What is dropshipping and how does it work

 

The commercial activity attracts many entrepreneurs. The main scheme of making money is to sell goods to customers, having revenue on the difference between the final cost of the product and its production cost. However, there is another commercial business model - dropshipping.

Dropshipping has different names, but the word has English origin and means literally direct delivery. The main essence of this business model - the goods are sent directly from the dropshipper (manufacturer, wholesaler) to the buyer.

What does dropshipping mean?

Dropshipping is a line of trade where there is a seller-intermediary. He offers consumers goods from a direct supplier. The dropshipper, in turn, makes a profit on the customers' orders. That is the main aim of the dropshippers is to provide high sales.
Each side of this business model has its advantages:

• You, as the reseller, earn income while not being burdened with storing and shipping goods. 
• The manufacturer or wholesaler builds up sales turnover, and even with wholesale prices, he is still in good profit. 
• The customer gets the most attractive price.

This commercial scheme provides an opportunity for a quick start with minimal investment. After all, intermediaries can not rent a warehouse, do not spend money on the purchase of products, do not deal with the registration of the firm, and avoid other organizational issues.

Is the dropshipper a reseller or a manufacturer?

Just a dropshipper is a direct supplier who is looking for reliable intermediaries for dropshipping. If you decided to participate in the dropshipping scheme, then you become not a dropshipper, but essentially a reseller and a commissioner. It’s because you will make a profit on the difference in price tags "offer"-"sell" or the percentage of sales = commission from the direct seller.

What web products will help work on dropshipping in Ukraine?

What is dropshipping and how does it work in Ukraine?

Let's look at a few ways to make money if you have decided to start with dropshipping in Ukraine. The basic algorithm of actions is quite simple - the reseller finds a direct supplier with whom he wants to cooperate on the current business model. It’s important to decide through which channel he will attract buyers:

• An online store;
• Social media account;
• Profile on leading marketplaces;
• Messengers;
• Message Boards

In Ukraine dropshippers often cooperate with middlemen who are registered on OLX, Prom.ua, Rozetka, etc. A small online store that will contain a direct seller's product catalog, but with different price tags (including commissions) will also work. Now it is possible to make such a site with the help of various designers and with minimal knowledge in layout and web design. The main thing is to understand all the advantages and risks of dropshipping.

The most common way to sell goods is through an online store. Other sites can serve as additional channels.

CMS SoloMono is ideal for the work on dropshipping, as the engine is integrated additional modules such as:

• user groups;
• different prices for different user groups;
• loading items through product catalogs in different formats.

Also, CMS SoloMono benefits from high download speed for any number of products.

The advantages of dropshipping

If we say what dropshipping is in simple words, it is making a profit through an intermediary store. However, unlike a simple online store, this commercial project is devoid of various difficulties at the start, namely, there is no need:

• to buy cash registers;
• register a company in the general tax system, it is sufficient to choose a simplified system, such as to open a sole proprietorship;
• organize logistics and transportation of goods, etc.

The advantages also include the minimum cost of starting a business. You do not need a large capital to start sales. You can do without an office, warehouse, and purchase of goods. This all remains on the side of the direct supplier. Packaging, delivery, product storage, and other organizational aspects are not the concern of the intermediary.

In addition, you as a reseller can cooperate with several sellers at once. This way you can offer a fairly wide range of potential buyers and increase sales (and therefore - and your profits). For example, with one dropshipper you will sell electronics, and with another - children's toys and souvenirs.

The main thing is to take care of the competitiveness of your shop-intermediary, emphasizing the exceptional advantages of your service. This can be a fast connection, discounts when ordering from 3 units, wholesale prices, and so on.

Create an online store intermediary and manage your site from any city of Ukraine, trading on dropshipping. Mobility and the absence of geographical binding are also among the advantages of dropshipping. But do not think that this business model is devoid of disadvantages. The disadvantages are also present, and you need to be prepared for them.

