There is no qualm over the fact that the e-commerce industry has successfully proved itself to be the best way of selling items of any industry niche. Whether you are a startup or an established company, there is always room for improvements and grow your business. With the beginning of the 3rd decade of this century, many business enthusiasts want to try their luck in the e-commerce industry but are lacking sufficient capital to start a new business. They require a business model which doesn’t require high capital, something which can be managed easily and offers flexibility in product sourcing. If you are among them then this is the perfect article for you. In this article, we are going to know about all the aspects of Dropshipping, a business model which will meet your requirements without a huge investment. With Dropshipping, you can expand your product line, streamline inventory & orders, or even start a new business.
What is Dropshipping?
In the Dropshipping method, the store owner doesn’t purchase the products from manufacturers or big distributors. They don’t need to maintain an inventory, own a warehouse for storing products or even don’t need to ship their products to customers themselves.
This model reduces eliminates certain costs and liabilities of stocking the merchandise themselves. The best part is that you don’t need to take risk of investing a huge sum of money. Basically, Dropshipping works in 3 simple steps:
- Selling an item on your Magento store
- Forwarding the order information to the supplier
- Supplier will ship the order to the customer but using your name
Ostensibly it seems highly promising but it can be a confusing and tricky process. That’s why you must also know the pros and cons of Dropshipping.
Benefits of Dropshipping Model:
There are many different benefits of Dropshipping. The prominent ones are:
· No need to maintain an inventory:
Dropshipping is almost about not using an inventory in your business. You will be using the inventory of your supplier and thus you can mitigate any risk of over-stocking or managing churn. You have to make a purchase only when you are selling an item.
· Low overhead costs:
Since there is no inventory in your business, there will be minimal or even zero overhead costs. Neither you need to pay for renting or for maintaining a warehouse. You can run a business from anywhere, as long as you have a reliable Internet connection.
· Selling different varieties of products:
Dropshipping gives you the freedom to sell different kinds of products. Generally, the supplier or big distributors have a huge inventory with diverse items. Thus, you can easily increase the niche of the product without worrying about the product being out of stock.
· No dependency on the location of your store:
You don’t need to present at the location of your target audience as long as it is within the reach of your suppliers or vendors. Strategically pick vendors that are closer to the target region and get your products there faster.
· Start your Dropshipping business on Magento right away:
All the above-mentioned advantages of Dropshipping allow the sellers to easily do their business with very little risk. You can sell anywhere that your vendors reach. Dropshipping merchants just require a smartphone, laptop, and internet connection to run the business.
Drawbacks in Dropshipping Business:
Dropshipping is not an exception in regards to the drawbacks or limitations. There will be certain roadblocks and problems you will be facing while running this business.
· Highly Competitive:
Since it is easy to jump into the e-commerce market through the Dropshipping business, that’s why there are many businesses that are selling similar products. You are not alone in this industry and have fierce competition.
· Less Profit Margins:
While starting out in the Dropshipping business, the profit margins would be very narrow. If you are operating in a particular industry niche then the margins of the product are going to be lower. Either you have to set low prices to attract the customers or set profit-marginalized prices with fewer customers.
· Choosing the Right Supplier:
To run a Dropshipping business smoothly, you must find and choose the right suppliers with the best services, price, and good quality products. You might have to scan through a lot of posing vendors who aren’t offering you real “wholesale” prices.
· Faults of Suppliers:
In the Dropshipping business, you are almost acting as an intermediary and have almost no control over the inventory and shipping mechanism. You will be dependent upon the vendor for this. There can be scenarios when the vendors don’t ship an item to the customers within the time frame and then it becomes your responsibility to deal with these situations. If you are getting positive feedback for the good services of your suppliers, you also have to bear the negative situations as well.
Why Choose Magento For Dropshipping Business?
In the Dropshipping business, Magento can be a game-changer. It is a highly recommended platform for creating a Dropshipping e-commerce store. It comes with unlimited personalization options, thus it gives you the freedom to personalize your store as per your industry. Magento comes with multiple editions, among which the Community edition is free of cost. You can opt for the rest of the platforms once your business grows and expand. If you are not planning on opening a large online store or trading platform, you can use the free Magento option.
The other reasons for choosing Magento instead of other e-commerce platforms like BigCommerce or Shopify are:
- Charge no commission fee for any order
- No extra or hidden charges
- Self-hosted data
- No restriction on the number of orders
Manually Dropshipping Orders Manually:
If you are a Magento startup that only processes a few orders a day, then you can also drop ship the orders manually. It simply means that if you receive an order from your Magento store, you can manually send an e-mail to the supplier so the supplier will ship the item to the customer.
You can try new and multiple suppliers in this manner. Thus, you don’t have to invest a lot in the technology until everything has been perfectly set up and you have decided that Drop shipping is the best solution for you.
Magento 2 Dropshipping Extensions:
If you feel that your Magento store has reached the threshold above which you can’t handle the orders manually, then you can utilize the Magento Dropshipping extensions which will let you achieve your goal. A Magento extension will save a lot of time of yours and give you direct help in focusing Dropshipping part of your business.
While looking out for an extension, you must give consideration to these aspects:
- Source of Extension: Always purchase Magento extensions from genuine and trusted sources. The most recommended way of buying extensions is from the official Magento marketplace.
- Price: Price is an important factor while considering an extension. Compare the features and prices of multiple extensions.
- Integrations: The extension should have a secure integration method. It must be able to integrate with the other channels of your Magento store as well.
- Feedback/Rating: Going through the reviews or feedbacks of others will give you a fair idea of an extension.