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What is dropshipping: a beginners guide in 5 steps

what is dropshipping

If you are considering venturing into the world of online sales, you may likely feel discouraged about how much launching and maintaining an e-commerce costs and the problems that could arise with suppliers. 

As we explained in the article “6 Reasons why you should have an online showcase“, data show that, in the aftermath of the lockdown due to the Covid-19 emergency, the trend of online purchases is strongly growing; for this reason, opening an online store today is a winning choice. 

The ability to keep your online store open 24 hours a day means a potential sales increase, but greater sales capacity requires also greater supply, inventory and transport capacity, with the economic and organizational costs that it implies.

Now imagine that someone is willing to buy your products in advance and that you don’t need to face expensive costs to start and maintain your online shop. It would be great, wouldn’t it? Here comes the good news: not only is it great, it is real and it is called dropshipping.

In this article we will explain what dropshipping means, why you should choose to open a dropshipping business and, last but not least, how to start selling in dropshipping. Moreover, we will give you useful suggestions about how to find reliable dropshipping wholesalers and how to launch your dropshipping store on Vetrina Live.

Dropshipping: definition 

Starting with the dropshipping meaning, we will shortly define it as a retail method that does not require the existence and management of a warehouse. More specifically, it’s a sales system in which the retailer sells products provided by an external dropshipping wholesaler (or dropshipper), who directly deals with the storage of the goods and their delivery to the final customer. The retailer has therefore to communicate the orders of the customers to the dropshipping wholesalers, who will then take care of the merchandise transport.

How dropshipping works

After this dropshipping definition, you may be wondering, more concretely, how dropshipping works. Simple: the seller chooses a trusted supplier (dropshipper), decides what products to sell and sets up his e-commerce. When a customer makes a purchase on the online shop, the seller cashes the sale price in and, in turn, transmits the order to the dropshipping wholesaler, providing the customer’s address for the delivery.

Ultimately, the seller is exclusively concerned with advertising the products of his e-commerce (like one would expose the goods in a shop window), leaving the supplier with the costs related to the warehouse, packaging and shipping of the items to the final customer. 

Not less important, the customer does not necessarily have to know that the seller operates as a dropshipping business: in fact, thanks to private label shipping, you can make sure that the goods leave the warehouse with the data of your e-commerce (name, address, etc.) and a personalized invoice. This way, you’ll be able to create and maintain the customer loyalty to your brand.

dropshipping private label

Now that you know what is dropshipping, the upcoming question probably is: how much does dropshipping make? Considering that the seller receives the payment from the customer and uses this sum to make the order to the dropshipping wholesaler, the calculation is quickly done: the earning is given by the difference between the purchase cost from the supplier and the sale price to the final customer, which is decided by the seller himself.

Let’s consider an example: if your supplier offers a perfume for $50 and you decide to sell it on your online store for $80, the $30 difference (paid by the customer) will be your earnings. In a nutshell: if you sell, you cash in and you pay the wholesaler in turn; if you don’t sell, you don’t have to worry neither about stock surplus nor inventory.

So, is dropshipping worth it? We would say yes, without any doubt.

Advantages of a dropshipping business

Let’s say the truth: dropshipping is a win/win model since both the wholesaler and the retailer pursue the same goal, that is to sell as much as possible, optimizing profits through a precise subdivision of the sales processes.

We saw that, for the seller, the main advantage of a dropshipping business is the possibility to start a sales activity (potentially very profitable) without making large investments in terms of products purchasing, logistics, inventory, shipping, etc.

no need to have a warehouse thanks to dropshipping

Furthermore, the seller never comes into possession of the goods sold nor does he have to buy them in advance, so he pays the dropshipping wholesalers only if and after he has cashed in from the customers.

For his part, the supplier will be able to increase his turnover thanks to a greater capacity for online commercial penetration (as a consequence of the marketing actions implemented by the sellers), at very competitive conditions.

If you are considering starting an online store, and still wondering whether is dropshipping worth it, here there are a number of reasons why you should consider it for your ecommerce:

1. Low investment and minimum risk 

Dropshipping does not require large investments in warehouse and transport and it makes online sales extremely simple, while at the same time it allows you to offer  a multitude of items to your customers. 

2. Save time and money 

Launching and maintaining a successful e-commerce requires hard work, especially if the financial resources available are limited. With this in mind, not having to worry about supplying is a great advantage, as it saves time and budget to assign to other activities (such as marketing and customer service). 

3. Total independence 

Without a physical warehouse to manage, another significant advantage is that you can run your dropshipping business from anywhere: all you need is an internet connection to send orders to your trusted supplier. 

4. Reliable and widespread offer 

You may think the dropshipping model is unreliable because the seller loses control over certain stages of the sales process (such as supply management and transportation), but it isn’t: many of the world’s leading retailers, such as the Canadian department store Sears or the giant Amazon, operate as a dropshipping store in order to offer a wider selection of products to their customers and to avoid having to manage a huge warehouse. 

5. Endless sales opportunities 

By not having to directly manage items in your own warehouse, you can potentially sell anything, including low-demand, large-sized or high-cost products. 

Dropshipping: how to start?

Despite this sales system being born in the United States more than a decade ago, there is still a lot of confusion about what is dropshipping and what are the pros and cons of this business model.  In this regard, we’ll try to clarify some salient points on how to start a dropshipping business. 

1. Identify investments and other duties to accomplish

First of all, we’d like to emphasize that opening a dropshipping store means starting a full-fledged business: it is true that the initial investments are lower than in a traditional eShop, but it doesn’t mean that it is for free. It is necessary to take into account some unavoidable investments (e.g. web hosting, domain, e-commerce platform, remuneration of any collaborators, etc.), together with administrative and tax burdens and a number of other obligations that the opening of any business would require. This being said, we do not want to disillusion you but to provide you with the information needed on how to start a dropshipping business with responsibility and awareness.

