The concept of Dropshipping is fairly new and is becoming more and more popular as people discover how easy it can be to make money sitting in the comfort of their home. Dropshipping is an arrangement typically involving three parties, “The Wholesaler/Manufacturer”, “The Online Retailer”, and the “Online Retailer's customers”.
Dropshipping is a process where an Online Retailer sells a product through a particular channel (website, eBay, Amazon, etc.) to their customer. However, the product is not physically in the retailer's possession but instead it is stocked with the wholesaler. Once the retailer receives an order from their customer, they place the same order on the wholesaler's website ( Style Volume) and the item is shipped directly to the retailer's customer.
Most wholesalers typically do not tell the end customer that the item was delivered by them. Therefore, the customer never finds out that the retailer is using a drop shipping service, until and unless, the retailer themselves mention this (which is usually not the norm).
Retailers get attractive wholesale prices on the wholesaler's website and add a further margin on that price before putting the product up on their website. The difference between the wholesale price on the wholesaler's website and the retail price on the seller's site is the profit that the retailer earns. It is important to take other costs into account, such as shipping charges. Sometimes, it is advisable to factor these into the cost of the product.
The wholesaler helps the retailers, by providing them with resources that would help in the sales and marketing of the products. For e.g. Style Volume provides its dropshipping users with descriptive product titles, product descriptions, High quality Images, Feeds, etc. This information is used by the retailers on their website in order to generate interest in the product and to make the dropshipping process easier.
Let's look at an example to understand the process better. Let's say “Style Volume” is the wholesaler and “Funky Accessories” the retailer. Funky Accessories registers for a dropshipping account with Style Volume and uses the product feed provided by Style Volume to import its product information, pictures, and prices, to its own website.
Funky Accessories customers look at the products available on the site and place an order. As Funky Accessories does not physically hold the stock, they log into their account on Style Volume and the place the order. Style Volume receives the order, along with Funky Accessories customer's shipping details and ships the product to the customer. Style Volume does not include their name anywhere on the packaging, so the customer never finds out that the item was sent by Style Volume.
Advantages of Dropshipping
There are various advantages of dropshipping, whether you are thinking of starting a new home based business or have been successfully running online businesses for some time. Some of these include:
- No initial investment on stock: As you do not have to purchase any stock, there is no initial investment on stock. This also eliminates a major business risk, especially with start-up businesses.
- No stock to hold : As you do not physically hold the stock, there is no expense on storage or insurance of stock.
- Focus on marketing : You can focus on marketing the products as you do not lose valuable time in packaging and shipping the products.
Where can you sell?
There are various channels you can use in order to sell your products online. Some of the dropshipping users prefer to use websites like Amazon and EBay, which already provide a large customer base you can market to. Others prefer to have their own websites, which gives them more control. Many dropshipping users use a combination of the two.
Most successful dropshipping users, try to find new markets where there is good demand and low competition. Therefore, it is always a good idea to try and think out of the box and also look at places other than the most popular channels like EBay. Most importantly, if you do not have any experience of selling online or if it is something, which does not interest you, you can always sell offline via brochures and catalogues.
Conclusion
Dropshipping is a great way of getting started in the world of online businesses and generating an additional stream of revenue. It allows you to test the waters, without making any huge investments in a business. This is something that you can easily manage in your spare time and therefore can be easily adjusted with your full time job. If you sell products from multiple dropshippers, it gives you an opportunity to sell a wide range of products, without having to invest in them.
To discover more about Style Volume's Dropshipping program, please read the articles in the following category
You should also refer to the Dropshipping FAQ at the following Link
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