Getting started with dropshipping - what to consider
There are both advantages and disadvantages to dropshipping, so it's important to have the right tools from the start. We clarify the concept of dropshipping and advise you on what you need to consider before starting.
We begin by clarifying the concept of dropshipping
Dropshipping is commerce/e-commerce without your own warehouse. In simple terms, it goes like this:
- The customer orders a product from a dropshipping company
- The company sends an order confirmation to the customer
- The company sends the order to the manufacturer
- The manufacturer sends the finished product to the distributor
- The distributor sends the product to the customer
Is dropshipping just a trend?
E-commerce in Sweden accounts for around SEK 90 billion of total trade. In addition, ca. 70% of all Swedes between 18-79 years old purchase on average one item online each month, according to E-barometer's annual report from 2019. Is it just a trend? We don't think so.
Companies involved in dropshipping are often good at social media marketing. They simply use different platforms as marketing channels to get information about their products out quickly.
The supplier, or dropshipper, receives orders which are sent to the manufacturer who ships to the distributor who ships to the end customer. Tip: How to find good dropshipping suppliers.
Dropship via a webshop
Dropshippers often run businesses and can, for example, dropship via a webshop in which images, product descriptions and various specifications are provided.
Examples of common dropshipping products:
- Rice cooker
- Bluetooth speakers
- USB cables
- Yoga mats
- Dog toys
- Training accessories
- Skin care products
The important thing to remember is to sell products that comply with current health regulations and the EU's general rules for online sales.
There are many advantages to dropshipping...
It is often cheaper to produce products based on demand, leading to higher profit margins. The risks are also relatively low as only a small amount of start-up capital is required in an already established and highly flexible industry.
You don't have to deal with inventory management, production, payroll issues and there are no direct geographical restrictions.
... and perhaps some disadvantages
It can be difficult to find suppliers that meet the above requirements. Inventory and production capacity also become problematic to keep track of, as do climate footprint and delivery times.
As a dropshipper, you also (usually) need to handle both reclamations and returns yourself, which means you should know a lot about CE marking. It can also be useful to have an experienced partner who knows about returns.
Finally, some things you can take with you into your new dropshipping adventure:
- Try to find your own niche
- Contact specific dropshipping suppliers
- Build your brand
- Market your webshop
If you want to know more about different logistics solutions or the logistics field in general, don't miss the Delivery Guide's logistics page, which is full of helpful information for current and aspiring entrepreneurs.