A dropship business is one wherein an e-commerce store peddles items without ever having possession of them. Instead of on-hand actual goods, a store takes order(s) from an interested customer, and then has to procure the item from a company or wholesaler or manufacturer only after acquiring an order from the customer. After such a purchase, a supplier directly ships the item to that customer, thus eliminating the need for an owner/store to possess such an item or even handle its fulfillment.
So the store-keeper means just an intermediary in such a model-type business. Whenever any order is placed by the customer, that storekeeper purchases that very item from the supplier and then asks the supplier to ship it to the customer. It allows the business owner to run their online store without investing into keeping any kind of stock or dealing with shipping logistics.
However, the big difference is between dropshipping and reselling. Reselling means buying products and then selling them. In case of dropshipping, the supplier will have a mutual agreement because, with most cases of dropshipping, a contract presents between both parties to streamline the entire process of product sourcing and fulfillment. You're likely to face the downside of disrupted product relevancy in terms of supply, delayed shipping, and inconsistent quality if you go on buying only from the supplier after a sale without any formal contract.
Dropshipping has its own challenges, low startup costs, flexibility, and lower margins; as profit margins depend entirely on third-party suppliers and competition in the market. Weak partnerships with suppliers can also make things worse with shipping delays and issues related to quality.
To summarize, dropshipping is the easiest way to begin a business without investing significantly upfront; supplier management can cause problems if proper sessions are not held to explain their duties in meeting customers' satisfaction. Without formal arrangements with suppliers, it may be challenging to maintain quality service and reliability.
As the supplier, you will specify which of your products are available for dropshipping. You will also outline any specific conditions or requirements for these products. This includes information on product availability, shipping terms, and any additional preferences you may have. We can discuss any adjustments to these terms as needed.
In this step, we will agree on the desired domain name (if you have a preference), as well as any special design requirements or branding preferences for the website. You can provide input on the overall look and feel, functionality, and any specific features you’d like the site to have. If you have additional specifications for the site’s operation, we will incorporate those into the development plan.
Pricing for the products on the website will be determined through a transparent agreement, where the final price on the website will be calculated as follows:
Price on the website = Supplier's base price + markup + hosting fee + commission
The markup structure is as follows:
The commission ranges from 0.1% to 3% + $0.30 per transaction, depending on the payment method. The hosting fee is set at $2.50 per month.
In this step, we will sign several agreements to formalize our collaboration:
Website development and hosting setup typically takes 1 to 7 days, depending on the complexity of the design and features required. We will ensure the website is fully functional and ready for customer orders.
Once everything is set up, we will move into full cooperation mode. When a customer places an order, the details of the order, including the payment, will be forwarded directly to the supplier (you). As the supplier, you will be responsible for shipping the product directly to the customer. Payment will be processed through an agreed-upon method or, if necessary, we will manually place the order with you and provide all the required details.
In case of any issues, such as wrong shipments, product defects, or any other problems, we will immediately contact you to resolve the matter with the customer together.