How Does Dropshipping Work as a Business?

Dropshipping

Whether you want to start up a new business because you are bored at work or you want to earn an additional income, dropshipping is certainly an appealing concept. With its low risk and possible high returns for minimal effort, it undoubtedly appeals to a wide range of people looking to work online.

So, what is a dropshipper?

A dropshipper is someone who acts as a middleman between a wholesaler and a customer. You will take the product order and money, and pass the information onto the wholesaler who will then dispense the product for you to the customer. You don’t need to worry about anything from the storage of the products to the handling and the shipping, as all of this is done by the supplier. You will work alongside wholesalers supplying a range of stock in the UK in order to ensure that you cater to your customer’s needs, as there is no limit to what you can offer your customers because you are free to work with as many suppliers as you want.

A Modern Business Practice  

It is a modern business concept that works for everyone. The wholesaler is able to sell more products without having to invest in marketing and advertising and the customer is able to get hold of good quality products for an affordable price, while the dropshipper can make a living taking a profit from the items that are sold.

How are the Products Sold?

There are lots of different ways to sell dropshipped products, from using websites like Amazon through to setting up an ecommerce website.

Dropshipping

TIP: Many successful dropshippers will do both of these things, as having an ecommerce website that you can point people to from a well-established platform like eBay is a great way to get the ultimate business exposure.

What Will the Profits be?

Profits will vary depending on what products you sell but here are a few general guidelines:

  • Low-priced items usually offer good profit margins of around 100%
  • Expensive items will provide a far lower profit margin – about 5-10%
  • It is vital to find the balance between making a profit and still providing good quality items

You will only build up a customer base if your customers are happy with the service and the products that they receive. This means that there is no point in using a wholesaler that sells really cheap products that will easily break, as your customers won’t be interested in buying anything again in the future. There is a fine line between a good deal and a dud one, as customers don’t want to buy useless products even if they are really cheap, so bear this in mind when choosing which wholesalers you want to work with.

Learning what your customers want will take time, as will finding suppliers that are good to work with and once this balance has been established; the day to day running of a dropshipping business is straightforward.

Be first to comment