Dropshipping - what is it?

Direct Delivery, also known as drop shipping (or drop shipping, depending on the kirjoutusmuodosta), is the goods delivery format in which your company does not have to be out of stock and goods sent to a third-party warehouse, often with their own company logos and signs. So in other words, when ordering a product the customer's online store, the product is sent to the customer stock in the third-party.

What good could it be that a company does not have its own stock?

The establishment of the company
From the perspective of setting up a business, utilizing live delivery means that huge amounts of money are not required to start an online store because the products for sale are not bought in advance and there are no storage costs or problems, such as inventory or inventory filling and management.

Operating expenses
Similarly, dropshipping also keeps operating costs lower than in a brick-and-mortar shop or in an online store, because without a warehouse, you can run an e-commerce shop even from your home sofa. Even if the Web Store had its own warehouse, it would be possible to reduce operating expenses and increase the range by selling some of the goods directly. As there is no own warehouse, personnel costs are also reduced. The workforce no longer has to be used to manually process and send orders, when the workforce can be freed up for other tasks such as marketing or customer service.

Range and risk reduction
The advantage of online shops over traditional brick-and-mortar stores can be considered a wide variety. In practice, however, keeping a large selection means that costs will also increase. There is also the risk of a large stock being left unsold. Dropshipping eliminates both problems and transfers some of the company's risks to third parties, because in this case, the entrepreneur does not have to order the products in his e-commerce store and be responsible for unsold products.

Growth Scalability
Dropshipping allows you to grow your e-commerce effortlessly without incurring extra work or major changes for your e-commerce company. As orders increase, most of the extra work goes to the party from whom the goods are shipped.

There are clearly advantages to direct delivery. Does dropshipping have any drawbacks then?

Availability and delivery problems
It was just mentioned that e-commerce does not have to worry about ordering and storing products. This is true, but it may also be difficult for an ecommerce business to find out the availability of goods. The problem that arises when net trade in goods ordered, which is not a third party in stock. The use of multiple suppliers further complicates the situation. There are software programs that report inventory levels to online stores, but some suppliers may not own or support the required technology.

With many suppliers, you also need to remember that a customer may order products that are shipped from different suppliers. This increases the cost of shipping an e-commerce, not all of which can be paid for by the customer. It may also be possible that there is an error in the delivery of goods when the e-commerce company is responsible for something not caused by the e-commerce. The supplier's actions also affect the reputation of the online store, which is important to keep in mind when dropshipping.

Small profit margins
Competition in the e-commerce industry is fierce due to dropshipping. Many websites are able to sell their products at really low prices because of the low cost of maintaining an online store due to direct delivery. For this reason, merchants are also prepared to accept lower profit margins on their products.

What kind of dropshipping costs can an e-commerce entrepreneur have?

In direct delivery, the supplier usually adds the shipping cost of the shipment to the selling price. The supplier may also invoice the e-commerce company for any handling and packaging costs incurred in connection with the shipment. Small orders may also incur additional costs, as suppliers would prefer to sell large items at a time to reduce costs.

In the end, the e-commerce entrepreneur either pays the extra cost from his or her bag, which reduces the profit margin, or the e-commerce company charges the customer, which in turn weakens the e-commerce's competitiveness, as prices may be higher.

Links to Dropshipping Operators and Software:

-Skycode Ecommerce Building and Integrations
We can build you a high-quality online store and connect it to any supplier's system. We specialize in Magento and Woocommerce, but our expertise is software development ja integrations to all online shopping platforms.

-AliDropship
Aliexpress's Dropshipping program, which includes, among other things, ready-made WordPress / Woocommerce plugins. Huge product range.

-WooDropship
An automation software to get your WordPress / Woocommerce store and Aliexpress well connected. Also included is pricing automation. Make your job easier.

-Shopify Dropshipping
An ecommerce platform where you can set up a dropshipping ecommerce. Shopify has many options for connecting dropshipping supplier ordering systems.

Anything else to consider in dropshipping?

It's a good idea to take the time to find a good supplier, as this will ensure a good experience for you as an e-commerce entrepreneur as well as for your customer who appreciates getting the right products within a reasonable time. For clarification, live delivery does not have to replace your own stock, but you can set up dropshipping alongside your stock to complement your selection and add value to your online store. For example, goods that are too large to be stored in stock should be sold by direct delivery so that the ordered product does not circulate through the online store warehouse but goes directly to the customer.

It's a good idea to use what you want to start selling through dropshipping. Finding the right niche for your market can mean that your profits can grow very significant. On the other hand, care should also be taken to deliver products with very low margins. This can result in a very low return on your ecommerce account, taking into account all the costs and fees that dropshipping has to pay. Dropshipping is no trick to getting rich, but when used properly, utilizing it can make your online store really profitable.

Dropshipping is practically no "new" thing. For example, many eBay and Amazon orders, as well as smaller online store orders, may be delivered directly to the customer. Dropshipping is no stranger to big online stores either. For many, dropshipping or streaming may be a new term because there is little information in English. Therefore, this article seeks to address that problem.

Dropshipping online shop using Skycode
Skycode Oy provides you with all the technical software and guidance you need to get started with dropshipping trading. We will build an online store for you and connect it to your partner's software. You will make us a good strategic partner for your business. Call 040-7000002 and let's talk more!