Dropshipping is a perfect solution for people, who would like to open an online store, but don’t have large capital and storage space. In dropshipping model the seller takes care of daily service and customer acquisition, while the distributor or wholesaler is responsible for processing orders and inventory control. It is a very comfortable solution, but is it profitable?
What exactly is dropshipping? How to run a business in this model?
The dropshipping workflow can be described in 5 short points:
- The seller manages everyday business and acquires new clients. The store offers products from the cooperating wholesaler’s stock.
- When the client decides to buy something, the order is sent to the wholesaler’s system.
- The wholesaler sends the product to the client and takes care of returns.
- The wholesaler sends an invoice to the seller for the ordered goods and shipping costs.
- The seller profits from sales margin.
As you can see, the seller doesn’t have to buy the goods themselves, because they are sent to the customer directly from the wholesaler. Thanks to that the seller doesn’t need to own the inventory and cooperate with delivery companies. Instead, they can concentrate on the business and marketing strategy.
Of course, this solution has its flaws. Dropshipping sellers usually don’t have the possibility to personalize how the products are packaged. Introducing new products into the offer may also be difficult when our distributor does not have those products in their offer. In this case, it would be necessary to order them from another distributor, making logistics more difficult. If a client orders two products from two different distributors, it can be difficult to bundle them together into one package. In this case, the best solution would be to transform the store from dropshipping to traditional model. It will increase the overhead, but increase the possibility to scale the offer, since slow and expensive delivery may discourage clients from ordering products from your store.
Is it worth to set up a dropshipping store? How profitable can it be?
The profits from a droppshipping store are in general lower than those achieved by classic e-commerce, because, you become only a broker. However, it may still be an effective business model and, above all, a good way to start an e-commerce adventure. Your final earnings will depend on the resourcefulness and management methods that you choose.
How to manage your dropshipping store wisely?
First, you have to create an attractive offer that will respond to market demand and trends. However, it’s more reasonable to concentrate on a smaller group and their needs rather than try to please everybody.
You should also present your offer in an attractive way. The store’s site must be designed with user experience in mind, high-quality photos. Product descriptions also are very important.
Before you open the store – in dropshipping or traditional model – you should also become familiar with promotion methods and strategies – without that, it will be difficult to attract the customers to your business.
Dropshipping in Poland – where to start?
The first thing you will need to start a dropshipping business is finding a distributor or wholesaler that will be able to offer goods on terms that correspond to your expectations. In Poland there already are more than a dozen dropshipping wholesalers – you can find them in the catalogues published on the internet. You definitely should read some of them if you plan to start a dropshipping business in Poland.
The next step is setting up an online store, taking into account the UX rules mentioned in the paragraph above. To set up an online store you will need: hosting, domain name, SSL certificate, and an e-commerce platform. WordPress integrated with WooCommerce plugin can be a good start.
After setting up the store, start synchronizing with the wholesaler’s system to automatically update information about your offer: product’s prices, availability, profit margins, etc. For this purpose, the wholesaler should send you their product feed in XML or CSV format. You can also try an API integration.
Based on these data the store’s offer will be constantly replenished with new products from a wholesaler. It is definitely worth investing in a solution that will enable automatic updates described above – otherwise, you will have to insert information about products manually, which can be time consuming.
Besides, product feed can be also helpful in online marketing, for example for Google Shopping campaigns.
Analytics is also a key element of running an online store. You should watch carefully which products sell the best and draw conclusions accordingly. All marketing activities should likewise be analysed.
Is dropshipping a good way to make extra money?
Running a dropshipping store is less time-consuming than managing a traditional e-store and warehouse, therefore many people treat dropshipping like a side activity. Dropshipping business does not require large amounts of money, because we don’t have to invest in the products we sell – they are the property of the wholesaler.
But if you intend running a dropshipping store to be a fast and easy business, it is crucial to automate it from the very beginning. Our offer should be automatically updated and synchronized with the wholesaler. It is also advisable to research available marketing optimization tools. Feedink is one of them. Thanks to us, you can easily transform the feed that you get from the wholesaler to a feed that you need for Google Shopping or Facebook campaigns. It will save you a lot of precious time and can increase the efficiency of your campaigns.