What Is Dropshipping?
Dropshipping is a low-risk business model where store owners can sell products without manufacturing them or paying for inventory/stock. When a dropshipping store owner sells a product, they purchase it from a third-party supplier that ships it directly to the customer.
As dropshippers, we are the only point of contact for our customers. Once our customers place an order, we then order with the supplier. Thus, we only have to spend money after earning money. Meaning it requires very little capital for you to get started as a dropshipping store owner.
The Dropshipping Business Model
We, too, can become successful dropshipping business owners with the right tools.
Let’s explore all the ins and outs of the dropshipping model.
How Does Dropshipping Work?
Now that we know that dropshipping is a fulfillment method that doesn’t require a physical store let’s see how the process works. In general, our third-party dropshipping suppliers are manufacturers, wholesalers, or retailers.
Meaning dropshipping works on the basis of supply chain management which involves the mentioned suppliers plus the materials in order to create and distribute the products we’re selling.
With this in mind, let’s look at the steps of the dropshipping process. There are three main parts of dropshipping. When done correctly, we can yield high-profit margins.
- Step 1: Customer places an order in our store.
- Step 2: We forward the order details to our supplier.
- Step 3: Our supplier ships the product to our customer, and we keep the profit between the source and selling price.
The outcome? Our customer is satisfied, and we earn a profit. It really is that simple. The more you sell, the more potential profit there is.
While it is an easy process to follow, each selling channel you use to sell products differs.
Why Is The Dropshipping Business Model So Popular?
Since dropshipping allows anyone to run an easy-to-start low-risk online business with minimal investment, even while on a tight budget, it comes as no surprise that it’s been gaining tremendous popularity.
Along with this, anyone with a computer and internet connection can run their own online business. This means that we can travel the world while running our dropshipping business since it can be done from anywhere.
Moreover, we can dropship part-time to earn an extra income or full-time to turn it into our main source of income. Dropshipping allows us to run on our own schedule.
With growing demand in the market and thus, an increase in potential profit, we can benefit from starting our own dropshipping stores. The best part is by using dropshipping automation, we can save time and scale our business. All of these factors have helped dropshipping become even more popular than it was before.
The 8 Benefits Of Dropshipping
1. Easy to start
As there’s no need for a physical store, warehouse, or inventory management, dropshipping is one of the easiest ways to start an online business.
One of the greatest benefits of dropshipping is eliminating the classic 9-5 grind. You’re able to work on your own time, according to your schedule. Even if you have a full-time job, you can build your business before or after work hours or weekends. Overall, dropshipping allows you to work at your own pace.
When a product isn’t selling well, it’s easy to remove and replace it with another one simply. We don’t have to get stuck with slow-movers.
With the help of dropshipping automation software, we can scale our business to new heights. We can run a smooth and stress-free online business by automating daily processes such as price/stock monitoring, quick product importing, and order automation. There’s no need to invest more money in order to scale.
5. Low capital
The costs of starting and running a dropshipping business are significantly lower than any other type of business. Our starting budget can be anywhere between $50-1000, depending on what selling channel, suppliers, and additional tools we use.
6. Easy to manage
Once our online store is set up with products from our dropshipping suppliers, our job is to manage our sales customer service and grow our dropshipping business. Our selling channel will make sales, while our automation tool takes care of price/stock monitoring, easy product importing, and even automating our orders.
7. No Minimum Order Quantity (MOQ)
With dropshipping, we never have to pay for products upfront or purchase any minimum quantity in advance. We can buy the products one by one, and only after getting an order from our customers. Therefore, the dropshipping business model saves us from substantial investments to run our business.
8. Virtual Assistants
When our business starts to grow, we can hire virtual assistants to take care of our daily tasks. That, along with dropshipping automation, is the perfect formula for running a network of dropshipping stores and raking in significant profits.
Let’s look at the four best-selling channels for dropshipping: eBay, Shopify, Wix, and Facebook Marketplace.
The Best Dropshipping Selling Channels:
eBay is one of the largest global marketplaces, with close to 900 million monthly visitors. With such high organic traffic, it requires no initial marketing budget. In other words, as soon as we list our products on eBay, our potential buyers will get to our listings without us having to spend a dime on marketing.
