Dropshipping is a business model that allows entrepreneurs to start an online business and sell products to their customers without ever actually stocking the items themselves.
But dropshipping isn’t a new business model.
Huge companies like Amazon, Sears, and Zappos have all used this business model for a while in their early years.
And it isn’t just the big companies who use dropshipping to start an online business – an estimated 33% of the entire ecommerce industry uses dropshipping as their primary inventory management model.
Dropshipping is a model which has some very clear advantages, like not carrying an inventory, which allows entrepreneurs to concentrate more on important things like bringing in new customers and scaling their businesses.
Want to know exactly why dropshipping is adopted by such a large portion of businesses across the globe? In this article we’ll do a deep dive on what dropshipping is, why AliExpress dropshipping is so popular, and why you should care about this business model if you’re interested in starting your own ecommerce store.
Ready? Let’s dive in.
- What Is Dropshipping?: How Dropshipping Works
- Benefits of Dropshipping
- What Is Dropshipping?: How to Start a Dropshipping Business
- 1.How to Start a Dropship Business: Can You Dropship Products Easily?
- 2. Will My Customers Know If I’m Dropshipping
- 3. Why Should Someone Buy From My Store Instead of the Supplier?
- 4. Shipping Takes Too Long With AliExpress Dropshipping, Will My Customers Wait?
- 5. What About Quality Risk and Copyright Infringements?
- 6. Do Dropshipping Suppliers Speak English?
- 7. Is AliExpress Dropshipping Favored by PayPal?
- 8. How Can an Established Business Benefit From Dropshipping?
- 9. How Does AliExpress Work?
What Is Dropshipping?: How Dropshipping Works
At this point you might be asking yourself, how does dropshipping work?
Maybe you’ve heard the term before, or maybe it’s your first time hearing the concept – don’t worry, it’s simple to understand regardless.
Essentially, dropshipping is a business model that allows entrepreneurs to start an ecommerce store without every stocking inventory – dropshipping entrepreneurs will have suppliers who store their products in their warehouses until they make a sale.
Whenever dropshipping entrepreneurs make a sale they’ll need to contact their supplier, who will then ship their products directly to their customers doorstep.
Benefits of Dropshipping
Dropshipping is a business model which offers entrepreneurs a bunch of advantages, especially when they’re looking to start an online business.
- You control your margins – you aren’t bound to a suggested retail price (MSRP) and you can decide your retail prices on your own.
- You don’t need to be an established business entity before getting started with your store (although you will need one as you grow.)
- You have access to a catalogue of millions of products that you can add to your store through Oberlo using AliExpress dropshipping.
What Is Dropshipping?: How to Start a Dropshipping Business
1.How to Start a Dropship Business: Can You Dropship Products Easily?
Yes, you can easily dropship thanks to tools like Oberlo. Oberlo is an essential tool if you’re looking to start an ecommerce store using the dropshipping business model.
2. Will My Customers Know If I’m Dropshipping
We can’t make any guarantees about this. If you’re using AliExpress dropshipping to run your business, we recommend reaching out to suppliers to let them know that you don’t want any promotional materials included in your packages. The best way to avoid any suspicions from your customers is to build a professional Shopify store, and provide a high-quality service for your customers.
3. Why Should Someone Buy From My Store Instead of the Supplier?
Because you’re better.
Call it better marketing execution, which reached the prospective customer first.
Call it branding, which drives people to buy from you.
Call it creating a store that people trust.
Call it the value you offer by providing extra services or content.
Call it technology that allows your customers to shop more easily.
Don’t get preoccupied asking questions like “why wouldn’t customers just buy from my supplier instead?” Think about it – when was the last time you purchased products directly from a supplier rather than a brand?
4. Shipping Takes Too Long With AliExpress Dropshipping, Will My Customers Wait?
Your task is to define your shipping policy, and then display it on your store’s website to set clear customer expectations.
With the commonly favored ePacket delivery option, it typically takes only 7-14 days for a package to reach the US from China.
In addition, some suppliers keep their most popular products in US warehouses, which will mean your delivery will be even quicker.
5. What About Quality Risk and Copyright Infringements?
You’ve probably heard stories about the ridiculously bad quality of Chinese products. Sadly, some of these claims are true. As usual, though, there are two sides to every story.
