Dropshipping is a business model in which the seller does not need to store the products in its facilities, or have a certain stock, since all the logistics management is handled by the wholesaler, also known as “dropshipper”.
This process involves 3 players: the customer, the seller and the wholesaler, and has given rise to a type of business that is very common in many E-commerce websites. The main reasons why dropshipping has become such an interesting business model are:
- Requires little investment,
- Distribution and warehousing costs are avoided.
- Allows you to sell to any corner of the world
What should you consider before setting up a dropshipping business?
- Clearly state each point of the contract with your suppliers to avoid confusion or misunderstandings.
- Get as much information from the company that supplies you with the items you can and study the profitability of the product you want to sell, the demand and the saturation of the market.
- Pay special attention to delivery times, scope of distribution, return and exchange policy and logistics management costs.
- Make sure that the products in your producer supplier’s catalog will not have any problems with customs controls, such as the payment of additional fees.
- Try to work with several suppliers as the success of your business depends on your relationship with wholesalers and dropshipping suppliers.
- Create a community around your store. Invest in SEO and social media strategies and create a blog with quality and interesting posts related to ecommerce content.
- Prepare a preliminary market analysis, a strategy and an action plan. Just because it’s a ‘cheap’ investment, don’t afford to take a risk.
- Think about how you will attract your customers and whether you have the means to do so.
- Negotiate directly with manufacturers or official distributors, so you can agree on the percentage of profit you will make on each item.
- Agree on deadlines with your dropshipping suppliers; there is nothing more annoying than losing customers due to missed deadlines.
This mode of intermediation, taking advantage of the development of online commerce, is an increasingly widespread trend in Spain, consolidating itself as a very attractive business channel. If you are thinking of embarking on the dropshipping adventure at MingTa we will help you to achieve success in this format for your online project.
