Origin of dropshipping :
The most astonishing fact is that drop shipping came into being even before the internet existed. No one expected the growth, today this is one of the most profitable businesses to ever exist. It goes back to the 60s and 70s when mail-order companies were taking advantage of mail-order catalogs.
These mail-order catalogs that customers received through mail had a range of items that companies wanted to advertise. Customers could order items directly from these catalogs via phone and the companies used to deliver them to their doorsteps. This business rapidly gained momentum and mail order companies such as JCPenny and Sears decided to use this method on a large scale to keep up with their customer demand. They built fulfillment warehouses which had the main purpose to store massive inventory bulk.
After these companies went through different stages of trials and tribulations in the 60s and 70s, the 90s dropshipping business wasn’t that successful as mail-order companies shifted from catalogs to eCommerce stores as the internet had just been born and the public was slowly getting used to it. Customers became a bit suspicious as to why they had to give their bank details online and raised a lot of doubts regarding the business. But, with time people did get accustomed to the internet and became familiar with this new shopping method. Millions of investments were made by investors and they put their bets on these companies convinced that they would make huge returns through eCommerce.
With more people entering the industry the ‘dot com’ era started and it was the only thing that people used to talk about. Few of the companies did end up making just a little profit but all these investors could not make a good return on their investment. Dropshipping took a toll by the late 90s as the business demanded more monetary support because of expensive shipping demands and a lot of stores went bankrupt as they became unsustainable.
In 2000, dropshipping entirely got a new identity to itself. The companies who survived the drought were Amazon and eBay and they changed the way how businesses could sell online and how easy was it for the customers to buy from them. Businesses did not have to go through the hassle of building an individual online store and marketing it but they just had to list their products on these companies websites and they would do all the complicated jobs for them. At first, there was no source of promotion so these businesses initially had to spend money to advertise their products through Google Ads which was quite expensive and is still very expensive. After Facebook was introduced, driving traffic and keeping a close eye on algorithms became relatively cheap and easy.
Fair enough to say that the dropshipping chain that exists today has been through a lot of rough patches and works seamlessly in today’s world. If any person has a business-oriented thought process and would want to start a business of their own, then dropshipping is the way to go.
What is dropshipping and how does it work?
It is a form of retail business where the seller accepts orders from the customer but does not keep the products in stock. There is a third party involved that receives the shipment detail from the seller and then ships the product directly to the customer. The seller just acts as a middleman between the customer and the third party.
These third parties usually consist of another retailer, wholesaler, manufacturer, or fulfillment house. The biggest difference between a normal supply chain and dropshipping has to be that the seller does not own any inventory which immediately eliminates the cost of maintaining an inventory, purchasing and storage, and employing staff for all of the necessary functions.
To understand dropshipping more efficiently, it works in the following stages-
- The customer places the order with the dropshipping retailer.
- The retailer processes the order and then forwards it to the manufacturer or the wholesaler.
- The wholesaler receives the order and processes it.
- The wholesaler directly ships the order to the customer.
- The customer receives the order.
According to the analytics,
Successful Dropshipping = Impulse Buying + Buying Power + Trending Product
Where the price is low so the customers get hooked on the product instantly.
Dropshipping with Hankly :
When do you want to have a business of your own but are not sure where to start? Dropshipping business is the only way that you ease into the entire process of your newly found entrepreneurship. At Hankly we are open to all types of business ideas that you want to move forward with.
Find fast-moving and easily scalable products to sell online through us. These products usually have a very high demand in the market which makes the business worthwhile and profitable. It helps you build confidence and in fact, teaches you about business from a whole different point of view. So, just like any other website at Hankly, create your store dropshipping website with us and sell an array of products online. The entire shipping process will be handled by our dropshipping partner, the only thing you have to do is focus on the quality of your business and all those orders.
How does dropshipping benefit you?
Dropshipping has to be one of the most effective ways to start your venture as an entrepreneur. You don’t have to stick to a definitive business but can go after what is working and is in demand in the market then. Following are a few other reasons why dropshipping would work for you.
1. Dropshipping leads to limited capital investment -
The whole point of dropshipping is that your business does not need an inventory, so half of the cost in regards to the space and staff employed to work that inventory is cut down at the beginning.
Dropshipping can work from one end of the world to another and works with any type of product.
2. Allows you to broaden your business perspectives-
With the whole dropshipping process try to broaden your perspectives when it comes to procuring the products in the market. The ones which are in demand, the ones that could be in demand in a few days, basically keeping an eye on the current trends and having a basic understanding of the market.
3. Limited inventory management -
With no physical inventory to maintain, it entirely reduces the extra cost that the business faces. Zero energy is spent on tracking and managing inventory, maintenance of the infrastructure that the inventory is in, and managing shipping partners.
What are the setbacks of dropshipping?
Dropshipping is considered to be the easiest form of business for anyone who wants to start up an online store and scale their business. But, this supply chain has its fair share of disadvantages too. Following are some of the downsides that should be considered before using dropshipping.
1. Unavoidable shipping errors -
Undeniably is the best part that you don’t have to deal with the product personally, but any mismanagement from the supplier’s side can cause frustration and lose customers in return.
2. Limited authority -
Most of the time you do not know what happens after processing the order to the supplier because after that the supplier directly deals with your customer.
3. Tough competition in the market -
As starting up a business with dropshipping is comparatively easier and cheaper, there are a lot of entrepreneurs who opt for this. The same supplier can sell his products to different businesses at the same time and this business can offer the same product at a lower price.
What are the top trending dropshipping products :
There is an array of products that you could choose from that could
potentially profit your business. You have to find a niche, stick to it and try
improving the standard day by day.
Following are a few top trending product niches that you can choose from-
- Women Clothing
- Baby Products
- Vintage Items
- Beauty Products
- Sneakers and Shoes
- Car Accessories
Now that we have figured out a few niches, how will you know that these are the products that will be trending in a few years? You need to have a checklist and a good knowledge of how to surf through these websites.
1. Search through Amazon, AliExpress, and Oberlo for the products that you have decided to retail.
2. Under each category identify and make a note of what are the best sellers and how much of it is being sold.
3. To confirm the popularity and the demand for this product, surf through social media like Instagram, Twitter, and Google trends.
4. Once you make sure all of the steps mentioned above tick your checklist, you have the products that you want to list on your website.
Wrapping Up :
There are so many business-oriented people out there who want to kickstart a business but sometimes never get that push. They might think that the business plan they are opting for might not work for them or maybe it won’t set a standard. To that, there is one thing you should clear your mind with is that you are more than well sorted out to start up a business with dropshipping. A business is built over time and right now you just need to start somewhere. The business will definitely go through a lot of trials and tribulations, but you learn from your mistakes and only keep moving ahead.