Dropshipping Business Model: All You Need to Know on It in 2023
Dropshipping business model refers to a coming-of-age model where third-party business owners are involved. Dropshipping refers to a fulfilment process where you don't own or ship any inventory. You work on getting orders and the logistics are handled by a third party. It allows you to carry on a business and sell products without maintaining an inventory or warehouse. If you are confused and want to know the dropshipping meaning and how it works, then this is the right place for you.
In today’s world where things are moving forward at a quick pace, everything is happening digitally. Dropshipping business model is a model where you don’t have to build a store, inventory or any warehouse, and can sell off products at the convenience of your home. When owning a business, there is a lot of hassle involved, from manufacturing to production, warehousing or sourcing. If you don’t want to start this big, you can easily start your journey through dropshipping.
What is Dropshipping?
Dropshipping is a fulfilment service where you don’t have to own an inventory or a store and can still be in business. It is when products are sold by an online store but are manufactured, stored and shipped by a third-party dropshipping company. For example, AliExpress, Wholesale2b, and Spocket. Dropshipping business model implies the promotion of products and maintaining an online storefront. Then when a customer from their end places an order, you send the order to the drop shipper and inform customers the products are on the way. The rest of the physical
fulfilment process is out of your hands.
Dropshipping business model has a ton of advantages for people who are starting fresh in the business. Delegating the fulfilment of your order to a third party helps free up time and allows you to avoid the hassle of handling delivery and shipment on your own. You can spend your time focusing on marketing, customer service, and brand building.
Who is a Dropshipper?
A drop shipper in a dropshipping business model is someone who handles the fulfilment of the products ordered by customers on the storefront. They are usually a third party who handles the warehousing, shipping and delivery on their hand.
For example, NimbusPost offers dropshipping through Sourceinfi. It is a platform made to cater to your needs and eliminate your hassle of procuring materials or products and it works around contemporary supply chain issues.
Drop shippers typically operate online stores or e-commerce websites, where they showcase products, set prices, and manage customer inquiries and orders. The dropshipping model allows you to start a business with minimal upfront investment, as you do not need to purchase and store inventory in advance. Instead, you can earn a profit by selling products at a higher price.
What is the Dropshipping Business Model?
What goes into the process of the logistics of a dropshipping business depends on your specific preferences and arrangements, but typically the dropshipping process follows this general sequence:
The signing of an agreement between the seller and the drop shipper.
The Customer then orders online.
The Seller receives the order placed by the customer.
The Customer is sent an order confirmation.
The Seller then forwards the order to the mentioned drop shipper.
The Dropshipper ships the order directly.
Customers receive their product.
Is Dropshipping Business Suitable For You?
Dropshipping business model is subjective to the person’s needs and preferences, you must answer a few questions before deciding whether the dropshipping business suits you or not.
How do you want to build your brand?
How much control do you want over product quality?
How quickly do you want to ship products?
How much capital do you have access to?
What is your target profit margin?
Can you handle supply and inventory issues on your own?
How will you handle refunds, returns, and replacements?
How are you going to manage customer fulfilment queries and concerns?
You can optimise each of these questions to create a positive customer experience as well as to know if you are ready to adopt the dropshipping business model. This can further help you build a base for positive reviews from customers, further increasing brand loyalty.
In the end, it is on you to decide if a dropshipping business works for you. It does have a lot of benefits, like risk management, cost-effectiveness, scalability and flexibility. Weigh your options and goals to find the right online selling and fulfilment strategy to help you grow your e-commerce business
If you are looking for a platform to help you with dropshipping in your business, you can connect to NimbusPost, a tech-enabled shipping aggregator that helps you with all your supply chain and logistics needs. It connects you to leading courier partners as per your requirements. For more information, check out NimbusPost.com.