Definition of Dropshipping
The origin of the word Dropshipping comes straight from America. The exact date of its creation is unknown, but this system has existed for several decades.
In French, the word means “direct delivery”. Basically, a drop-shipper is an intermediary in a transaction. Concretely, a customer or a visitor will place an order on your website, once the order is placed you will contact your supplier to in turn buy the product in question and at the same time give him the delivery information.
He will then take care of delivering the product to your customer without you having to intervene. As you have understood, it is a system where your customer buys a product that you do not have yet, you will place an order with your supplier only once the customer has placed an order.
As the diagram above illustrates, there are three parts
Your customer will buy your product. Then, once the payment is received, you will order the product from your supplier. Finally, once you have paid, the supplier will send the product directly to the customer’s address.
The advantages of dropshipping
Dropshipping has many advantages:
Firstly the main advantage is that it does not require stock: indeed, the fact of not having stock reduces considerably the number of risks, the risk of not succeeding in selling the remaining quantity of stock and it also eliminates the risk of having to manage the stock. (warehouse)
Then unlike other business models, you don’t need to have a lot of capital to start (nevertheless I advise you to have about 2000 € to 3000 € aside if you want to launch on Facebook, with Instagram the investment is less).
Indeed the costs to maintain a dropshipping store are not high
Because you just have to buy a domain name, pay the platform that hosts your website (Shopify), the applications necessary for the proper functioning of your store, and pay for your first advertisements or product placement, of course, if you want to go through SEO (natural referencing) this is different because there are no advertising costs
Another advantage is that it is very easy to reach people who are hundreds or even thousands of kilometers away from you. This is suitable for any business on the Internet, however with dropshipping, you can decide to promote your product in France or in America in just 2 clicks.
you can make tens of thousands of euros in sales in a very short period of time
Finally, unlike many other business models, you can make tens of thousands of euros in sales in a very short period of time, of course, you will have to gain experience to be able to achieve this kind of result.
As you can see, there are many advantages to dropshipping, but like any other entrepreneurial activity, there are also disadvantages.
The disadvantages of dropshipping
The main disadvantage and the most known of all is related to the delivery time sometimes very long, given that the dropshipping suppliers are Chinese the product comes from very far knowing that the processing time (ie the time that employees prepare the package before shipping) can go up to 5 days. Although you can of course drastically improve these excessive delays, you should know that at the beginning, you will surely not have the choice, especially due to the lack of experience and contact.
The second disadvantage is that you have no control over the delivery of the product.
Indeed, since you are not the one sending the product, you don’t know what is really going on. Generally, if you go through Aliexpress, you will surely have quality concerns since some warehouses don’t have regulations and therefore some employees don’t take care of your package. It happens frequently that your customer contacts you to tell you that the package that received it is of poor quality (damaged or sometimes a different variant of the one desired).
Problems related to the return, this does not happen often, but sometimes some customers will ask you for a return and a full refund.
As you can guess, generally, you will not ask the customer to send the package back to China, because this is “abusive” in the sense that the shipping cost will be more expensive than the product itself. You will therefore ask the customer to send the package back to the address where you live (your company). Thus, the customer will be able to make his request for a refund (mandatory) and on your side, you recover your product. You will be able to send it directly to your next customer from your home, so the delivery time will be much faster.
Finally, the last disadvantage is related to the lack of stability of a dropshipping store.
Indeed, if you specialize in paid traffic vectors, it is obvious to know that if you stop paying you will have more traffic, therefore more customers, and more turnover. Of course, you can always set up an email retrieval strategy in your store nevertheless, it is complicated to have a long-term strategy if your traffic comes mainly from Facebook or Instagram.
The evolution of dropshipping in 2020
In this last part, I’m going to state some major changes in 2020 in dropshipping. Mainly the general idea is that you have to differentiate yourself, the competition is getting tougher. This does not mean that it has become impossible to make money in 2020, which is completely wrong if you have the right strategies. In concrete terms, this means that you will have to create a professional and unique store.
It is necessary that all the legal pages are present on the store
Then, copying a competitor’s site, a product page, or a video advertisement is no longer relevant in 2020. Why not? Simply because Facebook’s robots can more easily detect Plagiarism and therefore punish the site in question. Finally, it is now necessary to reach new traffic vectors in order to have a competitive advantage over your competitors.