September 09, 2020From Startup to Success: An interview with a Baobab Marketing client
What is dropshipping and is the business model still going strong?
More people are looking into working for themselves. There are a number of opportunities online that can allow you to do this. In recent times you may have seen websites referring to dropshipping as a means of working for yourself or as a means of making additional income while working in another job.
Essentially the idea of dropshipping is a person or company sets up a website storefront. However, this person or company does not keep any items in stock and instead uses a third party in order to supply the items (ie to ship them out to customers, hence dropshipping).
There are various methods you can do this, with a number of online apps and stores that allow people to set up their dropshipping storefronts. Often the process will be automated and the only thing you have to look out for as the storefront is to check that the contact details are correct before the items are shipped out.
What are the benefits? ✅
For people looking to start their own business, there are a number of advantages. The first is that a lot of the costs associated with businesses (having to buy in stock, run an office etc) are not applicable to dropshipping.
There is also the fact that as long as your internet connection is stable then you can run your dropshipping business from anywhere. This is also important in terms of keeping in contact with customers in the event of any issues.
Another benefit of this is if you are considering going into a certain market but are not sure of the level of demand. Dropshipping allows you to trial a business. For example if you are considering posting baked goods by post you can see if cake pops, brownies or doughnuts are more popular before basing a business around one of these products.
One issue smaller businesses sometimes have (and this may sound strange) is if they become too big too fast. Smaller businesses can often struggle with larger orders. With dropshipping, suppliers are more likely to be able to adapt to a surge in sales.
What are the disadvantages? ❌
While the overheads of dropshipping are low, it also means the profit margins can be very narrow as well. It also means you are likely to have competition and they will often start off at very low prices in order to rope in customers.
There is also the fact that you need to keep a close eye on your suppliers, as you won’t be able to see your stock in a way that a more traditional business will be able to. It also means in the event of any issues you will bear the responsibility for any mistakes in deliveries.
It can also be a challenge to customise and make your business stand out from your rivals, so this is something to consider investing in before you get started.
Is the dropshipping business model still going strong❓
Dropshipping as an online sales method has been around for a few years now, so it is appropriate to ask whether this particular method is still viable as a business model going into 2022.
One complication in 2021 has been the Covid-19 pandemic. This has meant that more people have either been out of work or furloughed. What this has meant is more people looking into methods of self-employment and inevitably more competition.
In terms of popularity, there have been larger numbers of people establishing dropshipping storefronts. What this has also meant is that there are more websites, videos etc claiming that they have the key to unlocking dropshipping success (often this will not be the case).
While it is a cliché to say this on the internet, here “do your research” is very much applicable. The first thing is to look into what you want to sell online. If there does not appear to be much competition then this may be a viable option.
The next is to look into the suppliers who will be shipping out the products to your customers. Ideally you want people with a reputation for being reliable and for having the best quality stock. While this may mean higher prices compared to the competition, it may be better to stand out in terms of quality as opposed to cost.
Another method of giving your dropshipping business the best chance of succeeding is to look into who is likely to buy your products. Fortunately, there are a lot of survey generating websites available now that will allow you to easily ask people questions about what they want and whether you could get what they want for the best price, as well as giving you a better idea of who your ideal customer is- indeed, sometimes the answers you get may surprise you!
Finally, as with any business, you need to put time and effort into it. Having a well-presented website, a strong and engaging social media presence and having as much as possible in place to deal with any potential customer issues will give you the best chance of standing out from the crowd.
While dropshipping in 2021-2022 may be more of a challenge than in previous years due to increased competition, this simply means that anyone looking to get into this should do so with a view to the long term rather than mistaking it for a get-rich-quick scheme.