Dropshipping

FULL DISCLOSURE - Fidel O. Abalos (The Freeman) - December 5, 2020 - 12:00am

Christmas is just twenty days away. Traditionally, this season’s celebration is closely associated with spending. Most likely though, wild spending will be set aside for the time being because of the ongoing wallet-busting pandemic. However, history tells us that consumer spending has a huge influence in our economy. Therefore, to those who have the itch for entrepreneurship, they should always keep that in mind.

Needless to say, some are into entrepreneurship already. To most of them, modern technology made their start relatively easy. They are into dropshipping business.

Dropshipping is a kind of business where a store doesn’t really keep the products it sells.  It is a business model wherein a store sells a product (online) it purchases from a third party (online) and has it delivered or shipped directly to the buyer. Consequently, the seller does not handle it or has not even seen the actual product. 

Simply put, the customer puts an order in the dropshipper’s online store, the dropshipper, in turn, places an order with the supplier. The dropshipper’s supplier will, in turn, ship the order to the customer. As the flow will suggest, this is a retail fulfillment method. Obviously, the dropshipper does not maintain stocks or inventories but an online store. 

So, what are the benefits, we may ask. Well, for aspiring entrepreneurs, this is a good one because of its accessibility. So accessible because everything we need is in the internet. Products are just clicks away. Therefore, an entrepreneur can easily assemble products that are deemed in demand either constantly or seasonally. 

Unlike traditional retailers, since a dropshipper (owner of an ecommerce store) doesn’t have to keep physical inventories, there is no need to invest thousands of pesos in it. In fact, items aren’t purchased unless these have been paid. 

Apparently, it is so easy to get started. The fact that stocks aren’t carried, a warehouse isn’t needed and all storing activities like packing and shipping the orders and handling incoming or returned items do not exist. Consequently, overhead cost is so minimal.

Moreover, store location isn’t an issue because the netizens are everywhere. The items that maybe sold are unlimited. The internet is awash with these.

Indeed, all these benefits considered solely will be really tempting. However, just like any approaches, dropshipping has its own shortcomings too. For one, don’t expect a huge margin. The fact that it is easy to start, competitors abound. Expect, therefore, that some productswill be sold at rock-bottom prices. 

Likewise, base stock will be a big issue. Since there are no stocks on hand and suppliers cater to everyone in the planet, chances are that some orders may not be served. Therefore, some sales will be lost or, worse, customers will be lost forever.

Not only that. Considering the volumes they are dealing with every day, dropshipping suppliers will likely commit delivery mistakes too. If complaints are not handled well, chances are, these customerswill be lost forever. There will be instances too that a customer buys multiple items. Though good because it would mean more sales, the challenge comes when these items shall come from different suppliers. Especially when the customer will need or use all of them at the same time.

Then, the most worrisome of all should be the Chrome (or browser) extensions, like Honey, that are now sprouting like mushrooms. These Chrome extensions comb the internet (like websites or platforms of online retail companies like Amazon, Target, Walmart or that of the dropshipper’s) for price comparison. Obviously, a dropshipper’s price will always be higher.  That’s a no brainer. 

Aspiring dropshippers in the country need not be so worried though. For one, these extensions are not prevalent yet in the country. Secondly, if they do or should someone in the country develops extensions of these kinds in the future, you just have to do something different.

First and foremost, don’t be like Amazon that sells anything from an inexpensive toothpick to a Dracula 1931 original movie poster that sells $1,250,000. Just put up a specialty store online. You have to be like a curator of the right mix of products. Apart from just selling the products, help them find the right products. If there are issues in shipping or delivery, be right there to provide solutions. 

Secondly, remember that manufacturers or wholesalers that have their own ecommerce platforms do need dropshippers. They need you because you can help boost their revenue.  Therefore, nurture a mutually beneficial relationship with them.That’s what a good dropshipper do.

foabalos@yahoo.com

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