The ecommerce market has been booming for years without reaching the point of saturation (there are still developing markets throughout the world), and the global pandemic that’s keeping many people confined to their homes is only bolstering this growth. Now more than ever before, people from all backgrounds (and of all income levels) are eager to buy online.
Let’s say that you’re a budding entrepreneur looking to take advantage of this demand. Maybe you’ve been considering it for a while, or you’ve lost your job due to the business impact of COVID-19 and you’ve decided that you might as well bet on yourself by opening a store. It’s a good choice — but what kind of store should you run?
Well, one option that works incredibly well for first-time entrepreneurs is dropshipping. Let’s cover what dropshipping involves, and set out why it’s such a good choice.
Here’s the core concept of dropshipping: instead of stocking products and selling them online, you find products that suppliers are selling and list them through your store. When someone orders a product, you pass the order to the supplier (and pay their product price), and they handle the rest. You wouldn’t make any money at all just charging the supplier’s price, so you raise the cost in your store and profit from the margin.
That’s all you really need to know here, so I won’t spend too long going into detail about the general pros and cons of dropshipping. You can find them in this expanded dropshipping guide if you’re curious, but for now we’ll move on to why you should use it for your first store.
Here’s the biggest benefit of dropshipping, and the main reason why it’s so popular and so useful for new merchants: it’s completely risk-free (or as close as online retail can get) from a financial standpoint. And the only reason it isn’t 100% risk-free is that you’ll always have to pay for your website hosting, and that money can go to waste if you don’t make any sales.
When you list a product from a dropshipping supplier, you don’t need to buy that product and potentially watch it devalue as you fail to sell it. You don’t need to fund a warehouse with decent security so you can track and protect your inventory. You don’t need to pay for packaging or labels. You don’t need to hire couriers to take packaged products to their buyers.
Aside from the meagre cost of keeping your website going, you don’t need to pay for anything at all, meaning you don’t need a decent budget to get started. Given that budding entrepreneurs often have minimal savings, this is incredibly useful.
The other huge reason why dropshipping is so worthwhile for new sellers is that it’s also extremely challenging. When you’re running a standard store, you can make sales through having products that are exceptional and/or unique, or even just hitting price points lower than those of your competitors. You can’t do anything like that when dropshipping.
Dropshipping products are generic and available to everyone, and you can’t sell them for less than anyone else because your profit margins are wafer-thin. There’s only one thing you can do to have a better shot at selling a dropshipped product than someone else: nail the presentation. Use a combination of great product copy and high-quality images to make it sound fantastic.
Do this well, and an item that shoppers gloss over elsewhere will stand out to them in your store. You can also stand out through providing great customer service, but that only helps you once you’ve made some sales — sales that you can only earn through good presentation.
The two reasons we’ve looked at here are more than enough to justify trying dropshipping for your first online store. You won’t put your finances at risk, and it’ll teach you some invaluable lessons about the importance of product presentation — lessons that you can draw from with any other stores you create in the future.
The article has been authored by Rodney Laws, Editor, Ecommerce Platforms