How Does Dropshipping Work On Shopify?
Ever since the whole world has become one big happy digital family and commercial exchanges and monetary transactions occur on the digital fabric, physical and geographical boundaries seem porous than ever, to an extent immaterial. At such a juncture, business establishments have the burden of transition. To discover, explore, analyze and innovate ways to build a niche in the market. To look for ways to mend the existing landscape of trade. Small scale businesses bear a more significant burden to gain momentum in the highly competitive market. Small or medium-scale industries must align with modes to tap the global market. Revolving around the same idea lies dropshipping.
This article will see how dropshipping works on Shopify and how it benefits businesses operating. But, first, let us take a quick review of what Shopify is.
Shopify is a cloud-based software that functions as a service shopping cart solution. It enables business establishments to set up an online store or practise eCommerce. It provides different tiered subscription plans for prices varying the service feature inclusive. Therefore it can cater to businesses of all sizes, be it large, medium or small scale entities. It hands business owners an admin panel to feed store information, add products, and deal with orders. The interface is lucid with a few clicks of buttons; an eCommerce entity is ready. If you wish to build an eCommerce platform on Shopify in UAE, then you must have in-depth research of the target market and have clarity in the ideas and objectives of your establishment.
What is Dropshipping?
Dropshipping is one of the many varied ways of online retailing, where merchants don’t have to undergo the hassles of possessing a warehouse for inventory. Instead, the merchants purchase the products ordered by a customer on their domain from a third-party supplier. The third-party supplier ships the purchase directly to the customer. Therefore, the seller does not handle the product directly at any point in time.
At the end of the retail store manager, the shipping and fulfilling orders is a hands-off process. The merchant hosting the retail store does not need to stock the goods, order inventory in bulk, or fulfill the orders physically; instead, the third party supplier associated will deliver the products on behalf of the retail store merchant.
Dropshipping is a viable option for entrepreneurs because running a store does not demand much operational capital compared with a traditional retail model. Rather than getting into the complexities of opening a brick-mortar store, hiring employees, infrastructural expenses, paying overhead and stocking products, you only have to open an online storefront and purchase wholesale from suppliers who already possess warehouses spaces and products.
In this particular dealing, the manufacturer or the supplier who handles the inventory for a particular retail merchant and ships the said order to their customers is called a dropshipper.
The role of the retail merchant is to gain customers by driving traffic to their online retail store, processing orders, and communicating the details of the same to the dropshipper. Thus, the merchant is effectively a middleman. Yet, it does not mean that the merchant’s profit share is low. Instead, he gets a lion share and scores for accessibility and visibility in the target market.
According to Shopify experts, there has been a recent influx in the market, with more and more entrepreneurs heading to dropshipping since it has fewer barriers, requires less money to launch, and one can build a business that’s sustainable in the long run, right from their screen.
For understanding the intricacies of dropshipping, let us take a look at its pros and cons.
Pros of Dropshipping:-
(1) Ease in setting up
One does not need vast and intensive experience to establish a dropshipping entity. The slight learning curve indicates that after a basic knowledge, one can launch their business quickly and learn the rest as one goes along. Compared to other retail business models, the start-up cost is comparatively lower. You save a substantial amount of money when you don’t have to rent a warehouse to house the inventories or an assemblage of people; you are free from the complications of stocking or shipping, and the business ultimately gets hands-off once the operations get going. Establishing a dropshipping business takes a concise amount of time. In a matter of hours, your business is out and open for the world to see.
A dropshipping business does not undergo any transition; therefore, their business model does not change much as one keeps scaling up. Of course, one has to put more effort into sales and marketing as the business grows. Still, the day to day operations and administration remains the same. One of the many advantages of dropshipping business is that the infrastructure does not balloon when one scales since there is no infrastructure. Therefore, one can dedicate more input to the promotion and customer experience.