It’s relatively simple to set up an eBay account and start selling products. However, the platform initially subjects you to selling limits. Luckily, there are a few ways to quickly increase your eBay selling limits, allowing you to scale your business and increase your earning potential.
That’s not to say there won’t be some grunt work involved. Starting up an eBay dropshipping business does require some time-consuming work, including learning how to set up business policies. This is especially true for dropshipping, where business policies must match your suppliers one for one.
Nonetheless, once you’re set up, selling and processing orders are as simple as they can get.
One of the best-selling features of Shopify is that it’s fully customizable. We can consider this a DIY project where we get to design our store however we want, including various apps and necessary features to increase sales. Shopify is designed specifically for online sellers, making their user interface easy to use.
On the other hand, Shopify doesn’t prompt you with immediate organic traffic like eBay. With Shopify, we have to budget for marketing our products. By using marketing techniques like Search Engine Optimization (SEO), paid advertising, and influencer marketing, we can attract more customers to our store.
Check out these resources where you’ll learn everything you need to know about starting a dropshipping Shopify business that works and earns profit:
- Free A-Z Shopify dropshipping course
- The Ultimate Guide to Facebook Ads For Shopify in 8 Simple Steps (eBook)
- 10 Influencer Marketing Platforms for Finding and Partnering with Internet Influencers
Wix is another top-rated and easy-to-use dropshipping selling channel. If you’re not super tech-savvy, then you’re in luck because Wix helps you build everything.
One of their best features is their landing page builder, which doesn’t require any previous website building skills.
With over 800 different website templates, you’ll surely find the perfect one for you. And although they don’t bring in much organic traffic, they do offer a complete suite of SEO tools. By integrating these tools into your website, you can increase traffic and increase your earnings.
However, unlike Shopify, Wix doesn’t allow us to customize our store fully. Whereas Shopify has advanced eCommerce features for customization, Wix works based on the “drag and drop” method. Meaning there’s not much creative freedom when it comes to the overall design of your store.
Although they may lack customization features compared to Shopify, Wix counters that with a complete building solution that includes excellent features like AI, professional templates, and more.
Facebook Marketplace is an untapped selling channel with little to no competition and tons of free organic traffic (and sales). While the platform was previously used as a local exchange for used goods, it’s become one of the best places for dropshipping.
To begin with, Facebook Marketplace has the lowest startup and operating costs of any selling channel. There are no monthly selling fees, and you only get charged 5% or $0.40 per sale (whichever ends up being higher).
Additionally, there is no need for marketing investments due to the high volume of daily traffic. Just list best-selling products from your suppliers’ websites, and there is a high chance they will sell on Facebook Marketplace. With no competition (yet), it’s really that easy. Furthermore, we can boost our listings by adding them to local buy and sell groups or by converting them into ads.
Altogether, dropshipping on Facebook Marketplace is effortless. Just log into your account, create a listing and start importing products to the platform.
Since Facebook already has its own set of Commerce Policies, there’s no need for us to set up any business policies or legal pages. We just have to pick the best Facebook Marketplace dropshipping suppliers that can abide by the rules and expectations.
How To Profit With Dropshipping Automation
Did you pick a selling channel? Great! You’re one step closer to managing your own eCommerce business.
Nevertheless, as you start selling, you’ll also notice that running a dropshipping business can be time-consuming.
For one, you’ll need to import listings from your suppliers one at a time. Once listed, you’ll have to keep refreshing product pages to monitor for price and stock changes. Finally, each order that comes in needs to be fulfilled manually.
Ultimately, these burdensome activities limit you from growing and expanding your business. And while you’re at it, the chances for your store to become a passive income source diminish.
This is where automation comes into the picture to save the day. Imagine if a platform can take care of all the time-consuming tasks, so you’re free to research more products or spend time with those you love?
At AutoDS, we’re dedicated to making this dream a reality for dropshippers. Our all-in-one dropshipping platform does the hard work for you.
Here are just some of the great features that automate your business:
Quick Product Importing
Importing products manually can take 10-20 minutes per product (and more, depending on what selling platform you’re selling on). Now, imagine wanting to have a store with 100 products, or 1,000, or even 10,000. How much time would it take to add those products?
