Unless you have an overarching vision, a dream team of designers and engineers, and a lot of investment capital, it’s likely that the retail model you’re most familiar (and comfortable) with is wholesale marketing.
You buy the minimum order quantity of a given product from a wholesaler at a low price and then turn around and sell it for a profit, establishing a viable business for yourself.
However, though this system is easy to understand, it’s not without its flaws and limitations: Not only is competition high, you’re also saddled with the responsibility of managing inventory (including knowing what to order, how much to order, and when) and the immense hassle of shipping and delivery.
Indeed, there are so many logistics involved that wholesale retailers frequently have to limit their selection and hire on additional employees to manage their business, eating into their profit margins and slowing growth.
What if I told you there’s a better way?
The Dropshipping Difference
Dropshipping is akin to the wholesale model, but with one crucial difference: You no longer have to handle shipping, delivery, and inventory management. Your dropshipper will do that for you, saving you an inestimable amount of time and money. When you use a dropshipping service, you can start an e-store via a marketplace service like Shopify or Ebay without having to store inventory, deal with manufacturers (and their frequent delays), or worry about shipping.
In essence, the dropshipper takes care of managing the physical aspect of your business (the products) while Shopify/Ebay rules out the need for an expensive, complex ecommerce website and marketing team. Within this model, all you have to do is put a human ‘face’ on the business and act as an intermediary.
The dropshipping system can be broken down as follows:
1. Customers buy products from your e-store.
2. You (and any staff you may have) handle the customer service obligations.
3. Your customers’ orders are processed, packaged, and shipped promptly by your dropshipping partners.
4. Your customers receive their orders with greater speed, security, and efficiency than they would if those orders were being filled by a small business with limited staff (you).
5. You reap the reward in the form of profit. While your dropshipper will charge a nominal commission fee per order, the difference between your price and what the dropshipper will charge you for the product will be your profit. When you factor in the amount of time, labor, and wages (for additional staff) that you will be saving by using a dropshipping service, you will find you’re actually saving money with the dropshipping method.
The benefits to business owners within this model are obvious: You’ll take almost no risk and make next to no investment while starting your business. All of the stressful logistics of running an ecommerce website will be effectively removed by your dropshipper and chosen online marketplace service. You just need to be polite and cordial to your customers while you sit back and massively grow your profit margins.
(Note that focusing on peerless customer service is essential to success when you’re running a dropshipping business; it is this skill which will differentiate you from your competition. Fortunately, the amount of time and stress your dropshipper will save you will make dedicated customer service easier to provide.)
Why Choose AliExpress For Dropshipping?
There are a lot of dropshipping services out there, but AliExpress stands out as exceptional for a few reasons: One, it’s free—you don’t have to pay a fee to get started. Two, most sellers on AliExpress provide clear, eye-catching product photos and detailed product descriptions.
This means that you don’t have to purchase either an expensive DSLR camera to take standout photos or hire a copywriter to write professional product descriptions. Three, dropshipping using AliExpress is incredibly simple: You just order the product on AliExpress after you get an order from a customer. (Make sure to input the customer’s address and not your own!)
Because AliExpress is still relatively unknown by most Western customers, you have a very good chance of finding a new, unique product there—something novel and enticing. You can then introduce it to Western markets for the first time and dominate the niche related to said product. Chances are your customers will never think to check AliExpress and find the product themselves, and even if they did, they wouldn’t have the confidence to order from an unknown seller from another continent.
How Profitable Is Dropshipping?
Many people who are new to dropshipping are put off by the lower initial profit margins (between 10-20 percent rather than the 20-30 percent typical of the wholesale method), but the ease of the system more than compensates for this aspect. Because your business is completely flexible and grows in synchronicity with your customer base, it can expand very rapidly… As former consultant Irwin Dominguez (from San Diego, California) discovered when he established a dropshipping business via Shopify. In less than one year, Dominguez had over $1,000,000 in sales.
The possibilities with dropshipping are endless when, like Dominguez, you find an interested niche market. “I can’t find a reason why people don’t try themselves in eCommerce,” he says. “With all the technology it costs no money to get started and it can’t be any simpler. You literally have nothing to lose. And I’m surprised people don’t use this to their benefit.”
As Dominguez advises, if you’re considering opening a retail outlet online, it’s vital to understand the importance of acting now: 30% of all retailers already use dropshippers for order fulfilment, meaning that competition is intensifying rapidly. By acting today you maximize your potential to find a unique new product and corner the market on it, reaping massive rewards in the process. For more information on how to get started, read our guide How to start a Dropshipping Business