Dropshipping is a popular business model, but what is dropshipping, and why is it so appealing? In today’s fast-paced digital world, many are searching for ways to start an online store without the headache of a traditional retail shop. Dropshipping offers a solution, allowing sellers to offer products without stocking them.
Understanding how dropshipping works is key to unlocking its potential. Unlike traditional retail models, it simplifies logistics by letting suppliers handle product storage and shipping. This article will walk you through the essentials of how dropshipping works and help you decide if it’s the right business model for you.
Dropshipping is a low-risk business model where store owners sell products without managing inventory or manufacturing them. When a store owner makes a sale, they purchase the product from a third-party supplier, who then ships it directly to the customer.
As dropshippers, we act as the only point of contact for our customers. Once an order is placed, we forward it to the supplier, paying for the product only after we’ve made a sale. This means dropshipping requires very little capital to get started, making it an attractive option for aspiring business owners.
Now that we’ve defined what dropshipping is, let’s explore how dropshipping works. The process involves partnering with third-party suppliers – whether they are manufacturers, wholesalers, or retailers – who handle product creation and fulfillment.
In essence, dropshipping relies on effective supply chain management. The supplier takes care of producing and shipping the products while we focus on marketing and customer service. Here’s a simple breakdown of the dropshipping process:
The result? Satisfied customers and profits for us. The more we sell, the more opportunities for increased revenue.
Dropshipping has gained massive popularity because it offers a low-risk, easy-to-start way for anyone to run an online business. With minimal upfront investment, even those on a tight budget can begin selling products. Plus, with just a computer and an internet connection, you can run a dropshipping business from anywhere.
You also have the flexibility to run your dropshipping store part-time for extra income or full-time to make it your main source of income. The freedom to work on your own schedule is a major perk, and automation tools make it even easier to scale your business as it grows. These factors make dropshipping a compelling option for many entrepreneurs today.
Dropshipping stands out as a unique eCommerce model due to its numerous advantages. Here are the key benefits:
With these benefits in mind, let’s explore the top four platforms for dropshipping: eBay, Shopify, Wix, and Facebook Marketplace.
Choosing the right platform is crucial to building a successful dropshipping business. When exploring what is dropshipping and how dropshipping works, you’ll find that different selling channels offer distinct advantages. Whether you’re looking for high traffic, easy setup, or customization options, it’s important to match the platform to your business goals. Below are the top four channels for dropshipping that can help you start and grow your store.
eBay is one of the largest global marketplaces, with nearly 900 million monthly visitors. Thanks to its massive organic traffic, you don’t need an initial marketing budget. As soon as you list your products, potential buyers can find your listings without any upfront advertising costs.
Setting up an eBay account is straightforward, but there are initial selling limits to consider. Fortunately, you can quickly increase your eBay selling limits to expand your business.
While setting up business policies may seem tedious, it’s necessary to ensure that your terms match those of your suppliers. Once everything is in place, selling and fulfilling orders on eBay becomes effortless.
Beginner’s Tip: For more information on what is dropshipping on eBay and how to get started, check out our guide How To Start Dropshipping On eBay.
Unlike eBay, Shopify doesn’t impose selling limits. Plus, it simplifies things by handling legal pages, so you don’t need to set up business policies manually. One of Shopify’s standout features is its full customization capability. With Shopify, you can create a store tailored to your brand, using various apps and features to enhance sales.
However, unlike eBay, Shopify doesn’t offer immediate organic traffic. You’ll need to invest in marketing strategies like SEO, paid ads, or influencer marketing to attract customers. Nevertheless, with the right efforts, Shopify can become a highly profitable dropshipping channel.
Beginner’s Tip: For those looking to learn how dropshipping works on Shopify, plenty of resources are available to guide you, like our Shopify Dropshipping Tutorial.
Wix is a highly rated, user-friendly platform that’s perfect for those who aren’t tech-savvy. Its simple “drag and drop” interface makes building your store a breeze, and with over 800 templates, you’re sure to find one that suits your brand. Wix also offers SEO tools to help increase your store’s visibility, though you’ll still need to work on marketing efforts to drive traffic.
While it doesn’t offer the same level of customization as Shopify, Wix provides an all-in-one solution for building an online store. For beginners, this is a great option to explore how dropshipping works without needing advanced design skills.
Beginner’s Tip: Here is A Full Guide To Starting Your eCommerce Business on Wix.
Facebook Marketplace is an untapped goldmine for dropshipping, with little competition and free organic traffic. Initially designed as a local marketplace for used goods, it has evolved into one of the best channels for selling new products. The startup costs are incredibly low – there are no monthly fees, and you’re only charged a 5% transaction fee or $0.40 per sale, whichever is higher.
You also don’t need to invest in marketing, as Facebook Marketplace generates tons of traffic on its own. To get started, simply list products from your suppliers, and you’re ready to go. Additionally, you can enhance your reach by sharing your listings in local groups or turning them into ads. Facebook’s built-in Commerce Policies further simplify the process, making it a hassle-free option for dropshippers.
