Taking flight on the huge e-commerce scene can seem scary. But if you want to take the plunge without taking too many risks, there is a solution: dropshipping.
This e-commerce practice, which has been very widespread in recent years, consists of commercial transactions involving 3 service providers:
- The customer
- The e-merchant (you)
- The wholesaler, or dropshipping supplier
But how does it work? Who are the players in the dropshipping market?
1. Creating a dropshipping shop to sell your products: a good idea, or a big mistake?
Dropshipping is a simplified online sales system which involves the e-commerce merchant acting as an intermediary between the customer and the e-commerce wholesaler.
Thus, thanks to the development of merchant CMS and numerous marketplaces, dropshipping makes it possible to develop online commerce in its commercial dimension, without having to manage the production or logistics often involved in running an e-commerce business.
Today, between 22% and 33% of online stores practice dropshipping. Perhaps this is an opportunity not to be missed? Focus on dropshipping and its practical application!
2. Using dropshipping for your webshop: how does it work?
The interest of dropshipping starts by understanding how it works and how it is implemented in the heart of the commercial system.
How dropshipping works?
A dropshipping circuit is divided into 3 phases:
- Phase 1: a customer orders a product, for example a fancy mouse pad on an e-commerce site. The site manager is informed and notified of the purchase, and when the customer pays for the order, the e-merchant takes a commission.
- Phase 2: the e-merchant orders the mousepad from his supplier, who is at the origin of his production.
- Phase 3: the dropshipping supplier takes care of the logistics and delivery of the package, directly to the customer.
The most obvious advantage of using dropshipping is that it fully delegates the logistical dimension of e-commerce.
As an e-merchant, you can then concentrate exclusively on the central part of your business - distance selling! You don't have to organize logistics, create packaging, choose a carrier, check the address, organize the tour, take care of stock management...
The only things you have to worry about are the transmission of the order, and the marketing and promotional dimension of the products you choose.
Quite simply, you don't create and deliver your products yourself - you simply promote the products made by the supplier of your choice. This may not be as simple as it sounds, but it helps you to not get lost when you're just starting out in e-commerce!
Basically, dropshipping allows you to dip your toe in the water before you dive in. And for longer than it seems!
An on-point e-commerce solution, to create a store without managing products.
In fact, dropshipping is a business model that has been used for a long time, by TV shows like Tele Shopping for example. The presenters promote certain products, and the TV channel gets a commission each time they manage to sell a product.
More recently, many marketplaces such as Rue du Commerce, Amazon, and eBay have exploited dropshipping without the general public necessarily realizing it. These platforms sell products offered by suppliers, and they take a commission for each sale made.
For young e-merchants who don't know where to start, dropshipping is a good solution. All you have to do is invest in a good CMS (content management system) to create a dropshipping site or an account on a marketplace, and that's it!
And to be able to start slowly is far from negligible. Indeed, it's not because you start on the e-commerce scene that you necessarily succeed. Fevad has counted more than 200,000 merchant sites in France in early 2019, and among these 200,000 sites, nearly 66% of them had a turnover of less than €3000 per month.
So dropshipping is positive for suppliers who multiply their sales channels without doing anything. But also for e-merchants, who can earn a commission on purchases without investing a penny!
Having said that, going into dropshipping implies having a certain knowledge of the market and the players present, in order to know the full extent of this activity.
3. The dropshipping market: product suppliers and marketplaces
Between product manufacturers and dropshippers, the dropshipping market is a vast playground. And the more players there are, the more the market expands. That's why over the years its access has been facilitated by the creation of platforms.
The dropshipping market is fueled by suppliers and wholesalers - manufacturers who offer their own product catalogues. There are different types of wholesalers, depending on their field of activity and the quality of the products.
Most of suppliers are, for example, generalists - they offer products of all categories, to ensure that the cyber buyer finds what he is looking for on their platform (pet shop, hygiene products, IT, etc.).
One of the many giants of international dropshipping is AliExpress, and you can find absolutely everything on its e-commerce sites. Webdrop is also a generalist marketplace, exclusively in French.
This way, dropshippers have a wide range of choices. A choice that is often summed up by: quantity of products, or quality?