What if we told you it could take you less than a minute to import any number of products with business automation?
AutoDS saves you time by allowing you to import products at lightning speeds. You can get this done in one of three ways: One-click importing, bulk upload using a CSV file (you’re gonna love this one!), and uploading with the AutoDS Finder.
First, make sure to download and install the Chrome AutoDS Dropshipping Helper Extension. It makes all of these options possible.
This feature allows you to import any individual hot product with one click. Because it works with any of our twenty-five supported suppliers, it gives you access to millions of products.
Using one-click importing is as simple as it gets. As soon as you arrive at the desired product page, click on ‘Import to AutoDS.’
With this single click, the extension gathers all images, descriptions, titles, and variants and uploads the product directly to the drafts page.
From there, you can optimize any of the information before uploading it to your store. For example, you may want to modify the title for better SEO keywords so that more people find it on eBay.
Bulk Upload Using A CSV File
Since plenty of our success comes from testing products, it’s always better to upload multiple products at a time and see which ones sell. The more products we test, the quicker we find out which niche or category is our true profit maker.
That’s why the bulk uploader is so great. It allows us to scrape and upload hundreds, thousands, and even tens of thousands of products in a few clicks.
To illustrate, say you found a page of wine openers from Target that you want to list on your store. Simply click on the AutoDS button on the bottom right, and hit ‘Extract.’
A list of product IDs populates in the box. Now, click on ‘Export as CSV.’ All of the products get saved in a dedicated CSV file on your computer.
Finally, on AutoDS, click ‘Add Products’ and choose ‘Upload CSV.’ Drag and drop the file you created before. Click ‘Add as Draft,’ and all of the products upload directly to the drafts page.
Not everyone has time to conduct their own product research. That’s why AutoDS has a feature that finds products and uploads them all in one place. You don’t have to go to your supplier websites!
To use this feature, click ‘Add Products’ on the AutoDS platform and then select ‘AutoDS Finder.’ Choose the level of popularity you want to search for. The hotter the product, the more credits it uses up.
Once you choose the number of products, either add them as a draft or upload them directly to your store.
Price and Stock Monitoring
No one wants to dropship a product, only to find out that the supplier raised the price or ran out of stock. After all, we are here to profit, and if the price goes up and we didn’t know, we may end up selling the item at a loss.
To make matters worse, if a supplier runs out of stock without our knowledge, we won’t honor customer orders, putting our entire business at risk.
It would be nearly impossible to stay on top of price and stock changes constantly. That’s why we need a more automated system.
AutoDS’s proven software monitors your price and stock 24/7. When changes occur to stock, the program updates your stores instantly.
Similarly, if the supplier raises the price, AutoDS ensures that you keep your profit margins by adjusting the price accordingly.
You can find both features in your Store settings.
The good news is that AutoDS automatically enables price monitoring by creating a default break-even setting for each supplier. For example, if you’re dropshipping from Amazon to eBay, the system adds the selling fees of your supplier plus a given amount of profit.
Then, regardless of price changes on products, you’ll always keep your original profit settings.
However, you may adjust your pricing settings as you see fit. The point is you never have to worry about losing money on your products again. For example, if your supplier changes the price of a product, your break-even settings maintain your profits by keeping them at a fixed percentage.
Since we are not holding any inventory, it is crucial to have a way to track our suppliers’ inventory in real-time. That’s where AutoDS’s scanners come into play. As soon as a product’s available quantity falls below a set threshold, it is marked ‘out of stock’ in your store.
You’ll never have to worry about updating your store’s inventory again. Like pricing, you can customize your stock threshold and automation in your store settings.
When stock levels on the supplier side fall below your Minimum product quantity, AutoDS marks it out of stock. For example, if you set your minimum to five, as soon as the supplier has less than five left, AutoDS marks it out of stock in your store.
You don’t need to change any settings for rare situations where you want to turn off price or stock monitoring. Instead, when adding products, you can turn off automation for price stock or orders respectively.