Beginner’s Tip: Follow our How Dropshipping Works On Facebook Marketplace guide if you are interested in tapping into this goldmine.
Did you pick a selling channel? Great! You’re one step closer to managing your own eCommerce business.
Nevertheless, as you start selling, you’ll also notice that running a dropshipping business can be time-consuming.
For one, you’ll need to import listings from your suppliers one at a time. Once listed, you’ll have to keep refreshing product pages to monitor for price and stock changes. Finally, each order that comes in needs to be fulfilled manually.
Ultimately, these burdensome activities limit you from growing and expanding your business. And while you’re at it, the chances for your store to become a passive income source diminish.
This is where automation comes into the picture to save the day. Imagine if a platform can take care of all the time-consuming tasks, so you’re free to research more products or spend time with those you love?
At AutoDS, we’re dedicated to making this dream a reality for dropshippers. Our all-in-one dropshipping platform does the hard work for you.
Here are just some of the great features that automate your business:
Importing products manually can take 10-20 minutes per product (and more, depending on what selling platform you’re selling on). Now, imagine wanting to have a store with 100 products, or 1,000, or even 10,000. How much time would it take to add those products?
What if we told you it could take you less than a minute to import any number of products with business automation?
AutoDS saves you time by allowing you to import products at lightning speeds. You can get this done in one of three ways: One-click importing, bulk upload using a CSV file (you’re gonna love this one!), and uploading with the AutoDS Finder.
First, make sure to download and install the Chrome AutoDS Dropshipping Helper Extension. It makes all of these options possible.
This feature allows you to import any individual hot product with one click. Because it works with any of our twenty-five supported suppliers, it gives you access to millions of products.
Using one-click importing is as simple as it gets. As soon as you arrive at the desired product page, click on ‘Import to AutoDS.’
With this single click, the extension gathers all images, descriptions, titles, and variants and uploads the product directly to the drafts page.
From there, you can optimize any of the information before uploading it to your store. For example, you may want to modify the title for better SEO keywords so that more people find it on eBay.
Since plenty of our success comes from testing products, it’s always better to upload multiple products at a time and see which ones sell. The more products we test, the quicker we find out which niche or category is our true profit maker.
That’s why the bulk uploader is so great. It allows us to scrape and upload hundreds, thousands, and even tens of thousands of products in a few clicks.
To illustrate, say you found a page of wine openers from Target that you want to list on your store. Simply click on the AutoDS button on the bottom right, and hit ‘Extract.’
A list of product IDs populates in the box. Now, click on ‘Export as CSV.’ All of the products get saved in a dedicated CSV file on your computer.
Finally, on AutoDS, click ‘Add Products’ and choose ‘Upload CSV.’ Drag and drop the file you created before. Click ‘Add as Draft,’ and all of the products upload directly to the drafts page.
Not everyone has time to conduct their own product research. That’s why AutoDS has a feature that finds products and uploads them all in one place. You don’t have to go to your supplier websites!
To use this feature, click ‘Add Products’ on the AutoDS platform and then select ‘AutoDS Finder.’ Choose the level of popularity you want to search for. The hotter the product, the more credits it uses up.
Once you choose the number of products, either add them as a draft or upload them directly to your store.
No one wants to dropship a product, only to find out that the supplier raised the price or ran out of stock. After all, we are here to profit, and if the price goes up and we didn’t know, we may end up selling the item at a loss.
To make matters worse, if a supplier runs out of stock without our knowledge, we won’t honor customer orders, putting our entire business at risk.
It would be nearly impossible to stay on top of price and stock changes constantly. That’s why we need a more automated system.
AutoDS’s proven software monitors your price and stock 24/7. When changes occur to stock, the program updates your stores instantly.
Similarly, if the supplier raises the price, AutoDS ensures that you keep your profit margins by adjusting the price accordingly.
You can find both features in your Store settings.
The good news is that AutoDS automatically enables price monitoring by creating a default break-even setting for each supplier. For example, if you’re dropshipping from Amazon to eBay, the system adds the selling fees of your supplier plus a given amount of profit.
Then, regardless of price changes on products, you’ll always keep your original profit settings.
However, you may adjust your pricing settings as you see fit. The point is you never have to worry about losing money on your products again. For example, if your supplier changes the price of a product, your break-even settings maintain your profits by keeping them at a fixed percentage.
Since we are not holding any inventory, it is crucial to have a way to track our suppliers’ inventory in real-time. That’s where AutoDS’s scanners come into play. As soon as a product’s available quantity falls below a set threshold, it is marked ‘out of stock’ in your store.
You’ll never have to worry about updating your store’s inventory again. Like pricing, you can customize your stock threshold and automation in your store settings.
