Dropshipping is a widely used sales system for selling and trading products over the web.

Generally, those who intend to start a commercial activity by investing a reduced capital, place the management of logistics on their suppliers, thus reducing warehouse and shipping costs. Basically, the product purchased by the end user, instead of passing through the retailer, will start directly from the supplier's headquarters, thus reducing, even if partially, the shipping costs.

But let's see in detail how dropshipping works.

How dropshipping exactly works

It must first of all be said that the dropshipping system is applicable to e-commerce sales methods, therefore, it is not compatible with the traditional sales system, that is, by physical stores that sell at retail, which must always have the goods requested by customers. available and ready for delivery.

With dropshipping we mean, therefore, the reselling of a product that must be ordered: the end customer wants to buy an item, enters the seller's website and orders it; the latter requests it from its supplier, who will ship the order directly to the end customer's address, without the product passing through the seller's shop.

The seller who applies this method of sale obtains a rather substantial advantage, given by the fact that he does not have to have a storage warehouse for the products processed by his shop and the costs related to its management, without neglecting the fact that in this way the risk relating to inventories.

In summary, the products sold are not actually owned by the seller but are offered to end users, so the merchant becomes the intermediary between customer and supplier.

To ensure that this system works without any problem, it is important that at its base there are solid commercial agreements between seller and supplier, in order to guarantee a mutual benefit to both figures.

What are the costs incurred by those who carry out an e-commerce activity

The costs for opening an online store, following the dropshipping method, are quite low, some are constantly supported even by those who do not manage an online product store, while others are specific to this activity. Below we limit ourselves to briefly listing what are the main expenses that the owner of an e-commerce site must face.

Internet domain

As with physical stores, an online store also needs a showcase: for the first it is a place located in a street of the city, for the second we are talking about an internet page. To open an online store it is essential to have a domain (web address) that leads users back to the store's internet page.

Realization of the showcase

The products that will be sold through an internet page are not sufficient on their own to attract customers, to make this happen it is therefore advisable to set up the showcase in such a way as to attract as many customers as possible.

Just like in a physical store, if the window is well organized and arranged, customers will be more enticed to visit the interior of the store.

Same thing goes for an e-commerce site, which should be built by professionals in the sector.

PrestaShop and Dropshipping

PrestaShop is a very valid solution for dropshipping sales activities, the high scalability of the CMS allows you to adapt to every need both as suppliers and resellers.

The market

What are customers looking for and what does the market offer? These two questions must find precise answers, since it is only through a careful analysis of the market that a winning e-commerce can be created.

This means that it may be necessary to consult a professional who can direct the retailer to the right products and suppliers.

Marketing

Advertising, or marketing campaigns, are also important for online stores, especially since there can be an infinite number of retailers of the same items online. A correct and interesting marketing campaign allows you to reach many units of possible customers, subjects who did not know of the knowledge of this site or who for different reasons were not encouraged to visit the site. Therefore, a marketing campaign carried out by professionals could improve the visibility of the site.

Advantages of dropshipping

The first advantage deriving from the application of the dropshipping system is that of the initial capital and the future costs to be incurred for the opening and management of an online business.

An e-commerce, in fact, can be structured with a low cost system thanks mainly to the computerization of the sales network.

This sales methodology is even recognized internationally and is used even by the largest online sales platforms.

The main advantage is, as is evident, above all that of the minimum costs to be incurred for the opening of the virtual shop, including those related to the opening of the internet page, the e-commerce showcase of the virtual shop.

While no outlay will be required for the management of the warehouse, as this will not come into existence, as the main retailer will make use of the supplier's warehouse with which he will sign a commercial agreement, within which it will be agreed that the latter will be paid only following the sale of the product ordered.

Through this method, therefore, those who intend to start an e-commerce business will not risk either getting into debt due to advance payments for pre-ordered goods, or having to manage unsold products.

In any case, the advantage is not only economic, but also of time.

Those who manage a shop, in addition to the collection and fulfillment of orders, must also take care of the logistics and updating of the warehouse.

With the dropshipping system, the activity that the seller will have to carry out will mainly concern the management of orders, without having to deal with the shipment of the items to the customer's home.

The main seller will make the packing and shipping operations of the ordered goods fall to the supplier. In this way it will be the supplier who will have to bear the management of the shipment of the product directly to the customer's home and the updating of the loading and unloading of items from the warehouse, as well as having to keep the inventory book up to date.

This is why the figure of the main seller is transferred to intermediation activities between the demand of the final customer and the offer proposed by the supplier.

For the seller (owner of the e-commerce), the peculiarity of this sales system, in addition to that of the low economic risk, is to be able to expand its customers worldwide, as well as having customers all over the world, the reseller will be able to choose which suppliers to contact for the purchase of products sold through its e-commerce site.

The further advantage in managing an online sales site is related to tax management, which does not require the issuance of tax receipts.

The benefits do not only concern the retailers, that is color who manage the online stores, but also the suppliers who, through the signing of commercial agreements, in addition to having guaranteed customers, can use the sales system of others to sponsor the brand of the company for free. their company.

