One thing the modern world has taught us is the fact that you cannot rely on only one particular stream of income. To maintain a fairly equitable lifestyle, it is imperative to have one passive source of side income. However, running a side business is a lot of work and requires more time and capital than you’d generally be willing to invest. Here comes the role of dropshipping as your source of passive income.
If you’re new to this term, don’t worry, by the end of this article, you’d be versed with and ready for your very first dropshipping business. Let’s get started, shall we?
Dropshipping- Meaning and Role:
Dropshipping is a business model that allows individual entrepreneurs to store and sell market products online without the need for inventory management or business investment. Okay, let me break it into easier terms for you. In dropshipping, you act as a mediator between customers and dropshipping suppliers. There’s no need to handle inventory or delivery and this is one important point of difference between dropshipping and the usual e-commerce business.
This can be an absolutely amazing passive source of income for somebody with a website and marketing qualities. The income can be generated either by solely depending on the dropshipping profit or by including high AOV products in the store. It’s inexpensive to start a dropshipping business.
One of the biggest reasons for the growing numbers of dropshipping businesses can be owed to the success of manufacturers too. To throw in some statistics- manufacturers that are also involved in dropshipping retailing earn about 18% more profit as compared to the ones that don’t. Hence, dropshipping suppliers are increasing day after day leading to more and more people taking up dropshipping retailing.
Steps in Dropshipping-
Dropshipping is a pretty easy deal that involves the following set of steps:
- The retailer promotes and sells the product online via their website.
- An online customer is attracted that wants to make a purchase of the promoted item/service.
- The retailer forwards the buyer information and details of the order to the manufacturer or wholesaler.
- The manufacturer delivers the items to the purchaser.
Sounds easy right? It is absolutely rewarding to take up a dropshipping business, with a long-term commitment and trust between the retailers and distributors.
Ways to start a dropshipping business-
The steps to start a dropshipping business are as easy as it is to do a dropshipping business. Here’s how you can do it-
- On an e-commerce website, create your site. Find your product niche and sign up with a dropshipping supplier.
- Sync the products to your e-store.
- Set up the delivery settings.
- Define and check your checkout process.
- Launch your website.
Tadaa- it actually is this easy. All you need is a functional website and good marketing qualities. Any e-commerce platform like Shopify or Fiverr to set up your online dropshipping store with services that allow you to design your eCommerce store and sync your inventory.
However, believe it when I say, setting up a dropshipping business is easy. Keeping it running is hard. In fact, a little too hard. It is so because-
- Marketing is hard and takes a lot of potential.
- Most of the marketing techniques used by beginners are outdates and usually not potent enough to bring in large organic traffic.
- Competition in almost every industry is whopping high.
- With high competitions come in low returns and thus, low margins.
Hold up, don’t lose heart because if there are problems, we’ve brought you solutions too. Here are some MARKETING STRATEGIES that can help you run your dropshipping website in the long run.
1. Knowing your target audience-
To sell your product, you need to market it in a way that it appeals to the needs of your people, one that solves an issue for them. To be able to do this, it is imperative that you know your target audience well enough to know exactly what to cater.
2. Social Media Marketing-
One absolutely amazing way to promote your business is through social media, which I’m sire you’re aware about. However, a point to note here is, as a website owner dealing in a particular industry, you should exploit EVERY single social media platform pertaining to your industry needs or general ones. Do not rely on a limited few platforms.
You can also promote your page via ads on social media.
3. Email Marketing-
This very effective part of digital marketing allows you to contact your audience right in their inboxes. This can prove to be very fruitful in terms of efficiency and range if used effectively.
4. Paid Ads-
Paid ad campaigns can be run on platforms like Google, Facebook, or Instagram to increase your website reach. Here’s how and why each of these works-
Google search engine marketing allows you to choose keywords to bid on and create an ad. Google then charges you as per the cost-per-click format depending on the competition of keywords. This method can usually get very expensive very easily and might be a little harsh on beginners
Google shopping creates ads by showing a product feed for related keyword searches. It also allows users to compare competitor products and prices and also helps you understand how crowded your selected niche is.
Ways to expand your dropshipping business-
Dropshipping undoubtedly is an amazing source of passive income but it is important to take note of the fact that dropshipping business doesn’t usually have a very steep growth in terms of profit margins and growth. To evolve into a profit-generating business, this model requires time and long-term investment.
To expand your dropshipping business, you can take the following measures-
1. Using Multiple channels-
One way to reach out exponentially to new customers is by using multiple channels like eBay, Amazon, Alibaba and so many more. Keep in stock your most selling products on all platforms and ensure you’re catering to your customers’ needs and demands everywhere.
2. Dropshipping store-
While it is absolutely worthwhile to exploit available channels and use many of them, building your own dropshipping store would bring in the added advantage of creating a brand name and identity. It also helps in ensuring better control and decision-making.
I’m sure it is completely unnecessary to explain why advertising is crucial but one thing that is important to be pointed is the fact that advertising is way more fruitful when it’s done using the right channels. Do appropriate market research and use the marketing techniques mentioned in the previous section.
Dropshipping- The real deal:
In this extensive section that wrote about all hooks and crooks of dropshipping, how can we leave out good pros and cons section for you?
Advantages of dropshipping-
1. Low Risk
Dropshipping strives to be one of the low-risk hand on ventures that can be your source of passive income in the long run. It also is amongst the most flexible business models due to no inventory requirements, and storage and shipment hassle.
2. No inventory requirement
This business model allows you to directly sync your e-commerce store’s inventory to the dropshipping supplier/ manufacturer.
3. Low set-up costs
Starting a dropshipping business is way less costly than a traditional e-commerce store since the only payment you need to make is for the domain and hosting plan for your website. Inventory management and shipping hassle is off hands, leading to low start-up costs.
Disadvantages of dropshipping-
1. Less control
As fascinating as this business model may sound, it leaves over less control to the business holders for customer service and order delivery since you don’t have the stock and the entire supply chain is not in your hands.
2. Low profit margins
As is repeatedly mentioned by the article, dropshipping is a source of passive income and leaves out less room for profits when compared to conventional stores and manufacturing businesses.
3. No branding
Since the products being sold belong to other suppliers and manufacturers, your brand image can suffer and makes it more difficult to maintain a loyal brand audience.
The long-lost chain is incomplete and non-functional without this one crucial element- the dropshipping suppliers. It is imperative to find the right dropshipping suppliers.
Some qualities that your dropshipping supplier should possess include-
1. Technological advancement
A supplier that is tech-savvy can be a plus to have by your side for your dropshipping business to ensure that he can keep up with the entire cycle.
2. Experienced and punctual
Good customer service is the one thing that keeps the business running and we know it. Since you’re not the one that ends this chain of dropshipping, you require someone who can paint a good picture for you in front of your customers.
3. Quality focussed
When choosing your dropshipping supplier, quality should be one important phenomenon to drive you to the decision of finalization. It is so because like any other business, quality makes or breaks a business. Along with that, if you’re confident about the product’s quality that you’re promoting, you’ll be more impactful to make a sale as compared to when you yourself are not very satisfied.
Here, you’re now ready to give dropshipping a try. Just keep in mind the above-mentioned information and run a successful business.