Disadvantages of dropshipping

We have tried to tell you about all the "pitfalls" of dropshipping:

1. Inability to control the speed of shipment of orders
2. The rapid turnover of goods at the supplier leads to the fact that the most popular items are sold out very quickly. This is where your intuition and the experience of the seller must work. If you think the product will "catch on" with customers, you can buy 10/20/100 units when a new item arrives
3. You need to adjust to the supplier's work schedule, i.e. if the supplier has decided to have a holiday, you will have to take a weekend off as well. That's why it's important to choose multiple suppliers for yourself so that you don't slow down your processes.
4. Dependence on dropship prices - if a supplier has decided to raise their prices, because of their internal processes, you will have to do the same. As a result, sales could drop drastically. Even before you cooperate, find out whether they warn you in advance about price increases.
5. The disadvantages also include a high level of responsibility to the customers. Although you provide the audience with the goods from a direct supplier, the quality of which is vouchsafed by the seller, all the "flaps" in case of defects, long delivery, and other difficulties will fly at you. After all, it was your online store that accepted the order, and communication with customers takes place on behalf of your e-commerce project. You can't control product quality until you make a checkout purchase. You'll have to do this with every new dropshipper.
6. Negotiate with the dropshipper to ensure that customers are not supplied with the dropshipper's contact information and prices per order. Normally, decent suppliers don't do this, but it's better to stipulate at the outset.
7. When dropshipping your business can be impersonal, as you can not, for example, put a gift or a business card in the box with the order. However, dropshipping will help you to identify the demand for the most popular products and order these goods "under the warehouse. Dropshipping is the very first step to growing your sales business. Over time, you can grow into an independent business that sends goods to customers from your own warehouse.

Yes, dropshipping is easy and hassle-free, but be realistic and don't expect phenomenal profits. Resellers have good profits only when the turnover of goods is high. Starting to work with one dropshipper, do not delude yourself with hopes of thousands of dollars of income from the first days in business.

Also, be prepared for constant self-development in the field of marketing. Sales cannot be made by luck alone. You must build up your store's reputation and customer base to ensure profitability not by season or chance, but by serving loyal customers.

It can also be difficult to decide on a niche that is in demand with customers year-round. High competition can similarly be an obstacle when it comes to dropshipping and business in this area. It is advisable to initially conduct an audit and market analysis to know the strengths of your competitors and prepare a strategy for developing your dropshipping store.

Dropshipping: how to get started?

If you have still decided to try dropshipping as a way of making money, then start by studying the marketing trends in this direction. It is also advisable to analyze the demand on the market in order to determine a profitable niche and gain the attention of a large audience.

How to start dropshipping in Ukraine: tips for beginners

Here are some tips for beginners who want to get a quick start, avoiding risks and failures from the first days in dropshipping:

1. Subscribe to leading web analytics publications. For example, Marketer.ua, b2bcenter.com.ua, etc.
2. Do an analysis of trends in the market, so as not to miscalculate the niche Google Trends, Matomo, Open Web Analytics, AWStats, etc. are suitable for auditing.
3. Do not focus on seasonal and too expensive products. This way you will face a high segmentation of the market. You can count on the interest of only a small category of buyers.
4. Assemble a proven and reliable supplier base in Ukraine. This will take time, but it will help in the future not to jump from one supplier to another, because it will pause the profit. 

Let's take a closer look at the product options that are favorable for dropshipping. You can start with the recommended products, and later expand the assortment. As you grow regular customers, you'll easily understand the niche of demand. That means you can cooperate with the right dropshippers and increase your revenue.

Dropshipping - what to sell?

Today's market is very fickle. It is important to find trendy products among the first and to offer them before the products have become mainstream in other online stores. But it is very risky to chase only fashionable new products. For example, this season there will be tweezers for hair, and next season there will be no demand for this accessory.

