What is a dropshipping business?

Rose May Pimentel in EntrePINOY

Jul 27, 2020 • 2 min Read

If you’re looking for an online business, legal, and with less capital, dropshipping is a great way to start. But, what exactly is dropshipping and how does it work?

According to BigCommerce, an e-commerce platform, dropshipping is an order fulfillment method that does not require a business to keep products in stock.  Instead, the online store sells the product and passes on the sales order to a third-party supplier, who then ships the order to the customer.

Dropshipping is simply selling other people’s goods and taking a cut for yourself as a middleman. You’ll earn by selling the product at a higher price and the supplier will handle your product fulfillment needs. You can sell to not just local but also international customers.

Compared to other business models such as online reselling, it’s faster to start a dropshipping business because of the low capital needed and perceived as profitable. You won’t need to spend a lot of money on stocks and warehouses, and even on staff to assist you for the supplier will serve as your teammate who will take care of the sending of the orders process. To make your business work, all you need are communication devices and proper platforms.

If you’d ask if dropshipping is legal for you may run into legal issues depending on who your supplier is, the answer is dropshipping on its own is a legitimate method of order fulfillment. Remember to protect yourself with a Dropshipping Agreement Contract.

The easiest way to set up your dropshipping business is to sign up with a dropshipping app (such as AliExpress, Dropify, etc.), which can create an online store for you and connect you with local e-commerce platforms like Lazada, Shopee, and Shopify.

You can dropship or sell almost everything but some of the most popular and in-demand products are masks, alcohol, clothes, gadgets, appliances, babies and kids products, home and living products, groceries, bags, shoes, makeup and skincare products, accessories, etc.

Here’s how to start a dropshipping business, according to AliDropship, an AliExpress dropshipping plugin:

1. Find an online supplier who has products that you want to sell.  Make sure to work with a trusted supplier with high-quality products.

2. Show the supplier’s products with marked-up prices on your website and advertise them

3. Receive direct payment from the customers who buy from your website.

4. Redirect the orders to your suppliers and pay them their original price. Keep the profits to yourself!

5. Monitor the order for the supplier will ship directly to your clients.

6. Repeat! Find more products and suppliers if you like, and enjoy greater earnings!

Though dropshipping may seem like easy money, of course, there will are drawbacks, obstacles, and day-to-day management that may not always run smoothly. However, if you know how to do it the right way and work hard for it, your business can be successful. Go dropship your way to success!