The idea of being your boss seems liberating, right? The flexibility that drop shipping offers is unmatched. You can enjoy working from the comfort of your home, entirely from your laptop or desktop, in the convenience of your time. Therefore, it is more like the business works for the individual, and one does not have to bend over the knots to get things done. Instead, one can set their own pace. It leaves sufficient room for you to make your own decisions, from listing new products as and when you want, adjusting the strategies, to automating everything for passive income.
When you don’t have to hire staff, rent warehouses and office space, you are a lone wolf, and you can manage everything without any complexities of commitments. After finding suppliers and setting up the operations once, you have only to pitch and manage the online storefront.
Cons of Dropshipping:-
(i) Low margins
Initially, in this form of business, you must expect low margins. It is profitable, but you must remember that the product margin might be small in a few niches. This problem is acute when your business deals in a highly competitive market. You have to put the maximum in garnering customers’ attention, then achieving the profit you desire might be difficult. However, choosing the right niche and targeting the right audience. Even in niches with lower competition, you have a scope of better margins, but it might become stagnant at some point. Therefore the success of every dropshipping establishment is highly inclined on highly optimized advertisement campaigns that can drive high volumes of sales.
(ii) Complication in order processing
Even though drop shipping is simple, it has its share of nuts. Especially sourcing from multiple suppliers, one may face problems, like using a different shipping solution, which might become a problem for you and your customers. In addition, the cost of shipping which depends on the shipping setup might become exorbitant when shipping multiple goods. In furtherance to that, various suppliers have varied policies for processing and billing, and managing interaction with each of them might get tricky.
(iii) Lack of control
As liberating as being your boss seems, dropshipping curtails the control you have over some particular aspects, for example, stocking products, fulfilling orders and shipping, since you wholly and directly depend on your supplier for the same. They have to do everything right and immaculately. For some entrepreneurs, this lack of domination can be seemingly off-putting. But this isn’t a tough nut to crack; it only requires devoted management. Suppose things seldom go wrong, like customer retention issues from the supplier’s end. In that case, you can resolve them and let customers churn to the minimum. A robust damage control system will keep your operations, customers and suppliers calm.
(iv) Intensive customer service
Customer support is one thing you have in your hands; however, the one delivering to the customer, i.e. the supplier, isn’t. Thereby you are the one who bears customer dissatisfaction. You might be doing everything perfectly from your end; however, a slight issue from the supplier’s end can become a problem for you. However, taking responsibility and accountability on your supplier’s behalf and then taking constructive and corrective measures is your primary job in the dropshipping model of business.
Now that we have proficient knowledge of the dropshipping business model, we can further delve into how Dropshipping works on Shopify?
How does Dropshipping work on Shopify?
A common approach for dropshipping on Shopify is to look out for suppliers located in any part of the world by using the supplier database or going for the Shopify application built to connect your establishment to multiple suppliers existing in the market.
Shopify powered marketplace Oberlo efficiently helps independent parties find products to sell. Oberlo is assembled in a way where you can browse through AliExpress and import those products you are interested in directly from Oberlo, which is linked to your store on Shopify within a few seconds.
Once a divested customer has bought a particular product, you can initiate their certain order in the Oberlo application. The best part is that Oberlo has automated this whole process. As a store owner, your job is to verify the details and click on the ‘order’ button. After that, the product gets directly sent to the customer by the supplier of AliExpress dropshipping, no matter from which part of the world the customer belongs.
Protip: You need to find the right dropshipping niche for the proper optimisation of your resources. One can not afford to be wary of the trends in the market and aware of different innovations taking place in different parts of the world. Considering the Covid pandemic and how it has pushed people to limit their lives entirely indoors, some of the best niches observed for dropshipping in 2021 are health and personal care, tools and home improvement, office products and gaming.
Conclusion: To dropship on Shopify, all you have to do is start by choosing a business idea, finding a product to deal in after doing competitive and comprehensive research, associating with a dropshipping supplier, building your eCommerce store, registering your business with the federal agencies, loading your products on the site, launching and pitch your dropshipping store. You are all set to sail!