27 March 2022

What is dropshipping and how does it work

If you have been reading about different business models for making money on the internet, you have undoubtedly come across the term 'dropshipping'... Sounds mysterious, but is it? This article will give you a brief and clear explanation of what dropshipping is, how dropshipping works, and how you can consider dropshipping.

What is dropshipping? 

Dropshipping is a form of e-commerce, where the (end)customer orders a product in your webshop, you (the webshop owner) pass this order on to the supplier (manufacturer or wholesaler) of your products and the supplier, in turn, sends the ordered product directly to the (end) customer.

Often people think that dropshipping is more difficultly than it actually is. There are even many books written about the finer points of dropshipping. Yet the principle behind dropshipping remains consistently the same.

How does dropshipping work? 

Suppose you have the idea of starting a webshop, but you don't have enough square metres or financial means to build up an entire stock of products. Time to pull the plug again? Well, wait a minute, you can build a webshop and receive the order from your customer. If you then pass this order on to a supplier of your products who is prepared to ship the products directly to the customer (often for a small fee), you still have a recipe for a successful formula: dropshipping!

 Dropshipping works as follows: 

1.  Your customer places an order on your webshop

2.  You pass the order on directly to your dropshipping supplier

3.  Your supplier ships the product to your customer

As an entrepreneur with a dropshipping webshop, you will have time to spend on (online) marketing, such as SEO, SEA and social media, to get as many visitors as possible to order from your webshop. You can also distinguish your business by offering excellent customer service. For this, the agreements with your supplier are of extra importance.

Why choose dropshipping? 

If dropshipping has no stock and I am not in physical contact with my customers, why should I choose this line of business? A very reasonable question we asked a handful of dropshippers. And as it turns out, apart from financial reasons like profit and independence, there are deeper reasons why we were surprised.

Did you know that as a dropshipper, you can work anywhere in the world? It's so easy when you don't have the stock to go wherever you want. You have no physical location and no appointments to test or receive products. This makes you flexible, and you can, for example, do your product research from Lisbon in the sun on a terrace.

In fact, travelling nomals do this in large hordes. Often, they even hold meetings from city to city where you meet all kinds of other people in this world. A complete community where you travel and earn good money in the meantime. This is also a second argument to start working as a dropshipper.

Moreover, we learned from one of the dropshippers that it is very attractive to take a look in Thailand if your products are produced there anyway. Who knows, you might learn something or force a better deal on your products by negotiating in person. You can't be close to your customers, as they can come from anywhere in the world at any time, but your supplier is stuck in one place. This negotiating tactic may give you bigger margins.

Finally, a big part of dropshipping is the marketing of your website and ads. Promoting a cool product on beautiful beaches, forests or terraces with a good video works as an attractive reason for the consumer to buy a product. That's two birds with one stone. However , as our interviewees themselves indicated, it is important that you have a love of marketing. Of course, you spend 80% of your time doing that and researching the product.

Dropshipping on a high level with e-pickr® 

It is important to limit risks in advance by selling the right, unique product to be successful. This saves you a lot of work. But how do you know which product is unique enough to sell successfully on a platform or through your own webshop? That's where e-pickr® comes to the rescue; e-pickr® is cleverly developed software built to give you this insight. e-pickr® recommends products to sell! With this insight, you can make smart purchases at the front end and make more profit at the end. Have we aroused your interest? Good for you! Then we would like to help you on your way by making an appointment and a tour in our demo environment. Make dropshipping easy and find products from anywhere globally with e-pickr®!