In any case, if you decide to become a dropshipper, it is important to find an e-commerce supplier with whom you have good communication. Indeed, the dropshipper depends on the wholesaler, and vice versa. This means that your supplier's actions and decisions can have a significant impact on your dropshipping activity (for example, change in sales price, production stop, stock availability, etc.).
To avoid wasting time working on the product sheets of an article that is no longer available, communication is key!
Platforms to create your online shop
The more suppliers and dropshippers there are on the market, the better the dropshipping is. Its access is therefore increasingly facilitated by the development of ApplicationProgramming Interface (API), which allows certain affiliates to take over a supplier's entire catalogue.
Once you have selected the supplier and the products you are interested in, dropshipping is just a few clicks away.
To avoid investing in the creation of merchant websites, you can create your own e-commerce shop on specialized platforms such as the French marketplace, Dropizi, which has the particularity of working with major suppliers in the dropshipping market.
These established dropshipping platforms help you in your choice of the ideal supplier. They calculate different proposals and give you a result based on the reputation of the supplier according to reviews, the number of orders placed, the delivery times, etc.
To get a wider view and play immediately in the big league, you can register on larger platforms such as Shopify or WooCommerce. They have very competent plugins (such as Oberlo for Shopify) to guide you in your choice of supplier.
The large marketplaces offer a wide choice of business models. You can get into e-commerce dropshipping right away or keep a foot in the "classic" profitable e-commerce by selling your own products.
Even though they create more opportunities for customers and growth, large marketplaces also mean strong competition. Many e-merchants are going into dropshipping on the largest platforms, hoping to prosper faster. Therefore, it is necessary to know how to stand out so that customers choose YOUR products!
Bigblue tips: Whatever your expectations, make sure you select a platform that fits your needs and future plans. Whether you want to do dropshipping for the rest of your life or if it's just a temporary phase, your choice of platform will not be the same.
Indeed, you must follow the regulations imposed by the platform you have chosen. However, some marketplaces have very strict dropshipping conditions which may not be in line with what you think: rigorous drafting of product sheets, prices, terms and conditions of sale, information given by the supplier, etc.
No matter what comes your way, keep your expectations and forecasts in mind, and choose the platform that suits you best!
Selling your products in dropshipping: the advantages
Dropshipping is at the peak of popularity. Indeed, its theoretical advantages for both young and established e-merchants are almost undeniable!
It is an excellent business solution for testing the reaction of your potential customers to the arrival of a new product. For example, if you sell computer chairs and the fancy mouse pad, dropshipping could be a way to try to expand into this market.
All you have to do is offer the item on your site and see whether orders are coming in or not. If you don't have any orders for a predefined period of time, there's no point in investing in a whole sale purchase of mousepads. On the contrary, if you have a lot of orders, you should go for it!
Dropshipping is a real test of the market reality and it's almost free of charge. It can be ideal if you want to widen your product range as it does not imply any financial investment for you as the e-merchant.
This business model is based on the just-in-time principle, which means that there is no overstock to manage for you (unless you choose to work with a push-flow rather than pull-flow supplier, in which case you have to take on the storage costs).
Bigblue tips: If you want to get into dropshipping but don't know what product to sell, maybe it's worth entering a niche market.The competition is bound to be less tough, even if you attract fewer customers.
You can also opt for better suppliers who are geographically close to you. This reduces delivery times AND the prices that customers will have to pay. So, more chances to sell products, without reducing your commission!
4. The world of dropshipping in your own ecommerce shop: why not you?
Dropshipping is a simplified way to access e-commerce. If you start in the world of dropshipping, you take the burden of production, logistics and delivery off your hands. You only have to concentrate on marketing, product promotion and order transmission.
Dropshipping is a business model that can also be of interest to e-merchants who are well established in the market. Indeed, it is an excellent way to test the compatibility of a product and a market with a customer base. All this without the need to invest up stream since the idea is to promote another person's products.
Getting involved in dropshipping involves maintaining a sales site on the internet, whether it's a website or an account on a marketplace. If you prefer the second option, take your time when choosing your sales platform. The regulations of the latter may affect your future projects.
To take advantage of the benefits offered by dropshipping, don't rush - study all your options!