{"id":3926,"date":"2024-07-13T21:03:00","date_gmt":"2024-07-13T21:03:00","guid":{"rendered":"https:\/\/www.bigbuy.eu\/blog\/what-is-dropshipping-everything-you-need-to-know\/"},"modified":"2024-11-07T08:15:10","modified_gmt":"2024-11-07T08:15:10","slug":"what-is-dropshipping-how-does-it-work","status":"publish","type":"post","link":"https:\/\/www.bigbuy.eu\/blog\/en\/what-is-dropshipping-how-does-it-work\/","title":{"rendered":"What is dropshipping? The ultimate guide (2024)"},"content":{"rendered":"\n

What’s dropshipping? This strategy is becoming more and more attractive for retailers all over the world. Find out more about how does it work and its advantages.<\/p>\n

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This distribution model, which frees the e-commerce owner from logistical burdens, is closely linked to online selling. So, before we delve deeper <\/span>into what dropshipping is<\/b> and how it can help an online store, let’s take a brief look at the history.<\/span><\/p>\n

Dropshipping: what is it and how does it work?<\/b><\/h2>\n

In essence, <\/span>dropshipping<\/b> consists of the following: the end consumer buys a product in an online store and the <\/span>dropshipping supplier<\/span><\/a> sends the customer their order without going through a retailer, with no requirement to have stock or a warehouse in order to sell. Is a very goog shipping method.<\/span><\/p>\n

So that there can be no doubt about <\/span>what dropshipping is<\/b> and how it works<\/b>, let’s look at an example. We have prepared a case study of what dropshipping would be like with a self-owned e-commerce (although it is also very common to do dropshipping via marketplaces – more information on that later).\u00a0<\/span><\/p>\n

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  1. Jorge wants to buy a fragrance online and have it sent to his home address. He Googles “Armani men’s cologne”, finds a dropshipping store called “Perfumer\u00eda Am\u00e9lie” and decides to buy it from there. He makes the payment and gives his shipping information.<\/span><\/li>\n
  2. Marta, owner of Perfumer\u00eda Am\u00e9lie, receives Jorge’s order. She is a BigBuy client and has contracted a Wholesale Pack, so she does not have to manage the shipping of the perfume. If your e-commerce is synchronised with BigBuy, the order will be shipped automatically. She will thus acquire the product at a reduced wholesale price.<\/span><\/li>\n
  3. Upon receiving the order, BigBuy prepares it, packages it and sends it directly to Jorge anonymously.<\/span><\/li>\n
  4. Jorge gets his perfume on time. In the package, he will find a delivery note featuring the name and logo of Perfumer\u00eda Am\u00e9lie, but nothing that refers to BigBuy. He leaves a positive review for Perfumer\u00eda Am\u00e9lie and recommends it to his girlfriend and her family for buying future fragrances.<\/span><\/li>\n
  5. Marta has a satisfied new customer and her financial profit is the difference between BigBuy’s wholesale price and the RRP at which she sold Jorge the cologne.<\/span><\/li>\n<\/ol>\n

    A typical example of dropshipping with Bigbuy.<\/p>\n

    \"what<\/a><\/p>\n

    And voila! Marta can focus on attracting traffic and optimising her store to sell as much as possible. She doesn’t have to worry about storing, preparing, or shipping the product.<\/span><\/p>\n

    Here is a good way to explainwhat it is and how to do dropshipping in general terms. Even so, we\u2019ve compiled some of the most common questions that all beginner dropshippers have asked themselves at some point:<\/p>\n

    What do you need in order to do dropshipping?\u00a0<\/span><\/h3>\n

    To do dropshipping you only need two things:<\/span><\/p>\n

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    1. Have one of the dropshipping suppliers available.<\/li>\n
    2. To choose the sales platforms through which you are going to sell: your own e-commerce, marketplaces, social selling, etc. Of course, these channels must be synchronised with your supplier.<\/span><\/li>\n<\/ol>\n

      What’s the difference between dropshipping and affiliates?\u00a0<\/span><\/h3>\n

      Many people confuse dropshipping with affiliation, and while both are viable business models with some common ground, they have quite a few differences. While dropshipping is shipping method and depends 100% on you (even though you don’t need physical stock or a warehouse), affiliate marketing consists of promoting third-party products or services in exchange for a commission.<\/span><\/p>\n

      Dropshipping and e-commerce in UK<\/b><\/h2>\n

      The percentage of retail sales made online in the United Kingdom is estimated to increase to 30.6% by 2027. By 2027, the market is projected to reach a value of around $230 billion. These figures are according to data from eCommerce Insights<\/a> and The Evergreen Agency.<\/a><\/p>\n

      Obviously, this fact has not gone unnoticed by those looking for business opportunities, who have hurried to create online stores to meet the new needs of their potential customers. With greater or lesser success, thousands of e-commerce stores have been opened, which have found their place in the day-to-day lives of their users.<\/span><\/p>\n

      And although one of the main benefits of a dropshipping store is the huge reduction in fixed costs (as you don’t have to pay rent for premises, or water or electricity rates) there is one common problem for offline and online entrepreneurs: stock. If you want to sell, you need to store your products in order to prepare them for shipment and send them to your customers. This can impact on the costs of your online store and reduce its advantages relative to a physical store. But don’t worry: <\/span>this is where dropshipping comes in.<\/b><\/p>\n

      This is a good way to explain <\/span>what dropshipping is<\/b> and how it works<\/b> in general terms.\u00a0<\/span><\/p>\n

      Pros and main advantages of dropshipping<\/b><\/h2>\n

      Now we have explained <\/span>what dropshipping is<\/b>, we will briefly explain the main advantages of using dropshipping.<\/span><\/p>\n

