What is dropshipping and how does it work in practice?

With several installations set in more than 18 countries, Amazon really does wherever to stay as the biggest name of e-commerce in the world. But what few people know about Jeff Bezos’ company is that not all products sold out there come from their own warehouses! Thanks to a technique known as dropshipping, brands such as eBay, Aliexpress and Amazon have managed not only to use the inventory of third-party products to realize their sales, but also to help other companies grow in the market. But what is dropshipping and how exactly does it work? Well, that’s what we’re going to show in today’s post. Follow the next topics to find out!

What is dropshipping?

The term dropshipping was born from the junction of 2 words: drop, which means drop, and shipping, which can be translated as shipping. Knowing this source is much easier to understand the utility of the technique for virtual stores: basically, to leave the delivery and inventory of products on behalf of another company.

With dropshipping, e-commerce makes the sale of the product and sends the order of that transaction to the partner supplier. It is the supplier who will send the item to the customer on behalf of the e-commerce, which has as profit the difference between the price charged to the user and that charged by the partner.

See how mysterious it is? If you have not heard of this technique yet, you may well find it relatively new. But, in fact, it is not quite so. TV channels and even some radio stations have used this model of logistics management for many years, offering in their programming some products that could be purchased over the phone. Among virtual stores, big names have been standing up from the start by dropshipping techniques.

This is the case, for example, of one of the largest virtual trades in the United States, opened in 2002: Wayfair. And that of course, let alone the Chinese retailers, who have used platforms like eBay, AliExpress and Deal Extreme to offer their products for years!

What benefits does it bring?

By now you might be wondering if it’s really worth betting on this type of technique for business and what are the real benefits of dropshipping, right? Well, keep an eye on these doubts once and for all!

You have to put less capital together to start the venture.

On the selling side, dropshipping is a great demand because it makes the entrepreneur not have to invest in a huge inventory of products before putting his hand in the dough. On the other hand, on the supplier side, the technique helps the company focus on a smaller number of details – such as maintaining e-commerce itself, online advertising and even sales support.

It is much easier to start your business online

If your company does not have to deal physically with the products to be delivered, the sales process is much easier. After all, after the sale, your part of the operation will be simply looking at numbers and continuing the cycle, generating more and more sales.

Is regional flexibility guaranteed

No warehouses are available where you live? Is the rental price too expensive? Is it difficult to take care of shipping logistics in the region where you work? With the dropshipping system, none of this is a problem.

It’s a possibility to offer a wider range of products

As you do not have to have the product on hand to offer, it’s easier to sell some less sought after niche items, even creating the possibility to test some new markets and new product mix for your online store.

It’s Easy to Scale Your Business

Anyone who has a traditional business knows that if the business doubles or triples in size, you need to double or triple the investment. In the case of a brand that works with the dropshipping model, this account usually closes more easily.

This is because, in case of sharp growth, the stock and logistics part can be passed on smoothly to suppliers (current or new), provided they take care of the demands.

And how it works?

Did you like everything we talked about here and are you already thinking about applying this technique to your online store? Before, understand a little more about how dropshipping works in practice!

The choice of suppliers

First, you must choose the best suppliers of a particular product, taking into account not only the price charged for them but also the quality of delivery and even of their monitoring of inventory and shipping.

The offer for the user

Chosen the supplier, it will show the respective amount that you can put on sale in your e-commerce according to the product and of course at what price. Since everything happens in real time, when a customer makes a certain purchase, the order is automatically processed by his virtual store, which sends the order to the supplier and generates the invoice.

From supplier to customer

The part of product packaging and shipping to the customer is on behalf of the supplier, who is still responsible for generating the tracking code for your company.

In case of a return

If a customer needs to exchange or return the purchase, almost the whole process of return is also on the account of the supplier – less, of course, the contact with that customer, which is always the responsibility of the virtual store. Remember: Stocking and shipping are invisible!

Lastly, it is good to make it clear that in every buying and selling process through dropshipping techniques, the supplier side is invisible to the consumer. For him, from the time of purchase until the time he receives the product at home, only his brand was present in the transaction.

Therefore, it is extremely important to find committed partners, who will look after your company name in the market. Ready! Now that you already know what dropshipping is and how it can help boost your business – or even get it off the paper!

How about looking for some business partners and putting your hand in the dough? Take advantage also to follow us on social networks and stay on top of other tips to leverage your e-commerce! Got any questions? Join our Facebook group with e-commerce experts and other retailers and submit your question.

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