When stock levels on the supplier side fall below your Minimum product quantity, AutoDS marks it out of stock. For example, if you set your minimum to five, as soon as the supplier has less than five left, AutoDS marks it out of stock in your store.
You don’t need to change any settings for rare situations where you want to turn off price or stock monitoring. Instead, when adding products, you can turn off automation for price stock or orders respectively.
As orders start coming in, you’ll need a quick way to process them with your suppliers. Doing it manually can end up stacking up orders, creating a backlog, and causing delays at the cost of your seller ratings.
AutoDS has a solution for that called Fulfilled by AutoDS. This system processes orders for you instantaneously, keeping your customers satisfied. This means that every step of an order from the moment it gets placed until the customer receives it is automated!
To sign up for this service, go to the ‘Plans & Add Ons’ of your settings and enable the Order Automation plan. Then, head over to your store settings, and under the ‘Orders’ tab, checkmark both automatic ordering options. The first enables fulfillment by AutoDS, and the second, automatic ordering.
You can also choose to leave ‘Automatic orders’ off. This way, when orders come in, AutoDS won’t automatically place the order with your supplier. Instead, it leaves the order as ‘Pending’ and awaits your approval. Once approved, the order moves along as usual.
Once you’ve signed up and enabled automation settings, you’ll need to load funds into your account balance. AutoDS uses these funds to place orders on your behalf with suppliers.
As a final step, add order credits to your AutoDS account. Now the system is all geared up to take care of your orders.
As customers begin to buy products, AutoDS processes each order and adds them to your orders page. Then, assuming you are using full automation, the system makes an order with the supplier.
The coolest part is watching orders move through the chain of events as AutoDS automatically updates the order status for you labeling it ‘ordered,’ ‘shipped,’ and ‘delivered.’
You might be wondering how to handle tracking updates when orders are shipped. After all, updating customers with a tracking number gives them the confidence that their order is on the way and allows them to track the package in real-time.
Manually sending tracking for each order might sound like a solution. However, this takes more of our much-needed time and leaves room for human error (for example, sending the wrong tracking information on an order).
This is yet another reason why Fulfilled by AutoDS is your best companion for dropshipping. The platform retrieves a tracking number as soon as an order ships. Then, it updates tracking both on AutoDS and your online store (e.g., Shopify). As a result, the customer gets notified immediately when tracking is available.
Those without full automation need to complete each of these steps manually, so it isn’t recommended.
As a bonus, the AutoDS converts AMZL tracking numbers to Bluecare Express. This is helpful because, unlike Amazon tracking, Bluecare Express gains the trust of your customers by giving them updates with each status change.
Part of every retail operation includes returns, and you’ll want a quick and easy way to process them, so you don’t get bogged down.
Fulfilled by AutoDS offers automatic returns to solve this problem, which allows you to retrieve a return label in one click.
It works as follows: each order’s status can be changed to ‘Request Return’ on the orders page. Within 24 hours of making this change, AutoDS retrieves a return label for you. Then, you can download the label and send it to the customer via AutoDS or directly from your store.
Great customer service is the backbone of every successful business. Therefore, AutoDS offers a dedicated page where you can manage all customer interactions.
Instead of going back and forth between your stores and your business platform, all customer service issues are managed in one place for all stores. This includes cancelations, returns, and refunds.
Accordingly, this integration lets you reply to customers on this screen, regardless of which selling channel they are messaging you from.
Even with automation, running a dropshipping business requires you to engage in routine tasks and maintenance of the business. The added workload can take up precious time. For example, customer service, sending return labels, or responding to emails.
Hiring a virtual assistant can help close the gap between the automated portions of your store and those that aren’t. And with AutoDS, it is simpler than ever.
All you need to do is grant your virtual assistants access to your account. Not to worry, you have full control over their access privileges so that none of your dropshipping assets are in jeopardy.
As a dropshipping automation software, AutoDS has different tools to help us streamline our business operations. Here are key features of AutoDS:
With these tools, we can automate our business processes and easily scale our profits. As soon as we connect our store to AutoDS, we can sit back and relax, as automation software handles our tasks.
Yes, it is relatively easy to start dropshipping. We do not need a starting capital, instead, we can start with product research and find a reliable dropshipping supplier. From there, we can set up our store and with the help of AutoDS, import products and fulfill orders.
We can automate our dropshipping business with the help of automation tools like AutoDS. With AutoDS, we can automate dropshipping business operations such as product importing, order fulfillment, inventory management, and more.
In conclusion, dropshipping is an accessible way to start an online business with minimal upfront investment. By understanding what is dropshipping and how dropshipping works, you can take advantage of its flexibility and low-risk nature.
However, like any business model, it comes with challenges. Success in dropshipping requires careful supplier selection, product research, and marketing strategies. By applying the insights from this article, you can better decide if dropshipping is the right path for your entrepreneurial journey.
Start by checking out these gems on beginning dropshipping:
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