At first glance, an online retailer that adopts the dropshipping model will look nearly identical to its competitors. In a world where customers only care about the product, the price, and a store’s reviews, rather than where the product was sourced, dropshipping will surely thrive.
Dropshipping can be described as a retailer that doesn’t keep its inventory on hand or processes the orders. Since orders are fulfilled and shipped by a separate company, dropshipping owners focus on marking their business and retaining a loyal customer base.
Here are 5 reasons why the dropshipping model appeals to small business owners and seasoned entrepreneurs. Ultimately, dropshipping solves several eCommerce problems.
1. Product Sourcing
Unless an eCommerce store makes and ships the product themselves, wholesale stores have to purchase from overseas wholesalers in bulk. Their products are then stored in a nearby warehouse before being marketed and sold. The entire process could take several months.
Besides taking up a lot of time, product sourcing is also costly. From banks to export-important agents, your bill becomes longer and longer. With the dropshipping model, retailers can sell products without having to source large quantities every time they want to make an order.
With automation, dropshippers can use eCommerce API integrations to connect with a large list of vendors. Wholesales can then transfer the product from the fulfillment center.
2. Order Fulfillment
No eCommerce founder expects to spend most of their time finding and preparing orders for shipment. Founders are more interested in growing their business, but that’s difficult to do when you don’t have enough employees. Thankfully, the dropshipping model has a solution.
A dropshipping business doesn’t have to look at a single cardboard box, strip of packing tape, or post office. Dropshipping owners simply have to route orders to their vendors, suppliers, fulfillment centers, or distributors. The whole fulfillment process is completely hands-off.
The manufacturer or wholesaler takes care of everything and barely costs the seller a thing. That gives business owners more money to spend on marketing, advertising, and research.
3. Photography and Cataloging
Most eCommerce business owners are business people first and artists second. Although cell phones have cameras that can take quality photos, you’ll still need a lighting rig, lightbox, decent editing software, and more. Or, you could hire a professional photographer instead.
No matter how you look at it, creating a catalog full of professionally photographed products is expensive. This problem is solved with a dropshipping management app and importing features, which instantly allow you to transfer product photos directly from the manufacturer to the app.
The process of adding another item to your website becomes less complicated when you don’t have to consider the time, money, and talent needed to set up additional product pages.
4. Storage (Fulfillment Centers)
One big barrier that stops small eCommerce businesses from scaling is storage. While small companies can manage to store 10-100 products in their house or in a tiny, low-cost location, once you reach 1000 products, you’ll have to spend a fortune on a fulfillment center.
Startups just don’t have the budget for that many items, but thanks to the dropshipping fulfillment process, they won’t have to. Instead of paying a high overhead cost on rent, dropshipping businesses can keep their products stored with the wholesale supplier.
Once you partner with several suppliers, you’ll gain access to more markets. International shipping is nearly impossible for startups because it costs too much to ship from the US.
5. Scalability and Growth
eCommerce businesses have to do everything on their own, which slows down their ability to scale and sell to a broader market. These businesses have to commit to a balancing act that spends money gradually in different places, but they can’t take significant risks as a startup.
With the dropshipping model, it doesn’t matter if the business is just starting or has amassed tens of thousands of suppliers because the risks are virtually the same. As long as you can market a product successfully, you’ll be able to sell and ship it to your customers worldwide.
Dropshippers see better margins for their sales and can therefore compete with medium to large-sized online retailers with half the capital. In the end, the dropshipping model makes the eCommerce world a safer, equal playing ground for all aspiring entrepreneurs.