I can bet that if you go asking random people on the street what they hope to achieve, many of them would say launching and running their own business. Not to be a party pooper, but that’s not as easy as it sounds, or is it?
Traditional business models meant you had to collect funds, buy inventory, set up a physical store, and market your products or services. However, newer business models like dropshipping have changed that.
Dropshipping is a type of e-commerce business where you do not buy inventory, nor do you need to set up a physical store to hold and sell your goods. You simply source them from a supplier and sell them at a profit on your website.
Naturally, this business model offers entrepreneurs a large range of benefits that have led to its growth. This article will explore some of these, as well as provide some tips you need to know before starting your dropshipping business.
Let’s get into it.
3 Benefits of Running a Dropshipping Business
1. Reduced Barriers to Entry
Collecting funds to start your business, renting or buying warehouses to store your products, setting up supply chains, and arranging delivery services to deliver products to customers are all major barriers to entry. With dropshipping, you can significantly reduce or eliminate the costs associated with each of them.
For example, with low-cost e-commerce platforms like Shopify, you can easily create and launch your online dropshipping store, saving you the expenses of renting, buying, and managing a warehouse or brick-and-mortar store. You can then use a large range of free dropshipping apps like DSers to find reliable and low-cost suppliers and source their products to your store.
The suppliers take care of delivering the products, saving you another major expense. The only costs you’ll face are Shopify’s monthly fees and digital marketing expenses to showcase your products. You also save on the expense of hiring a large team of people to manage your warehouse and transport goods to your stores. All these savings can be reinvested towards scaling your business.
2. Lower Risk and Higher Scalability Potential
Traditional businesses often face costs due to unsold products. These products can result in higher storage and management costs. For some businesses like food, this can also result in wasted products. With dropshipping, businesses can easily mitigate this risk.
Since products are only ordered when a customer buys them, you don’t have to worry about unsold products going bad or bearing the additional expenses of storing and managing them. Additionally, after a certain period of time, you can also identify which products perform better and remove the ones that don’t in a matter of a few clicks. Most e-commerce platforms provide detailed analytics, so this shouldn’t be an issue.
Dropshipping businesses are also more easily scalable compared to traditional businesses. You can simply upgrade the plan of the e-commerce platform you’re using to host a wider range of products, compared to renting or buying larger warehouses or retail stores. These upgrades also allow you access to advanced features that can help with automating and connecting business functions.
See also: 3 Reasons Dropshipping Businesses are Growing
3. No Geographical Limitations
This applies both to entrepreneurs and the markets you can target. Since dropshipping businesses are entirely digital, you can easily run and monitor your business using fast and reliable internet near you, and your laptop, yes, that’s it.
This provides an increased level of flexibility and comfort in terms of time and location. You can pursue hobbies or activities, give more time to your family, travel the world, and make a decent income. Let’s be honest, who wouldn’t want that? I sure do! That’s what the American dream means to me.
With dropshipping, going global is also much quicker and cost-effective. You can tap into large markets everywhere and grow your customer base online instead of traveling, studying local delivery services, negotiating rates, and setting up warehouses and outlets manually.
All in all, these three reasons were what inspired me to quit my 9-to-5 and start my online clothing store. If you feel a hint of courage to start your dropshipping business, make sure to follow the tips shared next before you start.
3 Tips for Starting Your Dropshipping Store
The tips shared here will help you minimize risk and possibly solidify your chances of success with dropshipping. Let’s take a look.
1. Research and Choose Profitable Niches
Take your time to study customer needs and identify the most in-demand product niche. Don’t try to focus on multiple products. Choose a niche that offers a balance between profitability, stability, and market growth.
2. Don’t go All Out – Start Small
You don’t immediately have to create the largest website or choose the most expensive plan that an e-commerce platform offers. Start small, test the waters, and adjust as needed.
3. Personalize Your Marketing
Your marketing strategy is what differentiates you from the competition. Develop a personalized plan for each phase of the funnel. The customer data provided by e-commerce platforms can help you with this as you progress. It can also help you upsell or cross-sell more relevant items to grow your revenue.
Dropshipping – Breaking Traditional Barriers and Encouraging Entrepreneurship
With low barriers to entry, lower risk, and increased flexibility and scalability, dropshipping is a convenient way to turn your entrepreneurial ideas into thriving businesses.
By researching customers and products, playing it safe, and personalizing your marketing efforts, you can overcome traditional business barriers and successfully navigate this growing industry.
