If you're thinking about setting up your own business you might have come across the term “dropshipping”. But what is dropshipping? How does it work? And how do you know if it's going to be right for your business?
These are questions we get from new businesses every day, and with all of our experience in the industry we thought we'd do a little blog post to help you decide if dropshipping is for you.
What is dropshipping anyway?
So you want to start selling online, and for the sake of argument lets say you want to start selling T-Shirts. Well first of all, you're going to need to buy some T-shirts to sell. To start off you're going to need to find a wholesaler – someone who will sell you some T-Shirts that you can then sell on to other people.
Once you find a wholesaler you like, you'll need to decide how you're going to buy your stock. There's two options here – the first is called bulk ordering and it's where you buy all of your stock at once. The second is where you buy stock individually as orders come in. That's called dropshipping.
Dropshipping can be best explained as a three step process.
A customer visits your website and places an order.
You forward the order to the wholesaler
The wholesaler processes the order and sends the product to the client, complete with your company logo and branding.
So what are the advantages of using dropshipping?
There are a number of reasons people choose dropshipping. To begin with, there's a lower start-up cost as you don't have to buy all of your stock at once. You can just wait for orders to come in and buy the stock with the money from the order. You're always dealing with profit and there's no initial outlay.
Another advantage to dropshipping is that it's a relatively low risk strategy for a business to adopt. Let's stick with our T-Shirt example. If you buy all of your stock at once, there's some big decisions to make. How many T-shirts should you get? How many of what colours? How many in different sizes? It's very difficult to judge what you need in advance, and you could well end up stuck with stock you don't want or need. Dropshipping eliminates this guesswork.
Finally, dropshipping means you don't need to pay for storage for your stock.
Who is dropshipping right for?
Due to the low initial outlay and the relatively risk free nature, dropshipping is ideal for new businesses. It can be difficult for a new business to know exactly what stock to get in, but by processing orders through dropshipping they can be assured of not paying for stock they can't sell.
Want to learn more about T-Shirt Dropshipping? Just give us a call and we'll be happy to answer any questions you might have.