In reality, you can easily run into a bad supplier no matter what their geographical location is.
In the end, you need to be cautious when it comes to choosing your dropshipping suppliers.
6. Do Dropshipping Suppliers Speak English?
When it comes to AliExpress dropshipping, lots of the suppliers who you’ll be interacting with will be Chinese, which means that their English isn’t always perfect. However, you can always contact the suppliers in advance to get a sense of their level of proficiency before doing business with them.
Larger suppliers are typically quite responsive as they’ll have sales teams managing your orders and can answer your questions via live chat or email.
7. Is AliExpress Dropshipping Favored by PayPal?
PayPal is one of the most well-known and widely used payment gateways, so it makes sense that many ecommerce entrepreneurs want to use it for their businesses.
From a customer’s perspective, PayPal is a great system as it tends to favor customers over merchants. If a customer has a payment dispute or wants a refund, for instance, it’s likely that PayPal will take the customer’s word and respond accordingly. All of this is meant to protect the many millions of people who use PayPal to make purchases every day.
In order to create a more stable and secure experience for customers, PayPal has set some precautions in place that can make using it as a payment gateway a bit of a hassle. For example, PayPal puts limitations on the money in your account in advance. These limitations are based on your business history, track record, ability to provide proof of delivery on time (via tracking numbers), your business’s physical location, and many other factors. Holds on your funds can sometimes last for months, which can end up being a problem when you’re trying to grow your business.
As dropshipping becomes increasingly more popular, PayPal is also adapting some of its policies to make it a friendlier environment for ecommerce entrepreneurs who dropship, and there certainly are merchants who have success with this option. That said, we still suggest exploring other payment gateways. Some of our top picks in this regard include Stripe, 2Checkout, and Shopify Payments. Shopify Payments in particular is a great choice if your store is hosted on Shopify because you can accept payments directly with this inbuilt system, which eliminates the complication of utilizing a third party payment gateway. Note, however, that Shopify Payments isn’t available in every country.
8. How Can an Established Business Benefit From Dropshipping?
When it comes to dropshipping, learning by doing usually works best.
Dropshipping is the ideal model for first-time entrepreneurs. It’s totally understandable that an established business wouldn’t change its order fulfillment model and adapt to dropshipping, but it’s still worth considering in these scenarios as well.
Simply, dropshipping is a great model that you can use to quickly test new product ideas regardless of the size of your business.
In addition, you can add a new product category within a few days and if it proves to be successful, you can stock the products in your warehouse as you usually do. This way, you reduce the risk of stocking the inventory before knowing what sells. It increases your business flexibility.
9. How Does AliExpress Work?
AliExpress is an ecommerce website which offers a huge catalogue of products. Consumers can use AliExpress to find products to purchase online for their personal use. Entrepreneurs can use AliExpress to find and source products for their ecommerce businesses. You can use Oberlo’s Chrome Extension to import products directly into your Shopify store with just a few clicks. Whenever you make a sale using AliExpress dropshipping, you can then purchase your products from the AliExpress supplier, who will then ship them to your customer.
Becoming adept at dropshipping requires time, careful research, and planning. I still prefer it because its the easiest way to kick-off your online business and it’s totally awesome for testing new product ideas. It requires low starting capital, and therefore you have the ability to try your hand at ecommerce with limited risks.
There are lots of helpful apps and services available to use in conjunction with dropshipping, including Oberlo and Shopify. These can facilitate and automate the more complicated aspects of the dropshipping process, and eliminate some of the pitfalls we’ve discussed in this post. With these tools, you can devote your time to maximizing profits through developing the right marketing techniques and solidifying your brand. You don’t have to concern yourself with storing inventory, which only further accelerates the formation of a successful business. To learn more, check out the Oberlo app or have a look at our blog for information about the leading dropshipping apps and platforms.
Want to learn more?
- How I launched my Ecommerce store in less than 30 minutes (with products)
- How To Select Dropshipping Suppliers
- What Should You Sell Online?
- 10 Online Stores to Use as Inspiration for Your First Store
Is there anything else you’d like to know more about and wish was included in this article? Let us know in the comments below!