Of course, you can rush from one dropshipper to another, but why when you have the option to start with the traditional niches, which do not depend on seasonality:

• Home textiles, home goods (linens, towels, organizers, hangers, etc.);
• Baby products (toys, clothes, hygiene, and baby care products);
• Automotive products (mats, car accessories, fragrances, etc.);
• Pet products (toys and food for pets, cages, aquariums, etc.);
• Women's and men's clothing and shoes;
• Hair Accessories, hats, scarves, gloves, bags, purses, clutches;
• Cosmetics, perfumery;
• Electronics, accessories for gadgets (cases, chargers, headphones, portable speakers);
• Handmade goods and souvenirs.

Notice that the selection is very large. Many resellers choose what they personally like for dropshipping. Especially in the era of social media, you can safely advertise products in the first person in Instagram stories, on the Facebook page, in TikTok, etc. About these and other subtleties of attracting customers, we'll talk further.

How to make money on dropshipping?

The most budget-friendly way is to create a commercial profile on social networks. However, be prepared for the fact that the first time you will have to spend all day in the account in search of subscribers or invest in online store advertising. You have to be active with regular posts and stories. Attract your giveaway audience with promotions and discounts at the start.

However, do not overdo it with price cuts, because it is a direct threat to your revenue. Some customers will not want to buy after the end of special offers, preferring your competitors' store, where the cost of the products is average and without red price tags.

Speaking of advertising, targeting is more suitable for social networks, while websites need affiliate programs, contextual advertising campaigns, and SEO. If you decide to register an online store on marketplaces, it will be easier. It is important to pay attention to search engine optimization:

• Prepare product cards, providing a detailed description of the position, a clear size grid, bright pictures.
• Include key queries. To do this, analyze search engine queries - how and what people search for. Use low-frequency keywords to avoid competition and hit the exact target, if your potential client enters in the search string "red cashmere sweater oversize buy Ukraine".
• Give preference to real photos of people with the product. About 80% of customers choose sellers with demo videos, photos without Photoshop, maximum realism.
• Create a product portfolio with photos from different angles. Make it so that the potential buyer can zoom in on the photo.

These recommendations will also be useful for designing a product catalog in your online store. It should be noted that an online store can be with a simple design. There is no need to overpay web specialists for branding and identity. Make sure the navigation is well integrated into the site.

We also recommend including a one-click ordering option and user registration (authorization) through social networks. Add icons for your commercial Instagram and Facebook accounts to the footer of the online store or to the top menu. Some customers like to checkout through Direct and other social networks.

The more functionality your online store has, the more chances you have to build up your customer base with minimal time expenditures. It is important that contact phone numbers, email addresses, and work schedules are clearly visible to site visitors! Otherwise, you risk losing customers due to navigation problems and poor communication.

In order not to depend on other sites, you can create an online store and sell on dropshipping. We have tried to create a perfect solution for newbies who just want to try dropshipping and have launched an online store rental with a monthly fee. 

Dropshipping Suppliers

There are many B2B sites where it is possible to find a reliable dropshipper. Among the proven sites of suppliers in Ukraine Postavshiki.ua, postavshiki-ukraina.com. You can search for other online platforms but beware of scammers, who sell non-existent bases of sellers for money.

Pay attention to the reviews of other participants of dropshipping campaigns. You can also find reviews on various review services. Remember that your excellent dropshipper offers:

• A good range of products
• Products that are in demand by customers.
• High-quality products
• Photos on the site correspond to reality
• The seller is interested in fast delivery and the integrity of the goods
• Responsible for storage, transportation, packaging of packages
• Quickly responds to questions
• Keeps under control of the financial component of cooperation
• Always aware of goods available in stock
• Notifies in time about the lack of positions, remaining goods, new delivery dates

Dropshipping can become your gold mine. Your task is to approach the business responsibly. Do not overestimate expectations and always improve your marketing approaches. The main goal of resellers is high sales and a growing customer base. Do not neglect your reputation and please your customers with good service. And then you will have decent revenues.