Dropshipping and Its Advantages for Online Retail Businesses

By Abhishek Amin Oct 22, 2021, 1:42:08 PM , In Web Development
Dropshipping and Its Advantages for Online Retail Businesses

We have heard connected devices, connected cars, and now are hearing the term “Connected Consumers”, thanks to the global pandemic. If I simply talk about one industry that has taken the most out of a situation like this is online retailing. Be it the delivery of groceries, on-demand food ordering, or simply, online shopping.

In this article, we are going to talk about the latter most industry- online retailing and shopping, i.e. the Ecommerce industry. 

Constant Rise of Ecommerce

Technology-based innovations have completely transformed the way a customer shops online these days. Various solutions leveraging Artificial Intelligence, Machine Learning, Augmented Reality, Virtual Reality, Chatbot, digital currencies, etc. are used to enhance the customer experiences.

On the other hand, online retail businesses are also looking for various options to cut down the operational costs, improve system efficiency, and sales with the help of these technologies. 

The Ecommerce landscape is being transformed disruptively due to this tech-based innovation as seen from the PYMNTS/VISA’s 2020 report, which shows,

  • 24% of consumers use food delivery apps more now than they did before the pandemic.
  • 32.6% of consumers use voice assistants.
  • 90.1% of consumers own smartphones, and 55% shop on marketplace apps more now than before the pandemic.
  • 30% of consumers own a connected car, and 17% make purchases while commuting.
  • 31% of consumers bank on their smartphones via an app.

Due to the continuous growth of Ecommerce, the market competition is becoming intensive than ever too. The Ecommerce startups definitely can find it harder to survive compared to other established Ecommerce giants who have been on it for years. 

Then what is the solution? 

Well, there is one. By saving the capital on acquiring the products and investing that money elsewhere on other important aspects that improve your customer’s shopping experience, enhance sales, etc.

Dropshipping is one popular model of Ecommerce business. A lot of startups, even SMEs and Enterprises are following dropshipping model to increase sales and revenue. 

What is Dropshipping and How Does It Work?

Dropshipping is ideal for Ecommerce businesses that are looking to grow in terms of popularity, create a high profit with the lowest possible investment.

Dropshipping is an effective Ecommerce business model where a seller can sell the items without having to purchase them and keeping in stock. It is actually a retail fulfillment method where a store doesn’t keep the products it sells in stock.

Instead, a seller forms a partnership with a stocker or manufacturer of the products being sold from an online platform. When a store sells a product using the dropshipping model, it purchases the item from a third party and has it shipped directly to the customer. Dropshipping can be a great approach for eCommerce merchants who want to keep their overhead low. 

Step-by-Step Process for Basic Understanding

Process

  1. A customer places an order via your Ecommerce web app or mobile app.
  2. The platform automates and forwards the order to the product owner (supplier).
  3. The dropshipping supplier/partner prepares the order for your customer.
  4. Your supplier ships the product to the customer’s doorstep.

Let us have a look at the benefits of Dropshipping model for businesses in the Ecommerce industry.

Benefits of Drop Shipping for Ecommerce Businesses

Low Investment

One of the biggest benefits of dropshipping is that it’s possible to launch a store without investing a fortune initially. Physical storefronts or even buying/renting and building warehouses need large amounts of money. This means low start-up costs and reduced risk.

Easy for Ecommerce Startups

It is extremely easy for Ecommerce entrepreneurs to get started running the online retailing business with a dropshipping model, as it helps them to avoid,

  • Managing or paying for a warehouse
  • Packing and shipping your orders
  • Tracking inventory for accounting reasons
  • Handling returns and inbound shipments
  • Continually ordering products and managing stock level

Flexible Location 

You can run and operate your dropshipping business from anywhere with complete flexibility. All you need is to have a robust system pre-built and an internet that ensures a reliable communication bridge between your partner and the customers. 

A Wider Spectrum of Products to Sell Online

Since the online sellers do not have to pre-purchase the items for selling, they can offer an array of trending products to your potential customers. If the suppliers stock an item, you can list it for sale on your online store at no additional cost.

Scalability

With dropshipping, the majority of the work falls on the suppliers. Yes to get those sales will require work, but if your business unexpectedly doubles, your workload will not. This means fewer growing pain areas for you as you scale your business.

Hey, Hold On. Wait a Minute.

With all the goodies dropshipping model has to offer, there are areas of concern associated too. 

Dropshipping has limitations in terms of lower profit margins on product sales, which is probably the biggest disadvantage of them all. However, considering the huge investment costs on purchasing and procuring products, it is still manageable to deal with lower margins.

You also have to do some groundwork over the shipping costs concerns and supplier errors. The products will be shipped to the customers by multiple suppliers with varied shipping costs incurred. It may get difficult for you to simplify it. Also, you must be accepting the responsibility in case of suppliers making errors in the shipping process.

Over to You

The idea of launching an Ecommerce dropshipping business sounds exciting. However, you should also keep in mind that it’s not easy. You also need to find the right technology partner if you want to design and build a dropshipping Ecommerce platform from scratch. 

IndiaNIC is a successful Ecommerce applications development company since 1997. Our experts have explored, worked, designed, built, integrated, and delivered all the aspects of trending Ecommerce features, modules, or platforms.

Our expertise and experience will help you select the best Ecommerce platform to implement the dropshipping model. The knowledge we possess in-house about the best Ecommerce platforms like Magento, WooCommerce, BigCommerce, Shopify and its popular dropshipping app named Oberlo, is second to none.

So if you’re up for the challenges ahead and ready to put in the effort, dropshipping can be your perfect opportunity to build an online business with low maintenance and the potential to go big.

Contact Ecommerce experts to share your idea and get the precise solution that your business needs.

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