Wed, 01 Dec 2021

What is dropshipping-

iCrowd Newswire
19 Oct 2021, 07:04 GMT+10

Dropshipping is a business model in which a retailer sells the product directly to the customer by purchasing from the wholesaler without owning any stock. This means that in the dropshipping model, the retailer only acts as the middleman or transit through which goods can reach consumers directly from their production source. A dropshipping retailer purchases stock or inventory from the wholesaler as per customer demand.

What Do You Need to Know About Dropshipping?

Dropshipping basically increases the number of transactions related to a product by acting as a middleman. If you've heard about the Keynesian Multiplier Effect in economics, you would know that increasing the number of transactions for one item in the economic market essentially multiplies the value generated by it. The dropshipping model can be considered a manifestation of Keynes' Multiplier Theory and is therefore highly profitable.

Key statistics indicate that e-commerce retailers who earn through dropshipping are 50% more profit than traditional store retailers. Not only this, manufacturers taking part in dropshipping models were 18.33% more profitable than those who did not.

Nearly 33% of online stores participate in the dropshipping model. And 27% of online retailers see dropshipping as a more profitable alternative to traditional in-store retailing.

How does dropshipping work?

After the customer places their order from any online store through a dropshipping software, the software scans among a wide range of suppliers to find the best match for your price. The customer's order is then forwarded to the dropshipping supplier by the software who directly ships the product.

Essentially, as the supplier or manufacturer receives the order from the software, the dropshipper gets a discount on the price. However, the item is sold at its original retail price to the customer-the dropshipper profits from this difference.

For example, if the customer is paying the retail price of $100 for a product and the dropshipper, upon forwarding the product to the manufacturer, pays the wholesale price of $50, the remaining $50 will be the dropshipper's profit, use a dropshipping software that has a robust product scanner to find you the most profitable items to list, order and sell. And all of this, the software does automatically without requiring any extra effort from you. You just need to list your product with a single click, and all the product variations will be added automatically by WalletMonitor. You won't even be required to include product images and put wordy descriptions as WalletMonitor automated system does all of this for you.

WalletMonitor's Amazon dropshipping software even lets you sell high-margin items from Amazon by listing them on websites like eBay and Aliexpress. Set the prices as per the software's programmable rule and earn a good profit by selling items on these websites at a higher price. Dropshipping retailers contribute to around 34% of Amazon sales.

Why should you choose dropshipping?

If you're looking to start your own business, dropshipping is the perfect way to begin. Here's why:

Start with a small investment

At the onset, the dropshipping business does not demand a large capital from you. You can start with a decent amount you're comfortable with, as this business model does not require you to purchase or maintain inventory.

Lower risk

With the dropshipping business model, you only need to make place orders for items that have already been paid for by the customer. So there is practically no risk of drop shippers losing out on their money. Additionally, you won't be faced with the burden of having to sell all your stock as dropshipping does not require you to hold any stock. You just collect orders, place them and ensure that they are delivered.

Negligible overhead expenses

Unlike in a traditional retail business, if you go for dropship retailing, you won't be needing to invest in keeping and maintaining inventory in a warehouse or store, shipping, packaging and delivery of products, labor and transportation costs, managing stocks, or handling returns and exchange processes.


You can run your dropshipping business from anywhere around the world. All you need is a laptop or PC and a working internet connection. You will only need to hire more people and set up an entire office space once your business starts growing. Most dropshipping businesses start from homes.

Don't sell specific products

Dropshipping does not require you to commit to re-selling any specific kind of product unless that is what you choose to do. With the dropshipping business, you have the liberty to explore markets for different kinds of products and makemake informed decisions as to what you want to sell.

In short, dropshipping basically means running a retail business without having to take the headache of a retail businessman.

Some quick dropshipping tips

Although the dropshipping business seems easy and lucrative, there are quite several challenges that you may face while setting up your dropshipping store:

  • Dropshipping businesses start with profiting over a minimal margin. So it will take you quite some time to get to the level of profit rates that the dropshipping industry boasts of. Throughout this process, you must be extremely patient and consistent as this is a kind of business that builds over time.
  • Dropshipping businesses have very little exposure in terms of brand development and visibility. Since you will only be acting as a channel for the transaction, it will barely add any value to your brand name. Your best bet is advertising through search engine marketing, social media and mobile apps.
  • Since the dropshipping business does not involve holding stock, it is often hard to keep track of items that go out of stock when orders are placed. To deal with this logistical nightmare, you can choose an automated dropshipping software like WalletMonitor that lets you unlist an item the moment it goes out of stock.

How to start?

Start with creating a website for your store with proper themes and interface. Choose a catchy domain name for your store. List out products that you want to sell on your website. It is always a good idea to start with products that are always high in demand. This will boost your confidence once sales begin. Set aside a budget to advertise your website online.

WalletMonitor offers various plans that you can choose from if you want to start small with dropshipping. Click here to check them out -

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