To give you an idea of how big ecommerce is today, consider this: online shopping is now a multi trillion-dollar industry. Experts project global online sales to jump from 2.8 trillion in 2018 to 4.8 trillion in 2021. That’s right: trillions of dollars.

In fact, 22% of all global retail today is attributed to ecommerce, and Statista has reported that an estimated 1.8 billion people worldwide purchase goods online—and that was just in 2018.  

So there’s no wonder that a lot of entrepreneurs are setting up their own online stores to get in on the dropshipping action.

What is dropshipping?

Dropshipping is a relatively new way of running an ecommerce business.

• You don’t actually keep the products you sell in stock.

• Instead, you (the vendor) purchase the goods from a third party, then those goods get shipped directly to your customer, hence, the name “dropshipping”.
• So you (the vendor) don’t really handle the products yourself. Your supplier fulfills those orders for you.

By getting products from a cheaper source – this is usually from manufacturers in China – then selling it elsewhere –typically in the United States, Canada, the United Kingdom, Australia, or pretty much anywhere where you can make a profit – you make money as a middleman.

For those looking to be an online entrepreneur, taking a dive into ecommerce might be intimidating. But dropshipping is actually a great business model. Here’s why:

What are the advantages of dropshipping?

For consumers, dropshipping is just like regular online shopping, but with a few added benefits: 

• A wider selection of products. Dropshipping allows access to everything from more high-quality items to more generic variants of the same product, giving consumers more choices when it comes to goods.
• Extremely convenient. Purchases can be made from mobile apps, which can also process payments (and eliminating the need for actual money to change hands). 
• Goods are delivered straight to their homes. So no need to head out to the store to make certain purchases.

For those looking to start an ecommerce business, here are the main reasons why a lot of online store owners have decided to take the dropshipping route:

• Low barrier of entry. No need to learn any fancy new tech skills or a degree to get started.
• Little start-up cost. As far as capital goes, you’ll probably need to at least cover the cost of getting your dedicated, self-hosted website up and running, maybe a decent online dropshipping course, and a steady internet connection.
• No inventory management or logistic arrangements required. You don’t need a warehouse to store goods, nor would you need an office for face-to-face transactions. Goods are shipped out straight from the manufacturer to wherever they are.
• All business is done via your website. Customers place their orders and pay for them, all straight out of your online store.
• Scale your operations easily. When you’re ready to grow a bit more, you can easily hire top-notch talent from around the world by outsourcing the work to freelancers.
• Run everything remotely. Whether you choose to do it from home, on a beach, or on holiday, for as long as you’re connected and have access to your online store, everything can run smoothly.

Thanks to a variety of new tools and services at your disposal – various payment gateways, easy-to-build e-commerce websites, on-demand logistics services – anyone with the grit and determination to get a dropshipping operation going can carve out a small niche online and see some steady cash flowing in.

Cool. Now, How Does Dropshipping Work?

Here’s a quick overview of what happens in dropshipping.

First, it starts with an online store. Stores can be built via  Shopify, via WordPress (using the WooCommerce platform), or Magento. 

Online stores list a variety of products. Note that for many (if not most) dropshipping businesses, finding the right product (or mix of products) is a closely guarded secret!

Visitors can interact with your online store directly, or via shopping apps (such as Amazon, AliExpress, Zalora, Lazada, and others).

The store automatically sends an order to its dropshipping supplier whenever a customer places an order. The supplier then prepares that customer’s order and ships it out directly to the address provided.

What are the downsides of dropshipping?

Just like anything else, dropshipping has its own downsides.

For consumers, sometimes there might be issues with the items ordered. This can be anything from missing or wrong items delivered, shipment issues, problems with packing and packaging, or just low-quality goods. 

When problems like these happen, the store owners will have to take responsibility for these lapses, which is why finding the most reliable suppliers around is important.

What do I need to keep in mind if I want to start a successful dropshipping business?

First off, a word of warning: there is no shortage of dropshipping “gurus” out there who paints an overly rosy picture just to sell their own programs. It’s a predatory practice that preys on folks overly eager to see results quickly.

Second: venturing into dropshipping like any other business. This means there are risks involved, and you have to put in the work to make things happen.

Third: when you think you’re getting overwhelmed by all the work, you can easily scale your operations if you need to by hiring some freelancers to help out.

Lastly: it’s a competitive space, so expect to work doubly hard to stand out. Other vendors will be slashing their profit margins just to stay competitive. Apart from doing a great deal of marketing and promotions, you’ll need to differentiate yourself somehow to carve out your own niche in the marketplace.

So to sum up our reality check on dropshipping as a business, as long as you…

• understand the risks involved in dropshipping (just like any other business venture),
• know you’ll have to work hard and work smart,
• don’t go in blindly with unrealistic expectations or misguided beliefs that you’ll be rolling in trucks full of cash anytime soon,  

…then you should be just fine. 

Where Can I Learn More About Dropshipping?

If you want to learn more about dropshipping, you’ll find quite a lot of resources online. Sifting through them all will be a challenge, so here are some of our best recommendations:

• Our personal favorites are Oberlo’s repository of free ebooks, as well as AliExpress’s own library of helpful guides. 

• Meanwhile, Shopify has a fairly comprehensive online guide, 

• You can also check out Reddit for online communities on dropshipping such as the subreddits Shopify, SmartDropshipping, and Dropship.

• And if all those simply don’t float your boat, there’s always Udemy and Lynda.com for a whole bunch of dropshipping courses to get you started.

A Final Word About Dropshipping  

Dropshipping might seem to be a fad to a few, but for many others who are already doing well online, it’s a real opportunity to make some money in the age of ecommerce.

Just like any business venture, do your homework to find out if this is truly something you’d want to do. There are certainly risks involved, and it’s going to require your full attention, especially in the early stages when you’re building your brand and your business.