Dropshipping: what is it and how to start from scratch

Dropshipping is a new intermediary business model for selling goods. It assumes that the seller does not have its own warehouse, and all goods are delivered to the buyer directly from the warehouse of the supplier or manufacturer. Let's figure out how dropshipping differs from a regular store and how to start a business from scratch. You can check out more at the our company website - Halla Systems Company.

Dropshipping: what is it and how to start from scratch What is dropshipping Ordinary stores have their own warehouse, and make money on the difference between the wholesale purchase price and the retail price for sale to the buyer. Of this amount, the money goes to renting warehouse space, paying utility bills, maintenance costs, salaries to employees, payment processing facilities, etc.

Dropshipping is different. This business model assumes that the seller that buyers contact acts as an intermediary. It does not have its own showroom or warehouse with goods, and orders are delivered to customers from the warehouse of a third party (supplier, manufacturer, partner, etc.)

The store itself in dropshipping takes on the tasks of marketing and product promotion, collecting orders, accepting payments and processing transactions.

Dropshipping scheme Dropshipping allows the store owner to sell third-party products under his own brand and easily increase the range. The main income of the store:

a trade margin added to the price at which the product was purchased; percentage paid by suppliers and manufacturers for the sale of their goods. The general scheme of dropshipping is as follows:

The buyer selects the product in the online store, places and pays for the order → The store sends the supplier (manufacturer) information about the order and the buyer's data → The supplier packs the order and delivers it to the buyer

Dropshipping should not be confused with big retailers - these are different things. Such stores work according to an agency scheme: the supplier independently brings his goods to the warehouse of the online store, creates pages on the site with characteristics and sets the price. The online store itself works as a platform for selling and withholds a commission from each payment from the buyer.

The advantages of dropshipping are exactly what makes this business easy and does not require investments. Let's consider the main advantages.

The most important plus is the minimum initial investment. You do not even have to worry about pre-purchasing goods, because the supplier receives an order only after a buyer is found for the goods. The main investments will need to be made in advertising: create your own website, promote the store in search engines, advertise on social networks, etc. If creating your own brand is not so important, you can connect to a ready-made site for online sales. No warehouse or logistics required. Dropshipping involves the store not interacting directly with the product. The supplier independently organizes the storage of goods and delivery to the buyer. No online checkout required. If you have built a work scheme in such a way that the buyer pays for the goods directly to the supplier, then you will only have expenses with a legal entity. A cash and sales receipt the buyer will receive from the manufacturer. Lots of opportunities for testing. This means that you can easily adjust the range of sales, if some product is not selling well, experiment with marketing strategies, pricing policy.