Dropshipping is the sale of someone else’s goods from your own online store in the presence of a partnership agreement with the supplier, while the supplier is responsible for delivery and costs. Dropshipping is when an intermediary creates a “showcase” for goods, promotes it and processes orders, which he transfers to the manufacturer and makes a profit from the difference in wholesale and retail prices.
For example: a person, a man, a woman, a Moldovan – it does not matter, he made a small website for several pages with a description of some products with ugltoys.com. He attracts people from Europe and Asia to the site, buys ads on Facebook, and accepts orders on its site. Then he buys these products on ugltoys.com and specifies the delivery address of its customers, and employees ugltoys.com perform delivery services independently.
On the question of why people do not buy immediately on the ugltoys.com. The businessman replies that people in Europe and Asia simply don’t know this site, they don’t look for new products and interesting products there, they just don’t know that they are there. And it works.
Manufacturers or suppliers do not spend time searching for customers, but enter into contracts with intermediaries that attract buyers. To organize a business, it is enough to create groups in social networks, find suppliers, or buy an inexpensive trading platform with a ready-made database. For such a business, you will not need large financial investments, space for a warehouse and storage organization.
How does dropshipping work?
The principle of dropshipping is simple: an online store or a page is an intermediary that attracts customers and sells products from a manufacturer or a larger supplier. Cooperation is provided for full or partial prepayment, and the income depends on the amount of the commission specified in the contract (in case of official cooperation). The product is sent to the customer directly from the supplier’s warehouse. Business can be organized in any area-from a furniture store to household chemicals and appliances.
It works in 7 stages:
- A person finds a supplier of goods.
- Creates a store on one of the platforms on the Internet and uploads the supplier’s assortment.
- Advertises the store and searches for customers.
- The customer places and pays for the order.
- The entrepreneur transfers the cost of the goods to the supplier, and makes a mark-up for himself.
- The supplier sends the order to the customer.
- The customer receives the goods at a favorable price.
An example of a dropshipping business.
For example, children’s clothing and shoes. Actions of the first intermediary:
- Setting up the site, specifying information about the product.
- Advertising and promotion costs 7,000 rubles and 5,000 rubles for the context.
- After 2 weeks of work, the first order from the client was received.
- The manufacturer received the order data and sent it to the customer by cash on delivery.
- After receiving the money, the manufacturer paid the commission.
This scheme is convenient and has many advantages, the main ones are:
- There is no need to accept payments from the client and keep your own accounting records;
- The fact of fraud on the part of the intermediary is excluded.
The disadvantage is that if the supplier does not have a sales control system, there is a risk of incomplete payment for attracted customers.
Children’s clothes are always in demand and up to 7 years old wardrobe updates at least 2 times a year, so the bet on the segment was a win-win. After 3 months, 50% of the costs (store and promotion) were paid off, after 6 months-a profit of 42,000.
Dropshipping can be organized without having more than 5,000 rubles behind your back, and you can do promotion yourself while there is no sales volume. Advertising can be shared with other sites, maintain pages in social networks and forums for mothers, fishermen, etc.
Most of the reviews of the owners of online stores are positive, because this is the only direction that allows you to start a business without investment, save on logistics, employees and purchases. Don’t be afraid to take risks and try something new! To date, there are enough people who have started, are working and continue to successfully develop in this direction!