In such a technologically advanced world, more and more people are able to work from anywhere around the globe. So many professions are based online nowadays, making it more possible to work from your couch at home – or even a beach on a Thai island. One of these so called “digital nomad” professions is dropshipping.
Running a dropshipping program is tricky stuff, but the beauty of it is that you can do it from anywhere. It is different than “normal” shipping as it doesn’t actually require you to have any inventory on hand. Like regular shipping, dropshipping works by getting a product from point A to point B.
Point B is still the consumer, but you (the ecommerce store owner) are not point A. Instead, point A is the product manufacturer or another vendor. If the sound of working anywhere from the world sounds good to you, perhaps you should consider dropshipping. Keep reading to learn the basics.
How does dropshipping work?
Similar to regular shipping, dropshipping involves receiving an order and then fulfilling that order. However, once you receive the order you won’t have direct access to the product. Whoever physically has the product – most likely one of your regular vendors/suppliers – is responsible for the shipment process.
With a dropshipping software, you probably won’t have to physically send the order information to the vendor. Instead, this person will get it automatically and have all the necessary information to fulfill shipment. The product will be packed and shipped by the supplier and sent to the customer via your postal provider of choice. Even though you technically made the sale, chances are you won’t even see the product before it is shipped off.
How is it possible to make a profit?
At this point you might be a bit confused about how there is any money in this for you, since the inventory isn’t actually owned by you. Basically the profits that you make are dependent on the difference between the cost of the supplier’s product and the payment made by the customer.
Say you charge a customer $10 for a product that the supplier only charges $6. You will keep the remaining $4 as profit. Some ecommerce store owners feel that this shipping process is not as effective has regular shipping, but it is ideal for entrepreneurs starting off with little money.
What are the perks to dropshipping?
We’ve already covered the first perk – working from anywhere in the world – but that is not the only benefit of dropshipping. In addition to freedom of mobility, dropshipping requires very little initial investment. Since there is no actual inventory on hand, you don’t need to stock a warehouse (or your home’s garage) with the products you’re trying to sell.
You could essentially start a dropshipping program with $0. You will need to figure out how to market your product and ecommerce store, but this requires more time than money. All in all, dropshipping is a great option if you want to work from home and spend as little as possible when starting out your ecommerce store.
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