What is dropshipping? Dropshipping review

Origin

With drop shipping, sellers don’t need to invest a lot of money to build a warehouse. As long as they have an Internet connection and a tax number, they can sell products. And because sellers don’t purchase product inventory before selling the product, they don’t have to worry about unsalable inventory, price cuts, or shipping steps due to capital constraints.

1. The customer places an order and pays, and both the seller and the buyer receive order confirmation information.

2. The seller sends the order information to the supplier, who will charge the wholesale price for the product.

3. The supplier (or consignor) processes the order and ships the goods to the customer.

4. The drop shipper will provide the seller with an invoice and tracking number, which the seller will forward to the customer.

Return steps for dropshipping

1. The customer contacts the seller and requests a return

2. The seller asks the supplier to provide an RMA (Return Material Authorization) code

3. The customer returns the product to the supplier, and the address bar is marked with the RMA code

4. Retailers refund the payment for wholesale products to sellers

5. The seller gives the customer a full refund

Advantages of dropshipping

1. Rapid scalability and more product options

2. Save time and not be restricted by location: When you receive an order, you can deliver it to the supplier through the computer for processing. You do not need to pack and ship the goods yourself, you only need to monitor the fulfillment of the order.

3. Reduce investment and lower costs: Before you know whether the goods can be sold successfully, you don’t need to purchase a large amount of inventory first. Therefore, you don’t need too much capital when starting up and the cost is relatively low.

4. Increase repurchase rate

Dropshipping Defects

1. The accuracy of the delivery date cannot be guaranteed: You cannot update the supplier's inventory status in real time, and you cannot know whether the supplier can ship the goods smoothly after the order is placed, whether the product packaging is firm, whether there are any defects, whether you can choose the logistics yourself, etc.

2. Small profit margin: You invest a lot of advertising costs to get orders, but the profit of the orders may not be enough to cover the advertising costs. Low profit means that you have to pass a lot of orders to get a good profit.

3. Unable to ensure product quality

4. Need to deal with subsequent after-sales issues

Dropshipping platform

Large platforms: JD.com, Cainiao, Suning. Relying on the platform to establish their own warehousing and logistics.

Medium to third-party warehousing: FaNet, KeJie, Geek. Relying on the national cloud warehouse and its own strength to establish warehousing and shipping services.

Small to local warehousing: Songsong, Yanghe, Kuaida. Only have warehouses locally and provide warehousing and shipping services.

During big sales, the delivery capacity and automation level are: large > medium > small.

References

• 1. How to start the simplest cross-border e-commerce with Dropshipping: Baijiahao [reference date 2018-01-14T16:00:00.000Z]