Dropshipping has certainly become a buzzword in the e-commerce space and for good reason. It is one of the best retail models for entrepreneurs who want to start a store but don’t have the capacity or time to deal with physical goods. While it’s grown in popularity, it has also engendered a lot of misunderstanding. Time to set the record straight so you can knowledgeably sift through the gossip by learning the facts.
First, what exactly is dropshipping?
Dropshipping is a method of online retail where products are shipped from the supplier directly to the customer. Retailers do not hold inventory but rather sell products through images online and have the suppliers fulfill the orders.
Sounds pretty good, right? Now let’s go through some of the most common myths of dropshipping and the corresponding reality.
Dropshipping works only for mass produced, low priced products.
A common misconception is that the majority of dropshippers are selling high volumes of low priced items. That includes all those ugly websites offering electronics and cheap clothes from China that have become the cliché dropshipping sites.
Times have changed. Now recognized as a great way to enter into the e-commerce world, dropshipping has become a popular and successful model for those entrepreneurs looking to offer high quality, unique items from all over the world.
One of the reasons this has changed is because many more suppliers are appreciating the benefits of dropshipping for their businesses and therefore allow more and more sites to sell their collections. Once upon a time, the emerging designers were longing for an exclusive deal with brick and mortars like Opening Ceremony. Now, successful distribution means being online in addition to retail stores. The most efficient and effective way to gain distribution online is through dropshipping.
Additionally, online retailers are becoming smarter and more ambitious. For example, many sites are recognizing that offering widely distributed products means you have to complete on price (if the products are all over the web, someone will just search for the lowest price available). The truth is, you will never be able to beat an Amazon or Nordstrom on price. They simply have too much bargaining power to reach margins a small store will never be able to achieve. Instead, offer your customers a different experience on your storefront whether it be exceptional customer service, personal outreach or a curated list of products just for them.
Now that there are so many awesome brands open to dropshipping, don’t be afraid to take the risk on new, cool brands. Focus on a niche demographic and creating the best possible user experience.
Help! I have no knowledge of coding so I need to hire a developer to build my site and add products to my store.
Welcome to the era of easy to use, no tech necessary tools, people. There are many platforms out there that will allow you to start an online store. In my opinion, the best one out there is Shopify. You can have a store up and running in minutes. Other great ones include BigCommerce, Magento and Volusion.
Check out our complete guide on how to start an online store in 11 steps
Finding products to sell, on the other hand, is not quite as easy. The dropshipping directories can often lead to unreliable, junky suppliers. Alternatively, who wants to sit at their desk googling for days to find brands to sell?
Modalyst has a curated selection of suppliers that can be easily added to your Shopify store. Check out the app and try out the platform for 14 days for free.
Any supplier will want to sell on my site. All I have to do is ask and they will be thrilled to be featured in my store!
Just like you are selective about the products you choose to sell, suppliers may be more discerning than you expect about the stores through which they want to be sold. Some suppliers are concerned about diluting their brand by being on hundreds of websites. Others only want to be sold on sites that match their aesthetic and customer base. While these are justified, they can also be limiting for a brand looking for wider distribution. Not much you can do in those scenarios.
The other reason that we hear of brands declining relationships is because the retailer has not yet launched their site or they have shown no signs of marketing their site. It is important as a retailer, a new one especially, that you outline your launch and marketing strategy to prove that you are not just starting a store for fun, but you are committed to making it a success. You can communicate this in your profile on the dropshipping platforms you are a part of (Modalyst has a series of questions for you to fill out) or else have a template you use when reaching out to the suppliers that includes some details on your store.
This will not only be helpful in gaining new brands, but encouraging a partnership that should include co-marketing to help with sales. Just like most business relationships, dropshipping takes two to tango so having a good relationship with your suppliers will just increase your chances for success.
Once I launch my site, I can quit my job, sit back and make millions just by dropshipping.
Everyone’s read those blog posts on people who have quit their miserable corporate jobs, launched dropshipping businesses and instantaneously were making millions in sales. As if you can trade in a day at the office for a day at the beach with computer in one hand and a daiquiri in the other.
While dropshipping eliminates a lot of the physical work involved in running a store, it certainly requires just as much (if not more) energy and diligence. That doesn’t mean your dreams of white sands and margaritas are out of the question, just know it takes a lot of unglamorous work to get there.
Since it has become relatively easy to launch an online store, there is more and more competition out there. That just means you need to find your own niche and go after it. That includes curating quality products, marketing your store constantly, and focusing on retaining customers. The work upfront to gain a loyal customer base is by far the most difficult, but once you have a working strategy in place you can find ways to automate the work flow and maybe,you find a mai tai in your hand soon after.
In conclusion, popularity breeds misinformation. While no doubt dropshipping is the best way to start an ecommerce business, get your facts straight so you have the best chance to make those millions a reality.
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One thought on “How Does Drop Shipping Work? Myths vs. Facts of Drop Shipping”
Great myth busting article. To myth #3, we will decline drop shippers if their only platform is a 3rd party site, as having retailers compete within the same channel will only depress everyone’s margins.