Fulfilled By AutoDS Service
As orders start coming in, you’ll need a quick way to process them with your suppliers. Doing it manually can end up stacking up orders, creating a backlog, and causing delays at the cost of your seller ratings.
AutoDS has a solution for that called Fulfilled by AutoDS. This system processes orders for you instantaneously, keeping your customers satisfied. This means that every step of an order from the moment it gets placed until the customer receives it is automated!
To sign up for this service, go to the ‘Plans & Add Ons’ of your settings and enable the Order Automation plan. Then, head over to your store settings, and under the ‘Orders’ tab, checkmark both automatic ordering options. The first enables fulfillment by AutoDS, and the second, automatic ordering.
You can also choose to leave ‘Automatic orders’ off. This way, when orders come in, AutoDS won’t automatically place the order with your supplier. Instead, it leaves the order as ‘Pending’ and awaits your approval. Once approved, the order moves along as usual.
How Dropshipping With Fulfilled By AutoDS Works
Once you’ve signed up and enabled automation settings, you’ll need to load funds into your account balance. AutoDS uses these funds to place orders on your behalf with suppliers.
As a final step, add order credits to your AutoDS account. Now the system is all geared up to take care of your orders.
As customers begin to buy products, AutoDS processes each order and adds them to your orders page. Then, assuming you are using full automation, the system makes an order with the supplier.
The coolest part is watching orders move through the chain of events as AutoDS automatically updates the order status for you labeling it ‘ordered,’ ‘shipped,’ and ‘delivered.’
You might be wondering how to handle tracking updates when orders are shipped. After all, updating customers with a tracking number gives them the confidence that their order is on the way and allows them to track the package in real-time.
Manually sending tracking for each order might sound like a solution. However, this takes more of our much-needed time and leaves room for human error (for example, sending the wrong tracking information on an order).
This is yet another reason why Fulfilled by AutoDS is your best companion for dropshipping. The platform retrieves a tracking number as soon as an order ships. Then, it updates tracking both on AutoDS and your online store (e.g., Shopify). As a result, the customer gets notified immediately when tracking is available.
Those without full automation need to complete each of these steps manually, so it isn’t recommended.
As a bonus, the AutoDS converts AMZL tracking numbers to Bluecare Express. This is helpful because, unlike Amazon tracking, Bluecare Express gains the trust of your customers by giving them updates with each status change.
Part of every retail operation includes returns, and you’ll want a quick and easy way to process them, so you don’t get bogged down.
Fulfilled by AutoDS offers automatic returns to solve this problem, which allows you to retrieve a return label in one click.
It works as follows: each order’s status can be changed to ‘Request Return’ on the orders page. Within 24 hours of making this change, AutoDS retrieves a return label for you. Then, you can download the label and send it to the customer via AutoDS or directly from your store.
Great customer service is the backbone of every successful business. Therefore, AutoDS offers a dedicated page where you can manage all customer interactions.
Instead of going back and forth between your stores and your business platform, all customer service issues are managed in one place for all stores. This includes cancelations, returns, and refunds.
Accordingly, this integration lets you reply to customers on this screen, regardless of which selling channel they are messaging you from.
Even with automation, running a dropshipping business requires you to engage in routine tasks and maintenance of the business. The added workload can take up precious time. For example, customer service, sending return labels, or responding to emails.
Hiring a virtual assistant can help close the gap between the automated portions of your store and those that aren’t. And with AutoDS, it is simpler than ever.
All you need to do is grant your virtual assistants access to your account. Not to worry, you have full control over their access privileges so that none of your dropshipping assets are in jeopardy.
Get Ready For Takeoff
And that, my friends, is how dropshipping works in a nutshell.
Wondering why you haven’t started dropshipping earlier? That’s alright. It’s never too late to get started! With a growing demand globally for online products, there is room for you to hop in and start earning the big bucks.
New and trendy products are hitting the market, waiting to be dropshipped by sellers like you. Furthermore, the addition of Facebook into the mix of dropshipping selling channels is a game-changer. So if anything, now is a better time than ever to open a dropshipping business.
You don’t need to go anywhere else to begin. From informative courses to excellent blog articles, you have all the information you need right here on AutoDS.
Start by checking out these gems on beginning dropshipping: