What is Dropshipping and Why You Should Opt For It

What is Dropshipping and Why You Should Opt For It

Whether you are looking for a side hustle to make a quick buck or looking into starting a new business and become your own boss, you most definitely might have come across the term drop shipping, and since you are in this page right now, we will assume you have.

So what is this current buzzword that has been causing an uproar in the e-commerce world?

Although most people have heard about this, very few people actually know exactly what this means. In fact, images of dropping someone right smack in the middle of the ocean might be on your mind right now, so let’s not dilly dally and dive right into what it is.

Dropshipping is a type of e-commerce business model which allows a company or a person to operate without maintaining inventory, owning a warehouse to store their products or even having to ship their products to their customers themselves.

So in the simplest of terms, what it does is that the person buys the products from a supplier and then have them shipped directly to the customers, as a result, the dropshipper does not have to go through the hassle of maintaining an inventory stock or shipping and logistics, in fact, the dropshipper never even sees the products.

Hence, all you need is a laptop and internet connection to start your own business, you do not need any physical space to store your products. All your childhood dreams of running a business while lazing around in some sunny beach, sipping on a Pina Colada IS actually possible. So how does all of this occur? Is it actually as easy it is made out to be by all the Marketing Gurus on the internet?

I’m going to come and say it outright: starting a dropshipping business by buying a dropshipping store is now easier than ever before with sites like WooDropship providing them to you at budget prices. All the changes and advancements in technology have affected the world of dropshipping as well. Yes, it has its own pitfalls, but that hasn’t stopped it from becoming an increasingly popular way to set up shop online. One of the major reasons for this is that it requires very little – almost nothing – in terms of upfront capital investment.

When you are in e-commerce, you may not have to maintain a physical retail location, but you do need to purchase and store inventory as well as packing supplies. That can mean thousands of dollars in capital that you need to supply upfront — and it comes with a big risk.

If people stop buying your products, you could be left with thousands of dollars of unused inventory, taking up space and tying up your investment capital.

As a small business owner or fresh-faced entrepreneur, you likely won’t have the means to store and ship a wide range of products. This, in itself, is a full-time endeavor. Dropshipping removes much of the financial risk that comes with purchasing and storing stock that might never sell.

When you become involved in dropshipping, you remove this risk completely.

In dropshipping, you don’t have to pay for a single piece of inventory unless you make a sale. In all cases, the money will automatically be transferred to your account so you are out nothing.

As a result, you can start a dropshipping company without much money upfront and you don’t have to use your hard earned money to fund your inventory. This means basically anyone with a limited amount of money to spare can start their dropshipping business, anytime.

When you choose dropshipping as a business, you can run your company from anywhere in the world that has an internet connection ,  but dropshipping comes with another important advantage as well.

You can sell whatever the hell you want!

Dropshipping offers you the choice of providing your customers with a wide host of products and to change that product offering whenever you like, according to the market trends. Most manufacturers and distributors will let you list ANY item they sell. You never have to worry about shifts in consumer preferences or up-and-coming trends. Your supplier has you covered , and you can scale your operations as big as your manufacturer or distributor can handle.

Although all of this might make you feel that you should jump right onto it, it is of utmost importance that you do it in the right way. People make the mistake of following dropshipping Gurus like a flock and end up losing their heavily profitable businesses to the Feds. Dropshipping is afterall, a business, so you need to do the proper licensing of it before launching the business. For beginners, the LLC(Limited Liability Company) is the best option. Then comes filing of taxes. With tax season in the peripheral, you might be busy filing your taxes to avoid paying penalties. This is the same in Dropshipping as well. But remember, you need to pay the tax only on your profits, not on the total revenue. For this, remember to use tools to download AliExpress Invoice, as they do not provide them to the users. Plus, being a reseller, you need to pay your sales taxes depending on your nexus. If you are confused about this, you can always use plugins like TaxJar in your Shopify or WooCommerce store to calculate them easily.

In conclusion, all these advantages mean that dropshipping is in no way getting slowed down in the coming years. If you have a look at Google Trends, you can see that Dropshipping has only gained momentum over the years. According to Forrester Research, the size of online retail sales will be $370 billion by the end of 2018. Moreover, 23 percent will come from dropshipping businesses, which translates to $85.1 billion. This sheer size alone is attractive to many entrepreneurs, including startups. It lets us roughly estimate that by 2021, the volume of global dropshipping sales in 2021 will exceed $1,500 billion. And surely, in a $1500 Billion industry, there’s a piece of cheese for every mouse.


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