©Shutterstock.com If you’ve ever used YouTube to search for side hustle ideas, you’ve probably come across a how-to video about dropshipping. It has been gaining popularity among online sellers , but is it all that it’s touted to be? If you are looking for options to build your wealth , starting a dropshipping business may be something to consider. What Is a Dropshipping Business?
Dropshipping is a way of handling online orders that doesn’t require the retailer or seller to be involved in maintaining the physical product inventory. When a customer places an order with a retailer or seller, it’s sent to a third party, who fulfills and ships the order.
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For example, imagine that a graphic designer would like to use a hand-drawn illustration they’ve done to print T-shirts. The designer creates an online listing featuring the T-shirt design, along with pricing and other details. When a customer finds the listing and places an order for the T-shirt, the graphic designer is notified of the purchase — but isn’t required to do anything.
Instead, a third-party supplier that the designer has chosen receives the order, prints the T-shirt, ships it to the customer and pays their expenses before sending the remaining profits to the designer. Pros and Cons of Dropshipping
When considering starting a new side gig or business venture, it is important to weigh the good with the bad. Here is a look at some of the pros and cons of dropshipping. Pros Cons Low overhead as you don’t have to store any inventory, printing or shipping materials Fewer profits as they are shared with a third-party supplier Can start right away as many companies offer a quick setup Highly competitive and can be hard to gain traction in a crowded marketplace Low maintenance business model Diminished brand value and potential legal issues due to a third-party supplier Potential for a long-term revenue stream Little or no quality control as you don’t see products before they are fulfilled or shipped How To Start a Dropshipping Business
If you have been wondering how to start a dropshipping business, it may be more within reach than you thought. Here are five steps you can take to start now.
> Choose your business concept.
Source your products.
Select your suppliers.
Build your online store.
Register your business.
1. Choose Your Business Concept
Your business concept not only defines what you’re selling but also the demographic to whom you’re selling. It is crucial to pick a concept you feel you can sell and market well. That being said, as dropshipping has so many product options, you can switch things up as you learn more about what is working best for your business. 2. Source Your Products
When it comes to selling products, especially with third-party sellers, it is important to research how the products you want are distributed, how many sellers carry them and what the wholesale cost is. This will better prepare you for how to design your website and choose products for your specific market demographic. The following are examples of popular marketplaces. Alibaba
AliExpress
Doba
Megagoods
Oberlo Printify SaleHoo Wholesale Central Worldwide Brands 3. Select Your Suppliers For a dropshipping business, it is important to choose a reliable supplier from an online marketplace to ensure the best inventory with the best stock quantities. This will be the company that actually ships the products to your customers so be sure to double-check some of these factors. Profit margin: Be sure to consider the cost of transactions such as shipping and how that will eat into what you make per product. You should aim for a 20% profit margin, but of course, if you can get more you should do so. Quality control: The supplier you select represents the quality of the goods you are selling. Higher quality could mean higher cost, but it also builds a better reputation which leads to more sales. Reliability and accountability: Make sure the supplier you choose sticks to delivery timeframes and shipping costs and estimates. Before choosing a supplier, order a few things through them to get an idea of what you should expect. More From Your Money: Choose a high-interest saving, checking, CD, or investing account from our list of top banks to start saving today. 4. Build Your Online Store There are many ways to build […]
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