In fact, the main seller, who acts as an intermediary, will have as main objective that of the sale of the products treated, consequently he will have to adopt marketing campaigns that induce the final customer to buy a certain product, which consequently will give visibility to the producer and to the supplier of that item.

But that is not all.

The final customer will also be benefited by the dropshipping sales system since he will have the opportunity to search for his product among the many items that the seller will have carefully chosen among the various proposals that the market offers at that precise moment, thus placing him in the condition of not having to do autonomous, boring and prolonged searches for the best product.

Disadvantages of Dropshipping

As is normal, in the various situations that life brings us to live, there are also disadvantages: let's see what those can be related to dropshipping.

The first difficulty that can be encountered during the e-commerce activity developed with the dropshipping method is that relating to the identification of suppliers who can be considered reliable , both from the point of view of the quality of their products, and from the point of view of professional reliability. , in order not to have to deal with orders managed incorrectly and not on time, so as not to risk marketing and advertising products that do not offer the qualities actually possessed.

Delivery times , the supplier must guarantee fast delivery times, the customer today will not wait tens of days to receive the ordered products, today he is used to receiving the goods already the day after the order. The care and delivery times are the first problems that are encountered even in traditional ecommerce that fail to emerge.

If you are thinking of receiving prepaid orders and then delivering to China with a single order, or something similar, desist, not only is it prohibited by the consumer code *, but today there is also Alibaba and AliExpress .

*) unless you communicate it clearly, but you would not sell anything.

Availability of products , the supplier must have large quantities of the products you resell in stock, it will be difficult for you to have a synchronization of the quantities almost in real time, in most cases you will be able to synchronize this data once a day. To avoid getting a bad reputation, it is important to avoid as much as possible that the customer orders a product that is not available, and if it happens, be quick in the refund or alternative solution to propose.

Withdrawal Policy and lack of conformity , it is a point to be clarified immediately with the supplier, what happens if your customer decides to make use of these rights? Your relationship with the supplier is of the B2B type, therefore without these protections, therefore with the supplier contractually you must have the possibility to return the products that customers make using the right of withdrawal.

SEO problems : it is not easy to emerge without investments in marketing, the price list that is loaded in most cases is supplied by the supplier, this translates into names and descriptions of the products identical to thousands of other sellers, consequently we cannot count on indexing SEO by search engines.

Unless the insertion of the products is done manually or manually edited by inserting original descriptions, for Google we will be just one said many duplicate pages, not worthy of presence in the SERP.

Another disadvantage if it can be defined as such is that of the negligible gain, at least initially.

Although the management costs are not high, the earnings appear, initially, rather low, to explain the reason it is good to give a small example.

If customer X requests a certain product from seller Y, this is placed in order by supplier Z, who will ship the item directly to X's home address.

X (customer) will pay Y (seller) the sum corresponding to the price of the ordered item; from this sum Y (seller) will have to separate the cost of the service offered by Z (supplier).

This means that seller Y will only be left with the difference between the sale price (to customer X) and the purchase price (via supplier Z).

So, if the product purchased from X costs 100 euros and Y (seller) has bought it, in turn from (Z) to 80 euros, the seller will only have 20 euros left in the cashier.

Seller Y from these 20 euros will then have to pay the additional management costs: electricity for the operation of the devices used to carry out the e-commerce activity; payment of the fee for the website, etc.

This means that for the management of an e-commerce site, even if the costs are really low, it will be necessary to engage in marketing activities so that the number of customers who rely on this site is always higher, thus allowing the economic coverage of all expenses, albeit minimal, for the optimal management of the activity.

To conclude, the further negative aspect that can derive from the dropshipping system is that linked to computer fraud.

It is not impossible that malicious subjects, as sellers, can withhold the consideration paid by a customer in good faith, who will never see his order processed.

A few years ago, when the internet was not yet widely used for shopping, some subjects pretended to be resellers by offering products at very competitive prices, thus attracting various unsuspecting customers into their network, who believed they were saving on the purchase of a product. offered at a low cost due to the absence of the classic costs that weigh on physical stores.

The unsuspecting customers ordered the chosen item, in advance of a sum of money, for a product that would never be placed in order, therefore it would never reach the user's home.

Thus the fake seller withheld the sum paid by the customer without ever forwarding to him what he would have ordered.

Reliability and dropshipper

The Internet is a wonderful tool capable of offering a solution for any doubts that the user arises.

On the web it is possible to find, within the online communities, lists of dropshippers accompanied by reviews, which compare the different e-commerce sites that carry out their business through this system.

Although there is no official register of dropshippers, thanks to the reviews released by users, it is possible to avoid unreliable retailers who are unable to satisfy user requests.

Author: Loris Modena

SENIOR DEVELOPER

For Ind Loris Modena , owner of Arte e Informatica , he began working in the IT sector in 1989 as a system engineer in charge of the maintenance and installation of IT systems. He started programming for the web in 1997 dealing with CGI programming in PERL and then moving on to programming in PHP and JavaScript. In this period he approaches the Open source world and the management of Linux servers.

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