Today we will talk about how this interesting works business model that allows you start your own online business from home.
What is drop shipping?
Basically it is a system that allows you sell products online Through your own online store or through a third-party store, without the need to have a warehouse with product inventory since the dispatch is carried out by a wholesale supplier (dropshipper).
It means that you will not have to worry about the storage of the products, their costs or the packaging and shipping.
How does drop shipping work?
The drop shipping model is made up of three elements: the customer, the supplier (dropshipper) and you as an intermediary reseller.
The distribution system works like this:
- You sell the products through your virtual store or an auction site such as Ebay or Mercado Libre.
- The customer navigates through your online store and decides to buy your products.
- Once you receive the payment, you contact the wholesale supplier to acquire the product that you have sold of course at a lower price.
- The difference between the final price to the customer and the dropshipper it is your profit.
- You place the order with your supplier supplying the name and address of your buyer and he will take care of the shipment of the product on your behalf.
What are the advantages of drop shipping?
For the entrepreneurs, this model has some important advantages among which we can highlight:
- Minimum initial investment. Fundamentally, you will only need to invest in the web platform to set up your online store. If you do it through an auction store, the investment is practically reduced to time you spend operating the business.
- You have no costs in inventories or warehouses. As we mentioned before, these are paid by your provider.
- Unlimited inventory of products to sell. The fact of not managing stocks gives you the freedom to offer a wide range of products in your store.
- Good earnings. The risks of losses are minimal since if you make a sale, you first receive payment from your client and then you pay your supplier, automatically keeping your profit in hand.
- You do not take care of packaging or shipping. Your priority in the business is focused on selling and your supplier takes care of the rest.
- Unlimited global market. You can sell your products to practically any country in the world.
- Business open 24 hours. You can operate from your home or from any place and time you want. Also your store remains available all the time.
What are the disadvantages of dropshipping?
As in any business, there are probably some weaknesses in the system that must be considered, although I assure you that they are minimal and the key to managing them is good communication with your wholesale supplier:
- Eventual delays in the delivery of the products.
- Warranty claims and returns from customers. Here it is important to be clear that although this work corresponds to your provider before the client, you are still responsible.
- Lack of knowledge about the characteristics of the products it sells. Not having an adequate knowledge of the products can affect your sales if you do not solve the customer’s concerns correctly.
As you can see, the drop shipping It is a very innovative system that can represent excellent income if the assembly and operation is adequate. Many people sell on Ebay successfully through this system and of course, like any online business requires a lot of responsibility and taking good care of the details to be able to provide excellent customer service.
In a future post I will delve even better about the details of the assembly and operational aspects of the store.
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