2. Study your competitors and find a niche

find a niche your dropshipping business

Once clarified what investments you need to make and what fiscal and administrative duties you have to accomplish, the following step is to identify what products to sell on your dropshipping store, also taking into account your competitors.

The competition in dropshipping sales is constantly increasing, due to the ease of carving out a slice of the market with this sales system. You will be competing with other dropshipping businesses but also with giants like Walmart and Amazon, so it’s crucial to study your competitors and to choose the right products to sell. 

Remember that the more competition a product has, the higher its demand is. There are many reasons why a product might not have a lot of competition (for example high shipping costs, supplier and manufacturing issues or poor earnings), but you should always look for products that have competition, because it’s a sign that there is a high demand for it.

Nevertheless, it is essential to distinguish yourself from other competitors. Our suggestion is to find a market niche, to carefully choose the items to sell on your eShop, to identify a fair market price and to take care of your marketing strategy, in order to build customer loyalty and obtain an adequate volume of sales and profits. 

3. Choose your dropshipping wholesalers

For your online dropshipping store to be successful it is essential to have reliable, efficient, correct, transparent, punctual and collaborative dropshipping wholesalers. 

choose a reliable dropshipping supplier

Relying on multiple suppliers at the same time can be complicated, since it means checking the reliability of each of them and making sure that the platform they use is compatible with and effective for your online store. If it’s too hard to manage, consider the saying “less is more”.

Also, most dropshipping suppliers are located overseas, making communication extremely important, both in terms of response speed and the ability to understand each other. If you aren’t fully confident in the communication abilities of a potential dropshipping wholesaler, move on and find another one.

If you are therefore wondering how to find reliable dropshipping wholesalers, you will find more details in the next section.

4. Build your ecommerce website

After you have studied the competition, found your niche, defined your products catalog and identified your suppliers, obviously you have to build an ecommerce for your dropshipping store.

Unless you have a sizable budget that allows you to hire a web designer and a development company to create a customized e-commerce website, it’s much easier and cheaper to opt for a ready-to-use platform, especially in the beginning. Once you are established and the revenue is coming in, then you can consider more expensive solutions.

The fastest way to launch a website that supports a dropshipping business model is to use a simple ecommerce platform such as Vetrina Live: you won’t need a tech background to get it up and running, and it has plenty of tools to help increase sales.

For more information, check out the last section “Your dropshipping store on Vetrina Live” at the end of this article.

How to find reliable dropshipping wholesalers

find a reliable dropshipping supplier

Let’s see now how to find reliable dropshipping wholesalers. At the beginning, you can use the feedback of those who have already collaborated with those suppliers, although we recommend that you check in person, since suppliers are sometimes not able to maintain a high level of quality in the long term and that opinions are very subjective: a supplier that turns out to be good for a given seller may not be so for you. 

Before having any agreement with a dropshipping supplier, therefore, it is better to do some small tests: for example, place an order for a reduced amount and carefully evaluate the punctuality of the shipment, packaging, conditions of the contents on delivery, and so on. 

Aside from having a publicly recognized reputation for reliability, there are other useful criteria for evaluating the quality of a dropshipping supplier. In general terms, the perfect dropshipper should: 

  • offer the seller the possibility to monitor deliveries and shipments; 
  • notify the customer of the shipment of the order; 
  • provide simple and advantageous return policies for customers; 
  • support different payment circuits and do not ask for any membership fee for your dropshipping sales program. 

To the present day, Alibaba is one of the largest online resources to identify and communicate with potential manufacturers and suppliers. Make sure to ask a lot of questions and learn what their production capabilities are in the event that your business grows exponentially. You want to be certain they have the ability to scale with you.

Be careful: the risk of running into scammers and intermediaries when searching for dropshippers on the Internet is very high!

In the meantime, you can consult the list of the xxx top suppliers in 2021 that we have collected and divided into categories for you. 

Your dropshipping store on Vetrina Live

As mentioned, you can easily open an e-commerce for your dropshipping store with almost zero investment and low-risk solution with Vetrina Live. This sales platform, developed in Italy, can be used by any type of business, it is easy to use but at the same time it offers a complete and structured e-commerce, totally compatible with a dropshipping business. 

What are the advantages of Vetrina Live? 

  • A complete e-commerce, manageable in full autonomy thanks to a simple interface that makes it easy to use even for those who have no experience or technical knowledge. 
  • A sales platform that allows you to create your e-commerce in a few minutes and put your products on sale quickly and easily. 
  • An unrivaled price valid for a limited time, which allows you to buy your e-commerce plan at an incredible price and use it forever, without additional costs.

With Vetrina Live there is a plan suitable for every need: find out which one is the best for you and take advantage of the limited time offer that allows you not only to open your store with a recurrent 50% yearly discount but also to have the iOS and Android app of your store published on App Store and Play Store. 

Conclusions 

At this point of reading it will be clear to you what is dropshipping, how dropshipping works, how to find reliable dropshipping wholesalers. Hopefully, we have also answered the most important questions: “is dropshipping worth it?” and “how much does dropshipping make?”.

If so, let’s finish this article summarizing how to start a dropshipping in 5 simple steps: 

  1. Open your dropshipping store with Vetrina Live
  2. Choose your trusted dropshipper among the  xxx top suppliers in 2021
  3. Start your dropshipping business
  4. Build loyalty among your customers 
  5. Increase your sales exponentially 

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Giuseppe

Giuseppe

Giuseppe is an internet and technology enthusiast with a decade of experience in digital marketing. He arrives in the Vetrina Live as marketing manager after having worked in Milan for a multinational media company and a clothing e-commerce.

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