Dropshipping, or direct supply contract, is one of the business models, the essence of which is that the intermediary does not have stocks of goods in stock, but buys them from the manufacturer only when he receives an order for them and payment from the buyer. Or he passes the order to the wholesaler, and then sends it himself, charging you a commission.
Dropshipping has become particularly popular in e-commerce and other areas of online sales for a reason. It allows starting a business with minimal start-up capital, requires less expense in the process, is easy to scale, and allows you to offer potential buyers a wide range of merchandise.
Dropshipping is probably the easiest, easiest and safest trading scheme. The real chances of getting a stable income when working on the dropshipping scheme are not clouded by the rental of trading premises, or solving problems with stocks (you do not depend on price fluctuations in the market either), or the availability of your own logistics database. The tool you need to implement dropshipping is just access to the Internet. You get the widest field of sales while maintaining freedom of movement.
On the other hand, the dropshipping scheme makes it difficult to get a high level of profitability, as you are essentially an intermediary and partly dependent on a third party, the monitoring of which obligations can be difficult.
Still, despite several complexities and controversial points, working on the dropshipping model can in some cases be the ideal solution for organizing a business. So let’s try to understand all of this in more detail.
It is already clear that the basic model is a collaboration between the supplier of a product and its seller to make money. The whole process of interaction boils down to a fairly simple scheme consisting of several steps:
You, as a seller, get access to the product range at a reduced price, and the answer to the question of how much you can earn on dropshipping already depends on how much of a markup you can sell the product to the end buyer. The range of royalties can vary greatly: from 10% to 50%, taking into account the characteristics of the product.
An important question, the successful resolution of which depends on the start and further development of the business. Usually working on such terms offer companies from Europe and China, so the choice depends more on the product that you need. Among the products that are most popular with this scheme of work, it is worth highlighting such as clothing, shoes, watches, jewelry, baby products, auto parts, and some others.
The interaction between the seller of goods and their suppliers based on this model has several advantages. You can name a whole list, which will be especially relevant to the small business owner:
There is no doubt that for the majority of first-time entrepreneurs the greatest advantage will be the need for minimal investment at the start. But other advantages are also significant enough to pay attention to them.
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