Updated: 4/05/2022
According to resources, the Drop-shipping business model is rising around the world and will be going to become a $550 Billion industry by the year 2025 with a growth rate of 28%.
Individuals and Entrepreneurs from around the world are starting dropshipping business as it involves low cost and also saves time.
“All you have in your business is your reputation, so it’s very important that you keep your words.“
Richard Branson(Founder of Virgin Group)
Dropshipping Business Model Explained with Examples
The drop-shipping business model consists of 3 main players:
1- Supplier or Wholesaler/Manufacturer: Take care of inventory, packaging, and shipping along with other things like a replacement, etc.
2- Retailer: Display and market the product on the website at their own customized pricing.
3- Customer: Place the order and receive it without knowing about the supplier.
What are the Advantage and Disadvantage for Dropshipping business model?
Advantages of Drop-shipping business model
- Customized pricing
- Marketing in own term
- Inventory management by the supplier
- Easy to Start & cost is low
- Scalability(Increase & decrease) without loss
- Expand business globally
- Reduce the risk of investment
Disadvantages of a drop-shipping business model
- Less margin
- Ownership overstock
- Errors like wrong packaging
- Shipping timings
- Product availability
Example
Zappos is the ultimate story of a successful drop-shipping business company or model which is now acquired by Amazon.
“Your most unhappy customers are your greatest source of learning.“
Bill Gates(Founder of Microsoft)
FAQ
1- What is the average profit of a drop-shipping business?
It relies upon the product and supplier margin cost.
2- Is there any problem faced by the drop-shipping business at the initial stage?
With a number of resources and tools present out there, no major problem faced by the business.
3- How to get and upload the products from the supplier?
Depends upon the platform through which you are connected with a supplier.
4- Start up cost of a drop-shipping website?
Less then $100
5- What services do you(USA Business) provide?
Complete online store development that includes supplier | product | shipping and payment gateway integration.
6- How to generate leads or drive customers to my website?
Through different marketing channels such as Google Adwords | Social Media Marketing | Search Engine Optimization.
Useful resources