Dropshipping is a form of marketing and distribution where the store does not hold the items it sells in stock.
Rather, when a store sells a product using a drop-shipping model, the order for the item is made by the supplier and then delivered customer.
As a consequence, the retailer will not have to deal with the commodity directly.
The biggest difference between shopify dropshipping and the regular retail model is that the seller does not have a stock or an inventory of his own.
Instead, the retailer purchases inventory as required from a third party — usually a wholesaler or manufacturer — to supply orders.
Two of the most popular ways to dropship at Shopify are to search for a supplier located in USA or Europe, to use supplier databases, or to search for a Shopify app that links you and your store to thousands of suppliers.
When a customer orders a product, you will be able to fulfil your order in the Oberlo app. Fortunately, Oberlo is automating this operation.
As the store owner, all you have to do is verify that the details are right and press the “order” button.
The product is then shipped directly from the AliExpress manufacturer to the customer — wherever they might be in the world.
Dropshipping Benefits
Dropshipping is a perfect business model for aspiring entrepreneurs to start with because it’s free.
With dropshipping, you can easily check various business concepts with little downside, which lets you learn a lot about how to select and sell on-demand goods.
Here are some other reasons why dropshipping is such a common trend.
1. Less money is needed
The most likely benefit of aliexpress dropshipping is that it is possible to open an e-commerce store without having to spend thousands of dollars in inventory.
Traditionally, retailers have had to tie up large quantities of capital stock acquisitions.
For the drop-shipping model, you do not have to buy a product until you have the sale is made and pay.
Without major up-front inventory investments, it is possible to start sourcing goods and start a profitable drop-shipping company with very little capital.
And because you’re not dedicated to selling — through any inventory you purchase upfront, like a conventional retail store — there’s less risk involved with starting a drop-shipping shop.
2. Quick to get started
Running an e-commerce company is a lot simpler when you don’t have to deal with physical goods. For drop-delivering, you don’t have to think about:
- Handling or charging for warehouse
- Packing and delivering your orders
- Monitoring inventory for accounting purposes
- Managing returns and inbound shipments
- Continuously purchasing goods and maintaining stock level
3. Low overhead
If you don’t have to deal with product sales or warehouse operations, the overhead costs are very small.
In reality, many productive drop-shipping stores are run as home-based companies.
When you expand, these costs are likely to increase but will still be small relative to conventional brick-and-mortar businesses.
4. Flexible location
A drop-shipping company can be run from just about anywhere with an internet connexion.
As long as you can interact easily with suppliers and customers, you can run and manage your business.
5. Wide variety of goods to be sold
Because you do not have to pre-purchase items that you sell, you can deliver a range of trendy goods to your potential customers.
If suppliers have an item in stock, you can list it for sale in your online store at no additional cost.
6. Easier to check
Dropshipping is a valuable form of distribution for both the opening of a new store and for company owners seeking to check their appetite for different product categories, e.g. accessories or entirely new product lines.
The biggest advantage of dropshipping is, once again, the opportunity to list and possibly sell items before committing to buy a significant volume of inventory.
7. Easier to scale
With a typical retail company, if you get three times the number of orders, you typically have to do three times as much work.
Through using drop-shipping suppliers, much of the work to process additional orders can be carried out by suppliers, enabling you to expand with less increasing pain and less incremental work.