What is dropshipping?
Have you ever yearned to run your own business? Do you crave the opportunity to be your own boss? Starting a new business can seem impossibly daunting but have you ever considered dropshipping?
You may not even have heard of it but dropshipping has flourished with the arrival of the digital age and virtual shopping. Unlike a real high street store, retailers can advertise products via description and image which they don’t actually need to keep in stock. When an order is placed, this is passed through to the stock holder or wholesaler who despatches the drop shipped order direct to the customer. The customer will probably never even realise. Have a read through our micro guide to dropshipping and see whether you think it might be something you want to try.
What is the idea behind dropshipping?
Dropshipping plus the internet has enabled literally anyone to set up an online store without the need to purchase large quantities of stock up front and, have somewhere to store them. The dropshipper also doesn’t even need to despatch the goods so the shop is literally just a portal. This can be very lucrative hence its popularity.
Why is dropshipping a popular way to start your own business?
It is so easy to see why this business model is head and shoulders above others in popularity. Unless you are actually manufacturing the goods yourself, why buy in stock which you have to fund up front and then keep until it sells? In a traditional business model, traders have to fund the purchase of stock which they are stuck with for months or years. With dropshipping, there is virtually no risk and crucially, no capital start-up costs either. If you want to start a small business then dropshipping is an ideal way to do it.
What are the advantages to a new business to use dropshipping?
- Low start-up costs as there is no stock purchase requirement
- Premises are not needed to store stock
- Operating location can, therefore, be flexible – you can literally work from anywhere and base yourself at home which can be really helpful if you also have domestic responsibilities
- You can stock a wide variety of products, a greater range perhaps than if you had to actually buy in the stock
- It is easy to scale up or down
Earn from dropshipping
For those stuck on the career treadmill, it can be really hard to ever envisage a time when a change might be possible. Imagine the prospect therefore of starting a little micro business from home. It is really easy to get started with dropshipping. You can work from home and earn an income dropshipping which can sit alongside your main job and family commitments without disrupting either. From little acorns do mighty oaks grow and when you are ready, you can upscale this business into something much more major leaving your main career behind and devoting your life to your new enterprise. Imagine how much better the work-life balance could be if you were at home all the time?
Learn how to dropship
As a business model, dropshipping is so popular that there are dedicated platforms like AliExpress to help get you started. You might opt for a very simple shop front or you may use creative skills and marketing ability to take a product and create something really unique with it. Often success is dictated by flair and vision. Equally, there are plenty of very straightforward ‘ no frills’ dropshipping stores.
How much should you mark up the goods by?
The idea is that as well as having absolutely no overheads to pay to run your business, you can also mark up the items for sale so that the customer pays a retail price and you pay the supplier wholesale, the difference being your profit. A key question on everyone’s lips is what is a good dropshipping markup? There is no straight answer to this as it depends on what you are selling and your marketplace. If there is a lot of competition and you are not uniquely presenting or marketing the products then you will not be able to charge much more than the next person. The key can be to bespoke your item and make it individual in some way. Or, start with a much higher value item and you will need to sell less. Try and spot a gap in the market and then fill it.
If you want to set up a dropshipping store then you probably need to think about working from home
So many people do it but how easy is it? You have to learn how to work from home as it is not without its challenges. Take a read of our top tips all gathered from dedicated and successful homeworkers:-
- Allocate yourself a dedicated and quiet space as your office
- Try and work regular hours as if you were still employed; it's important for the people around you to understand that you are working but that you don’t work all the time and are available to them. You may require this discipline in the early days to stop yourself being distracted by other things in the home environment
- Resist the temptation to work all the time, this is not the work-life balance you were seeking. Agree a finish time each day and then shut the door and walk away
Does dropshipping work – the million dollar question?
Dropshipping in Australia is great as it is one of the best countries in the world for this type of e-commerce and it is a thriving platform with plenty more scope for exploitation. There are established suppliers and wholesalers in Australia such as Factory Fast and SaleHoo who can introduce you to the concept with plenty of advice, information and their own dropshipping guide. But just remember, ultimately, like any small, embryonic business, success depends on the strength and sense of your choices and how hard you can work to bring it all to fruition.