Jun 5, 2022 12:15:00 PM | Biz Models 2022 Complete Guide of Dropshipping from Zero to Expert

Discuss what is dropshipping, why so many people start ecommerce business from dropshipping, and what are the pros and cons.

On April 14,2022,  Shoplazza Go Live team organized the first webinar with the main theme of “how to start a dropshipping business from home only at $28/mo”. We thank all the participants and merchants who provided us with kind and authentic feedback. It also helped us reflect how to facilitate comprehension in an easier way for people to quickly understand.

Here we go, we came up with this article, meanwhile, our GoLive Podcast team will also touch upon dropshipping themes from April.

What is Dropshipping?

Dropshipping is an order fulfillment method where an online store doesn’t keep the products in stock, or any inventory. Instead, the online store owner makes or duplicates the purchases or inventory as needed from a third party—usually a wholesaler or manufacturer from product sourcing platforms like Aliexpress in order to complete the orders. Customers will receive the orders directly from the third-party wholesaler or manufacturer. 

 

The most significant difference between dropshipping business  and the standard retail model is that the merchants who sell don’t actually withhold any  stock or own inventory—they resell the products from the third party wholesaler or manufacturer for a different price scheme. 

 

Quick guide

  1. How does dropshipping work out?
  2. Why so many people start ecommerce business from dropshipping?
  3. Pros and cons of dropshipping
  4. Is dropshipping still making money in 2022?




How does dropshipping work out

To put it in a simple way, let’s categorize dropshipping into two main groups.

The first group, “direct dropshipping from Aliexpress”. It refers to the way people source their products and later the orders are fulfilled directly by third-party sellers from Aliexpress. The second group is “dropshipping from an app”. Well, simply speaking, the application vendors source the products and recommend them to the dropshipping merchants. The latter one, at Shoplazza, merchants have plenty of choices to choose from different dropshipping (product sourcing) app vendors with different features and best selling products. 

Shoplazza appstore not only help the merchant to find the products to sell, also expand the product sourcing horizon for them. Merchants can either use Shoplazza featured built-in Skuowner to one-click import the product feeds directly from Aliexpress into your Shoplazza powered store, yes, it is that simple! Once a customer places an order, meaning the customer completes the payment to the merchant. The merchant then go back to the original third-party seller and places a duplicated order, the third-party seller then will fulfill the order and directly ship to the customer. As the merchant, all you have to do is check that the details are correct and click the Order button. 

Dropshipping is often seen as a no-hassle, get-rich-quick scheme. But it’s not. Just like any other business, it takes dedication to get your startup running and successful. Done well, dropshipping companies can become reliable and convenient partners to quickly growing ecommerce businesses to expedite order and fulfillment processing.

If we can dive into the second dropshipping type for a little longer, “dropshipping from an app”. It usually refers to the way that merchants install a particular product sourcing app from Shoplazza AppStore, then the app offers a product marketplace type services where merchants can get visualized product details so that they can directly import these products into their online stores. Once a customer places an order, these dropshipping app vendor will automate your order and fulfill the order directly to your customer for you.

Dropshipping app vendors offers different types of featured services:

  1. Dropshipping order automation
  2. Product recommendations
  3. Order fulfillment
  4. Global warehouse with fast delivery services
  5. Local product sourcing
  6. Customized product sourcing
  7. Print on Demand POD



Why do so many people start ecommerce business from dropshipping?

There must be reasons that so many people around the world are starting business from dropshipping. A nearly 17 billion industry,  dropshipping is a great business model for aspiring anyone at any size and shape to start with because it’s accessible. With dropshipping, merchants can quickly test different business models with limited downside, which lets you learn a lot about how to choose and market in-demand products. 

Yes, at Shoplazza, you are able to start a global dropshipping business at home starting only from $28. That $28 is covering the basic plan to enable you the seamless global access to Shoplazza featured admin console where you can create and operate your online store. 

The essence of dropshipping is to stretch your business life as long as possible, it means that you need to test out different products. The best thing is that once the product proves invalid to customers, simply “unpublish” from your product page, and find new ones. No hassle on inventory, no hassle on anything. Simply monitoring the performance of your products. 

On the other hand, many merchants regard dropshipping as a great way to scale up their business. For example, they use Print on Demand to increase their product lines, merchants can save tons of energy by selecting vendors, equipments, materials. Now at Shoplazza, they can simply use apps like HugePod to customize and design their garment products and simply place the orders. 

 

Here are a few other reasons why dropshipping is so popular for both start up and scaling businesses.

Very little start up fund is required

Probably the biggest advantage to dropshipping is that it’s possible to launch an ecommerce store without having to invest thousands of dollars in inventory upfront. Traditionally, retailers have had to get huge amounts of capital tied up in purchasing inventory.

With the dropshipping model, you don’t have to pay for anything until a customer places an order at your ecommerce store. Without heavy fund injecting upfront, you can save and utilize your precious capital reserve into product testing, digital marketing and any other more important areas to grow your business. Less routine costs help stretch the business life. 

 

Tons of choices

With dropshipping, yes, there are tons of products that you can choose to sell online. By learning the features of different dropshipping app vendors, you can utilize the different features to serve your unique business needs and purposes. 

 

Easy and fast to start

You only need to sign up to Shoplazza platform, purchase the basic plan at $28. Install the dropshipping apps, then your global dropshipping business debuts.

 

Very little cost if you decide to quit 

During the dropshipping seminar, many participants echoed to me since i mentioned the failure cost to dropshipping. For example, if you spend $28/mo at Shoplazza for three months to test products and your business ideas. After three months, you decided to quit, then your total loss is only three month subscription fee, sum up $84. 

 

Ever business model a few shortcomings to be aware of as well. 

Low profit margins

Low profit margins are a noticeable issue to operating in a highly competitive dropshipping vertical. Because it’s so easy to get started, and because the overhead costs are so minimal, many competing stores will set up shop and sell items at rock-bottom prices in an attempt to grow revenue. Since they’ve invested so little in getting the business started, they can afford to operate on tiny margins.

 

Inventory issue

If you stock all your own products, it’s relatively simple to keep track of which items are in and out of stock. But when you’re sourcing from multiple warehouses, which are also fulfilling orders for other merchants, inventory can change on a daily basis. 

Fortunately, these days, there are a handful of apps that let you sync with suppliers. So dropshippers can “pass along” customer orders to a supplier with a click or two and should be able to see in real time how much inventory the supplier has.

 

Fulfillment speed

Shipping speed is the most critical and deciding factor for dropshippers to consider, that’s where dropshippers receive most complaints since the beginning of the pandemic. Tons of cargos and products were delayed for shipping and delivery. Make sure you talk to the third-party sellers about your best fulfillment options. 




Is dropshipping still making money in 2022?

It is a tough question to answer. Dropshipping isn’t perfect, but it does offer many people a simple and fast way to start their business and put plans into real actions. The business model does involve complexities from product sourcing down to fulfillment speed. However, with a predictable maximum loss, dropshipping is still considered as a merchant friendly and less risky business model to start with. 

Written By: Luk.Chan

Read articles written by Luk.Chan and learn the essentials about developing eCommerce businesses on Shoplazza.