(Newswire.net — October 16, 2020) — It is a method of commerce where a business sells certain products that it does not have in its inventory. The way of operating what dropshipping is very interesting. The virtual store hires the services of a third party called dropshipper, which will be in charge of providing the products that will be published in its catalog. In addition, this is the one in charge of making shipments to customers.
The principle of dropshipping is to provide the possibility that an SME can undertake with the help of suppliers. These types of strategies are generally implemented for online businesses. An entrepreneur creates a product, hires a dropshipper to increase their production, and creates a store to offer the customer a product catalog.
Dropshipping tools are used to automate and streamline various aspects of running a dropshipping business, making operations more efficient and manageable. These tools assist in product research, listing creation, price monitoring, order processing, and inventory management across multiple marketplaces like eBay, Amazon, and AliExpress. They are particularly useful for managing supplier relationships, ensuring competitive pricing, and tracking sales and shipment data in real time.
Being an ecommerce trend, we want to show you some details about how it works.
Dropshipping: Main Features
Dropshipping is a trading mechanism in which a virtual store sells products without having them in stock. For this, they make use of suppliers or also called dropshippers, which are the ones that supply the product to the store. Here is a list of the main characteristics of dropshipping:
- It is an online sales system
- It is made up of a retail business and a wholesale supplier
- Sellers do not have the product in their hands
- Suppliers are responsible for making the shipment from their warehouses to the customer
- It can be applied in any of the new modes of online commerce
- It is one of the best options for small businesses
Elements that make up dropshipping
At first, this ecommerce system was made up of 3 fundamental agents. The first is the seller or business owner, then we have the supplier agent, called dropshipper, and finally we have the customer.
Seller
It is the person who runs the business or the online store. Basically, they are in charge of offering the client a platform where they can view the different products available. The seller does not have a stock of inventories, as he is simply in charge of offering the virtual store.
Dropshipper
It is the supplier and in some cases, the manufacturer of the products to be sold in the seller’s virtual store. These are in charge of handling the product from the warehouse until it reaches the customer’s hands. One of the best examples is HyperSKU.
Client
It is the person who enters the seller’s virtual store with the intention of acquiring the products that are offered there. It is the most important element, since the customer is the one who gives life and permanence to the seller’s virtual stores.
Main advantages of dropshipping
Knowing what dropshipping is and all the agents that make up this process, it is necessary to know what its main advantages are in ecommerce. In this way you can draw your own conclusions and determine why it is so beneficial to implement this type of system. We present a list of the main benefits of dropshipping for businesses:
- There is no need to invest in a warehouse, since the supplier is in charge of having the products in stock
- If the items you created are not selling, you can try others. This does not usually generate large losses, especially in clothing businesses.
- Most suppliers only charge for the sale of the product per unit and not for the stock. In this sense, it has an unlimited inventory.
- You completely avoid the work of packaging and moving the package to the shipping site.
Hopefully this brief explanation can give you an idea of this booming business system. If you’re new to the world of online retail, it’s important to understand what dropshipping is and some key things to know. By utilizing dropshipping, online retailers can avoid the need to hold inventory and can focus on marketing and sales.