and worrying. If you keep the points of interest in mind and capitalize on them, it can be a nice source of income. When are you going to start?

Sources:

Lightspeed (s.d.) Dropshipping for beginners [Brochure]
Webwinkel vakdagen (2017). Why dropshipping?! [Brochure].
https://www.dutchcowboys.nl/online/8-voordelen-van-dropshipping
https://www.ictrecht.nl/blog/de-meest-voorkomende-valkuilen-bij-dropshipping