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What is Dropshipping? 6 Things to Consider Before You Dropship as a Side Hustle
Jul
You buy a modern phone case from an online retailer. The case arrives safely at your home, the online retailer makes a tiny profit, and everyone is elated.
But the phone case didn’t come from a retailer’s headquarters. It was shipped directly from the manufacturer. All the online retailer did was take the order and arrange for the case to be delivered to your home.
This is “dropshipping”: the online retailer arranges for purchased products to be shipped to buyers directly from the wholesaler or manufacturer, rather than having them shipped in person. Many consider dropshipping, if not their main business, then a valuable side hustle that helps boost income when the cost of living crisis makes it difficult to make ends meet.
In other words, the seller does not have a warehouse of products ready to be shipped. He is an intermediary. He arranges for the delivery of products to customers without physical possession.
Dropshipping may seem like a tempting side hustle to aid offset the cost of living crisis, but it also has its drawbacks.
So what do you need to know before becoming a dropshipper?
Read more: Ago: China’s answer to Amazon is already Australia’s most popular free app. What makes it so addictive?
There are pros and cons
Dropshipping has doubled since 2020and this number is expected to double again by 2027.
Websites with e-commerce features are becoming more and more affordable, and because the barrier to entry into the dropshipping business is low, it has become a popular method for making extra money.
Dropshipping eliminates “inventory costs,” which include things like:
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buying products in advance
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paying rent for the warehouse and
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paying staff for packaging and shipping.
Because dropshippers don’t have to stock any inventory, they can offer a wider selection of products to sell. The low start-up costs also make dropshipping more accessible to a wider range of people than conventional businesses.
Dropshipping has clear advantages over conventional online sales methods – but not everything is rosy.
The main problem with dropshipping is the loss of control over the delivery and order fulfillment process.
If there is a problem with a delivery, it can be more tough to resolve. Is the problem with the manufacturer? The warehouse? The delivery service? Sometimes it can be unclear and take longer to resolve than the customer would like.
This may jeopardize the retailer’s ability to provide the highest level of customer service.
Here are six things you should know before you start dropshipping as a side hustle.
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1. Supplier reputation matters
Dropshipping is nothing modern – brands have been doing it since the behind schedule 90s. However, with this maturity comes the potential for fraud.
Counterfeits, fakes and general quality issues are disturbingly common in the dropshipping world.
Choose a reputable supplier that has clear systems and processes for controlling product quality and eliminating copyright infringement.
2. Choose a local supplier
To stay competitive, speed of delivery is key. If your target group is in Australia, shipping from overseas won’t cut it – the delivery time is too long.
Sometimes consumers are willing to wait to receive the product, but in most cases they want it immediately.
Choose a local, reputable supplier to shorten delivery times.
3. Don’t Assume Quality
One of the biggest mistakes dropshippers make is not physically inspecting their products before putting them up for sale.
Dropshipping allows retailers to offer a wider selection because shelf space isn’t an issue. However, this can tempt you to constantly add modern products to your catalog.
The quality of products offered by dropshipping suppliers varies greatly, and what looks great on screen may look completely different when you hold it in your hand.
Selling low-quality products means more customer service requests, and ultimately, consumers start to associate your brand with low quality.
Always send a modern product for inspection before listing it in your sales catalogue.
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4. Build a relationship with your supplier
The best way to solve potential dropshipping shipping issues is to build a mighty relationship with your supplier.
Many vendors do not offer support services when something goes wrong. These vendors should be treated with caution.
Establishing a mighty, collaborative relationship with a willing supplier makes it easier to deal with service-related issues.
5. Stand out from the crowd
Running an online business isn’t effortless – all your competitors are just a click or tap away. Dropshipping is common, with many other websites selling the same things as you, potentially from the same supplier.
Standing out from the crowd is key. Stand out from other dropshippers by catering to niche markets and offering excellent after-sales support.
6. The customer determines the demand
Don’t keep adding more and more products to your catalog until you can offer everything under the sun. This will set you up for failure because you won’t be offering anything to anyone.
Specialization is key. Find an easily accessible and immense audience and stick to what they want, not what you want. think they want.
Careful analysis of your sales data will aid you clearly define what your customers think they want.
Read more: ACCC says consumers need more choice over what online marketplaces do with their data
