If you’ve ever dipped a toe in the shallows of online business, you might have heard the term “dropshipping” thrown around. But what does it truly mean? What’s involved? Why do we hear about it more every year? And, most importantly, how can it help you grow your business?
This guide will answer all those questions and more, including:
- What is dropshipping?
- What are the benefits of dropshipping?
- How do I find a dropshipper?
- How do I choose the best dropshipper for my business?
- How do I integrate dropshippers with my Volusion store?
To learn more, read on!
What is dropshipping?
Simply put, dropshipping is the process of shipping goods directly to your customers from a third-party supplier or “vendor”, without an intermediary step (like storing the goods at your physical business location).
Here’s an example of a normal business model without a dropshipper :
- Your business routinely orders product from a supplier to maintain inventory on hand.
- Your business stores the products until a customer orders them.
- You process each customer’s order, package the goods, and ship them to the customer yourself.
When a dropshipper is involved, the process looks a bit different:
- A customer orders products from your business.
- You pass the order info along to your dropshipper.
- The dropshipper packages the goods and ships them directly to the customer.
What are the benefits of dropshipping?
Dropshipping eliminates the need to keep inventory on hand, freeing your business from the (time, labor, and monetary) costs of keeping your goods on hand and maintaining your own warehouse property to store them. Even if you only dropship some of your goods, you’ll bes freeing up resources for the items that need particular attention. It even allows you to offer items that would normally be impossible to ship due to your location’s limitations, like extremely large or perishable goods. You can be based anywhere in the world, and your items will still reach customers right on time!
Another benefit is that your dropshipper takes care of the entire physical process of packaging and shipping your products. Because dropshippers are often large businesses dealing with many orders a day, they may even have negotiated shipping rates that are lower than the ones your small or medium business can get;Those savings get passed on to you, and your customers benefit in turn! Dropshipping can also reduce losses from damaged product, since shipments take a more direct route from warehouse to customer.
In addition to eliminating the need for the physical inventory storage, dropshipping can prevent logistical headaches and customer service woes. You don’t have to worry about overstock or shortages on your end, nor is your company as susceptible to the risk of shifting trends that cause certain products to suddenly fall in or out of favor. And if you ever need to expand your selection to new items, many dropshippers have a wide variety of goods to offer, from extremely niche items to popular or classic sellers. Between the ability to expand and the flexibility to choose your company location, dropshipping naturally promotes scalability!
How do I find a dropshipper?
So you’re sold on the idea of dropshipping, but you have no idea where to begin. Thankfully, the internet can be enormously helpful in your search - but it’s not quite as easy as typing “dropshipping” into a search engine. Most dropshippers do the majority of their business with small and medium companies like yours, and they may not appear at the top of search results if their SEO isn’t very strong. To get the best results,be sure that you expand your search to include various dropshipping vocabulary:“dropshipping”, “wholesale”, “distributor”, “bulk”, “reseller”, “warehouse”, and “supplier” are all good ways to start. You can also combine those terms with the particular goods or types of goods you wish to sell. (It can be very useful to know your “niche” before searching, since different dropshippers specialize in different industries.)
You can also find dropshipping “aggregators” online, either in the form of comparison lists and blog articles, or actual companies whose purpose is to help you find the perfect dropshipper for your business. These can be free or paid resources, but just as with the dropshipper itself, do your homework to ensure the aggregator is honest, reliable, and reputable in the field. In the past, many Volusion merchants have worked with dropshippers that have built-in “aggregation” tools, such as Doba and Kole Imports.
Of course, you don’t have to limit your search to the internet; another option is to contact the manufacturer of your desired goods directly! Most manufacturers can provide you with a list of dropshippers that carry their products, and are perfectly willing to give you their opinion. And who knows, you may get an even better deal from the manufacturer themselves!
How do I choose the best one for my business?
You’ve narrowed down a small list of dropshippers to choose from - but how to choose? First, have a solid idea of what you want your business to look like in your head, including the purchase order process with dropshippers. This will help you better analyze different factors, such as:
What goods do they provide, and at what cost? Are there additional fees? Payment options? If they don’t match your desired inventory or overhead, the decision will be quick.
How long have they been in business? A veteran dropshipper is usually preferable, one with a record of trustworthy and safe shipments (and happy customers) going back a decade or more.
Who do they ship with? If they use a particular shipping provider, is it well known? Capable? Can they ship anywhere in your region? Do they have limitations on goods they can ship that exclude you?
Who else do they ship for? Are you using the same service as your competitors? (Not necessarily a bad thing, if you believe you can out-compete them elsewhere.) Would you be their largest client? Smallest? Somewhere in the middle is preferable, so the dropshipper isn’t stretching out of their comfort zone to meet your needs.
What customization do they offer for shipping? Can you put your branding on the box your customer will see? Can you add coupon codes, or contact info? Do they send order notification emails? What is their return policy?
All of these questions are useful, but when doing research keep in mind you don’t need to stick to asking the dropshipper - ask their customers! See if you can find reviews on the internet, in forums, on their social media pages, or ask them for references directly. Take it all with a grain of salt, and decide for yourself if their most glowing or devastating feedback is the real deal, or if they lie somewhere in between, and how closely that matches what you are looking for.
How do I integrate them with my Volusion store?
Compared to the process of investigating and searching out your “perfect supplier”, setting them up to work with your store should be easy as pie. For Volusion stores there are two ways to set up dropshipping - standard dropshipping, where you generate Purchase Orders yourself when you need an order shipped to a certain address, and Auto Dropshipping, where your dropshipper is sent a purchase order automatically for each order that comes through your store.
Both methods involve creating Vendors (a representation of the dropshipper in your store, including their email info) and vendor rules (a record on each product defining things like the minimum quantity, price, and vendor’s name for the product for the purchase order).
The articles linked above go into the specifics, but essentially once you have these two sections set up you are ready to go - you can create your own POs for your dropshipper in Inventory > Purchase Orders, and if your products are set up to auto-dropship, you can sit back and let your store process them on its own with each order! You can even process received items (if, for example, you needed to restock your own store using the same system). Keep in mind that the lower prices you set in these sections for the dropshipper products are for your own record keeping - payment of your supplier is handled outside the Volusion system.
So concludes the Beginner’s Guide to Dropshipping. There is certainly much to gain from the streamlining and versatility of using a dropshipper, so long as you follow the tips above and ensure the one you choose is right for your business needs. With a bit of homework, negotiation, and set up, you can have your store working for you in no time!