To better understand what a dropshipper is , it is important that you also know those who participate in the dropshipping business model, so that you are clear about how the entire process works.
The 3 people involved in dropshipping are:
The buyer : the person interested in purchasing an item.
The seller : the merchant who offers his products through an online store or a marketplace .
The supplier : A manufacturer, distributor, or wholesaler who has a physical inventory of items and the means to ship them to people interested in them.
Now that you have a clearer idea of the role number data of these 3 protagonists, we share an example to better understand how the work of a dropshipper works :
Dropshipping example
Let's say a seller, who is a dropshipper , promotes a new line of makeup for the summer through Instagram questions . A potential customer comes across this information and decides to buy those products, going to the seller's online store.
The saleswoman then transfers this request to her supplier, whose physical inventory of makeup is located abroad. This is how the supplier becomes responsible for directly sending the items from its warehouse to the hands of the customer.
One way to look at it is that the dropshipper becomes an intermediary between the customer (the one who buys) and the supplier (the one who physically has the product). The seller offers the products at a higher price than the one they pay the supplier and that is precisely how they make their profit.
In this way, if a dropshipper promotes his business and the products he sells well , the sales volume can become a profitable business activity.
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Advantages and disadvantages of becoming a dropshipper
The main advantages that a dropshipper has when doing business are the following:
You need little investment to start your business.
You don't need a warehouse or space to store your inventory.
You can test the success of a product with your customers without purchasing huge amounts of inventory.
The variety of products you can sell is as wide as your catalog of suppliers.
You do not manage the delivery of merchandise (one less task for you).
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On the other hand, the disadvantages that a dropshipper faces are:
Low profit margin that becomes dependent on the volume of your sales.
You have no direct control over the shipments your customers receive.
It is a very competitive market if you do not find suppliers with attractive products.
If your suppliers are located abroad, shipping times and costs, as well as import charges, can discourage your customers.
It is important to consider that, by becoming a dropshipper , you will have to work on mechanisms - such as generating greater promotion of your business to increase your sales or having better suppliers than your competition - that allow you to mitigate or resolve all these disadvantages.