      Low initial investment. <\/span><\/h3>\n

      Of course, <\/span>you save having to manage stock<\/b>. But this was already made clear in the above paragraphs. In any case, this fact entails significant economic savings (<\/span>reducing your risk of losses<\/b> in case the business fails). By not having to manage stock, you won’t have to invest in storage or maintenance. This is the main attraction of dropshipping: it allows you to dedicate yourself to selling and generating maximum profit without worrying about logistical aspects.<\/span><\/p>\n

      Start your business easily and quickly<\/span><\/h3>\n

      Starting your business is easier and faster than ever: it <\/b>will only cost you what it costs to set up your dropshipping store. If, in addition, you outsource its creation, you can have your e-commerce ready in a much shorter time frame than you might expect. At BigBuy, for example, we develop your Dropshipping Store<\/a> via a 360\u00ba turnkey solution, which is fully synchronised and offers a multitude of advanced tools to boost sales.\u00a0<\/span><\/p>\n

      No need for a physical warehouse<\/span><\/h3>\n

      Not having to worry about storage and shipping<\/span> leaves you plenty of time for what’s really important in an e-commerce: selling.<\/b> By delegating work to a dropshipping wholesaler, you will be able to devote yourself to attracting as much traffic as possible to your store, and then encouraging them to buy the products you have so carefully placed at their disposal. You will be able to optimally allocate your resources – both financial and in terms of time – so that your e-commerce reaches its full potential.<\/span><\/p>\n

      Easy shipping management<\/h3>\n

      Your supplier must become your global logistics operator, with everything that this implies. They must manage all the merchandise in stock, register the order, do the picking, prepare the package to be sent and coordinate with the respective courier companies for each area. At BigBuy, we also provide our distributors with all the information on the status of their orders on their control panel. They can track each one of them with their tracking number and receive post-sale support in case they have any questions about the delivery.<\/p>\n

      Wide range of products<\/span><\/h3>\n

      Using a dropshipping wholesaler <\/span>allows you to offer a very extensive catalogue of products,<\/b> which could prove complex if working alone. In addition, it will be constantly updated, without you having to worry about it. At BigBuy we have thousands of items and are constantly looking for new products to expand our catalogue.<\/a><\/span><\/p>\n

      100% scalable business<\/span><\/h3>\n

      Your business will be 100% scalable. <\/b>In a traditional shop, scalability can be limited by simple things like the size of your premises. In order to grow, the owner would have to look for a new space, with all the costs that this entails (and we are not just talking about rent. Should they change areas, they would also have to launch an advertising campaign to publicise their new location, and that does not come for free).<\/span>
      \n<\/span>And, although an e-commerce store that doesn’t use dropshipping is certainly more scalable than a physical one, <\/span>the real difference is felt by the brand which uses dropshipping<\/b>. This distribution model allows you to direct all the traffic you want to your store, without the risk of selling too much and not being able to manage everything. The dropshipping supplier will make sure that all your orders arrive on time and in your name.<\/span><\/p>\n

      \"Start<\/a><\/p>\n

      Potential cons and risks of dropshipping<\/h2>\n

      Despite the numerous advantages offered by the dropshipping business model, it’s important to recognize that it may also have certain limitations, drawbacks, or inconveniences, particularly depending on how you view your own business. Below, we outline some of these potential disadvantages, which, as mentioned, will depend on how you choose to run your business and in many cases may not pose an obstacle to achieving a successful online store.<\/p>\n

      Dependence on Your Supplier’s Inventory<\/h3>\n

      Dependence on your supplier’s inventory. It is clear that product availability is limited to what dropshipping suppliers have in stock, so it is important to have one that has a wide catalog of products and stock.<\/p>\n

      Lower Control Over Product Quality<\/h3>\n

      When you do dropshipping, unless you place a test order, the products are shipped directly to the final customer, so you don’t have the ability to inspect each product before it reaches its destination. To ensure this doesn’t affect customer satisfaction, it’s essential to work with a full-service supplier<\/a> like BigBuy, which complies with European guarantees and certifications. Additionally, if this supplier works with top brands, you can set this concern aside, knowing from the start that the products offered in your dropshipping store are of high quality.<\/p>\n

      Lower Profit Margins<\/h3>\n

      Since you have to pay your supplier for each item sold, profit margins may be lower compared to selling your own products. This is not a problem specific to dropshipping, as any online store can sell products not manufactured by them, but purchased from a supplier. To counteract this disadvantage, it’s important to implement a smart pricing strategy, where you seek products with higher profit margins. For this, it’s crucial to work with suppliers with a broad product catalog like BigBuy, where hundreds of thousands of references are at your disposal.<\/p>\n

      Order Delivery Issues<\/h3>\n

      One of the most common disadvantages associated with dropshipping is potential shipping issues. There may be delays or errors that are beyond your control and could affect the customer experience. This problem is often encountered when dropshipping from China, as you generally don’t have control over the shipping companies used, and you don’t have access to shipment tracking. With a supplier with European stock like BigBuy, you can monitor the customer’s order at all times and trust that the best shipping companies will be used for your orders, as we work with over 50 throughout Europe.<\/p>\n

      \u00a0Best selling dropshipping products<\/b><\/h2>\n

      If you are just starting out in dropshipping, it is normal to worry about what products to sell, the market trends and opportunities, etc. The best thing is to begin with a market study of possible niches and trending products and attempt to find a balance between both. If you don’t know where to start, here’s <\/span>how to pick a niche to get started with dropshipping<\/span><\/a>.<\/span><\/p>\n

      To give you an idea, some relevant niches in dropshipping today are:\u00a0<\/span><\/p>\n