We would like to explain a few fundementals about dropshipping, I am going to explain what the dropshipping model is, list a few of the benefits and downfalls and finally draw a conclusion.
So lets start at the beggining
WHAT IS DROP SHIPPING?
“Drop shipping is a supply chain management technique in which the retailer does not keep goods in stock but instead transfers customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer. As in retail businesses, the majority of retailers make their profit on the difference between the wholesale and retail price, but some retailers earn an agreed percentage of the sales in commission, paid by the wholesaler to the retailer.”
Penny Store gives you the opportunity to start a new business and to become your own boss within a very short time. All you need to do is to sell our products on your own website, or online auction website such as eBay, Amazon, etc. , without the need of holding any stock or worrying about packaging and shipping to your customers. These are services that we will provide to you. We will pack your order and send it directly to your customer.
THE BENEFITS OF DROP SHIPPING.
- Drop Shipping service gives you the opportunity to sell our products on your own platform without the need to purchase and hold the stock and worry about packaging and posting to your customers.
- So, no matter whether you have an existing business or you simply want to start a part time business with no huge investments it means that you can invest in marketing, developing your website or even customer service.
- You can work from any place with an internet connection, even if this is a part time hobby business it can simply be a back bedroom. Once again, no huge investment in premises, staff or office equipment, you can use what you already have, this is also beneficial for existing established businesses that want to increase their product offerings.
- It's a tried and trusted business model. The amount of times I have heard the question 'is this legitimate?' or 'what's the catch?'. Yes, it does sound too good to be true but this business model has been around for years and was primarily to be found in the USA in the early years. As with any business model there are always scams and you do need to be careful, how many times have you received an email with the subject 'work from home opportunity', there are many shady characters on the internet so finding a reputable dropshipper with a proven track record is a must.
THE DOWNFALLS OF DROP SHIPPING.
Remember here are always negatives to every positive.
- There will be other dropshippers selling the same product so you will need to compete on price, the nature of dropshipping means you aren’t selling a unique product. You will need to make yourself stand out from the others to be successful.
- If a customer is dissatisfied, they will contact you, in their eyes you will be responsible for any mistakes made by the dropshipper. So if there is a delay in shipping or a problem with the order it is you who will be held accountable.
- The first physical interation the customer has with your business is when they receive their order and open the package, because the shipping and packaging is done by the dropshipping company you do not have the ability to make your business stand out from the rest by adding vouchers, special offers, customized invoices and packing slips. Although most dropshipping companies offer a 'white label' service there is usually not the ability to persoanlise to your business.
As with any business there are pitfalls, let's be honest here, not every dropshipper is going to make millionaire status, the reason is that many dropshippers expect to reap all the rewards with little to no effort. This is simply not the case, dropshipping requires hard work, time and patience, you will need to invest in marketing, maybe create a quality website and you will need to provide a high standard of customer service or you will not survive.
You will face competition, that's to be expected, you didn't really think you were the only one reading this did you? But as with anything if you are prepared to put in as much time and effort as required then go a little further you can be on the road to building the foundations of a profitable business or maybe your own successful online ecommerce store.