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What is dropshipping business?
Dropshipping is a method used in retail business in which an e-commerce owner does not possess the inventory for products. They instead ship their products from a wholesaler as and when the demand rises. The order is delivered directly from the storage unit of the wholesaler.
It is stated that dropshipping is often a safe option for entrepreneurs as it is a very cost-effective tool. As the entrepreneur is only beginning with the business, it might be difficult for one to handle all the stocks and inventory by oneself.
One might not have a deep insight into the working of the market, and thus, can’t predict the demand accurately. Thus, dropshipping is recommended.
How is the dropshipping business in India?
Dropshipping in India functions the same way as it works in the remaining parts of the world. Due to India’s unique geographical setting, it might be easier for dropshippers to gain more profit.
Even international goods can easily be transported through this mode. While there are certain legal precautions to be noticed, a drop shipper in India might be able to make profitable revenue with their business in India. There are also business loans available for financial needs.
How to start a dropshipping business in India?
Starting a dropshipping business in India demands a lot of deep research and study regarding the market. After the initial research process, the following steps will guide the process of starting a dropshipping business in India:
Select a dropshipping idea
It is important to finalize a unique product or service first to dropship a product that can have demand in India. Some patterns suggest that most of the successful dropshipping companies are those that have not worked with the mainstream media but instead with a particular niche. They have worked on a deeper level to find their unique idea.
The advantage that drop shipping offers is that it will easily offer flexibility in checking out new products to sell. Based on its performance in the market, the service can be changed or dropped.
There is no pressure of being committed to a single product that might not sell or be profitable. There are guaranteed products that might earn profit.
Only with the trial and error method can the perfect product be finalized. There is also a lot of financial support available in the form of loan for MSME.
Find the right supplier
Dropshipping is not the preferred mode of business. Thus, there arises a need to ensure that the right suppliers are selected to partner with. A Google search will aid in this process. Based on the selected niche, the supplier can be chosen and collaborated with.
The process of selecting a supplier can also be done using specialized platforms like Oberlo, Printrove, etc. But before selecting the supplier, ensure that they manufacture the product and that they are not 3rd party intruders and are committed to punctual delivery.
This is an important step as if the product supplied doesn’t meet the customer’s expectations, you might have to answer them.
Settle financial and legal sectors
Before venturing into the business, remember to register it as a sole proprietorship or Pvt. Ltd. In India, there are the following steps to be taken care of:
- GST Number registration
- Starting a current account
- Import and Export code
Make sure an experienced lawyer offers their advice and support to the firm so that there are no legal complications in the future. Along with it, ensure that the MSME registration is done right.
Create promotion
It is important to market the company so that desired sellers might get in contact. Despite having a remarkable service, many businesses have failed to earn profit. It is mainly due to their lack of marketing and exposure. To avoid such a situation, it is necessary that the business is highly marketed and promoted.
There are numerous latest features to promote a brand online such as Google Ads, Facebook Ads, or IG Ads. These online advertisement campaigns offer high brand promotion and recognition. Influencer marketing is also one of the highly used marketing tactics in the current age.
Build a social presence
In today’s world, a customer undertakes thorough research regarding a seller before beginning to place their order. This research is often through online mode, and thus, a strong social presence is highly demanded of any business.
Most social media services are free of cost, so create engaging content relating to the service and post freely on social media handles. It will offer a bright and positive image regarding the business.
An active social presence will also make it easier for prospective sellers to contact the business. It is one of the important tools to use in the current business world.
How to manage dropshipping costs?
Once the dropshipping business is planned and ready to commence, the most common question is related to the cost incurred during the process. The most common cost in this business is that of shipping.
Offering free shipping can be a great attraction tool in the initial phase, but the shipping cost must be added later. Some of the means to add the shipping cost are:
- Including it in the MRP, so the customer pays for it completely. Most online shopping options have their delivery cost added to the total bill.
- It can also be added separately based on the location to be delivered and mentioned in a separate column.
- Having a fluctuating shipping cost based on the product demand will also increase revenue for the firm.
Dropshipping is a viable business idea in India as many customers have opted for online shopping. Not many sellers might have the facilities to deliver their products to all their customers. Thus, Dropshipping business in India can be expected to grow.
There are many business loans and specialized loans for MSME in the market for support. For more information regarding a business loan for MSME or MSMSE registration, contact Ziploan at 011 – 4310 – 9577 or mail to customer.care@ziploan.com.
Frequently Asked Questions
Dropshipping is a retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product using the dropshipping model, it purchases the item from a third party and has it shipped directly to the customer.
Yes, dropshipping can be profitable to merchants. Dropshipping is a low-risk business model that allows you to sell products to your customers without incurring huge running costs like a wholesaler would have.
Yes, dropshipping is legal. It’s a legitimate order fulfillment method that thousands of business owners use worldwide. However, you need to be careful not to do business with fishy suppliers who illegally use another company’s intellectual property.
On average dropshippers make between 20% and 30% from each sale. This works out to be between $1,000 and $5,000 per month. The remaining money goes to purchasing the product from the supplier, dropshipping fees, paying to host dropshipping websites, and marketing.
Successful dropshippers estimate that the dropshipping business with the highest success rate is around 10 percent during the first year of operations.
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