Dropshipping has been trending recently in the market due to its passive method of earning online. It is closely interlinked with the e-commerce business and is really helping to give it a better future reducing the hassles involved in the supply chain management system.
It is a process that benefits both the retailer and the drop-shipper to have profited from the sales without allowing too many middle parties intervene in between. A Dropshipping business is a fruitful choice for the individuals looking forward to starting an online e-commerce business having a minimum to zero startup costs and lesser risks. It is an excellent method to have passive income online.
What is Dropshipping?
Dropshipping is a kind of online e-commerce business where, as a dropshipper, you don’t own any physical store or company with the products in stock rather you have tie-ups with the e-commerce merchants for product orders and help them ship to the respective customers address. In that way without actually being involved in the manufacturing or storing of product you make money by handling it and from the wholesale price of each product.
Dropshipping is a very beneficial business model for all e-commerce merchants as it gets their work done easily without spending too much on the bulk orders for inventories.
What is E-commerce Business?
E-commerce is a synonym of electronic business or online business that helps in the buying and selling of physical and digital products, services, and affiliates online where are transactions are either done through digital currencies, or a centralized bank (debit and credit cards) or by cash on delivery. E-commerce business has three types of models-
B2B model, which is involved in buying and selling of products between two or more business parties.
B2C model, which is involved in buying and selling of products between retailers and customers.
B2G model, which is involved in buying and selling of products and services between retailers and government organizations.
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How Dropshipping Business works
If you want to start an online e-commerce store, Dropshipping model is very beneficial for a kick start of your business. E-commerce platforms are quite competitive and hence taking risks as a startup is not an ideal business thinking.
If you have a Dropshipping model on your business, you just need a good website, write blogs and informative content of the kinds of products and services you are offering and focus on the marketing skills required to drive the sales.
In a traditional e-commerce model without Dropshipping, you have to buy a bulk amount of products to store in your inventory from the wholesaler which becomes quite expensive when you are a beginner and in addition to that, if you don’t have enough sales, you are financially drained.
But with Dropshipping, you just need to focus on the product niche you are comfortable with, write valuable information about it in your website from the customer’s points of view and their benefits and as soon as you attract any sales order, you pass it to the dropshipper.
The Dropshipper then packs that product from their inventories or warehouse and sends it directly to the customers. Or you can also purchase the products and then hand to the drop shippers to just ship it directly to the customers. So, in this case, you not only save the beforehand inventory investments as well as also the hassles of shipping.
For the Dropshippers those who are in contact with the online merchants they don’t need to own a shop or store for the storage of products. They just get the product manually and ship it to the customers to gain profits on the shipping price as well as the wholesale product price.
Some Dropshippers, on the other hand, have tie-ups with the inventories and warehouses and feature products on their website. Retailers buy products from them pack the order and hand it over to the Dropshipper for shipment. In this case, they gain more profits as the purchase fee plus product handling fee.
You can have a Dropshipping business model for all kinds of physical and digital products and hence in the above-mentioned ways it helps both the Dropshippers and online retailers to have passive online income.