- 08 Dec 2021
I don't want to use a lot of Mandarin Chinese to analyze with you, I want to say something that everyone can understand.
In the link of a transaction, there are actually three different roles:
The reason is very simple. Retailers get goods from suppliers and sell them to customers through certain channels. This is our very common sales model.
Whether you are doing eBay, Amazon, or AliExpress, you follow this model.
And Dropshipping actually follows this model, but the process is lighter. Retailers are now
◎ No need to take the goods by yourself
◎Out of stock
◎ There is no large amount of capital investment (the main cost is the cost of drainage)
◎ No customer service required
◎ No need to pack and ship by yourself
What is the whole process of dropshipping?
The first stage: the retailer puts the product information provided by the supplier supporting the drop shipping service on its website
The second stage: The buyer places an order on the retailer's website, and the retailer sends the buyer's order information, ordering costs and freight charges to the supplier that supports the drop shipping service.
The final third stage: What the retailer earns is the price difference after "buyer's payment-supplier's payment-shipping".
You can see:
In the first stage, the retailer puts the product on the Internet for sale, and in many cases it is built using shopify (of course you can use other websites to sell, we will talk about this later)
In the second stage: the retailer sends the buyer's order information to the supplier. This is the mode of buying and reselling (usually using oblero to achieve)
In the third stage: the retailer earns the price difference
The picture below explains the whole process of dropshipping very well!
Let's make a comparison:
In the traditional way, you first need a certain amount of venture capital, right? Suppose your startup capital is 10W RMB. Then, you open another store. At this time, you may have to go to alibaba.com to buy the goods. The cost of getting the goods is more or less. Let’s say the cost is 4w RMB.
The remaining 6w still has various expenses, so the money spent on advertising is not much. And more importantly, you can't sell these goods in one or two days.
If you add the wrong product selection, there may be slow sales in this process, inventory pressure, and advertising conversion failure, then the goods will become inventory, and your pressure will be placed.
With Dropshipping, there is no such problem. In the Dropshipping business model, the seller successfully transfers the inventory risk to the supplier, and also outsources the packaging and delivery of the order to the supplier. You only need to focus on the operation and promotion of the website. .
In this way, there is no inventory, and do not deal with shipping and packaging. You just need to spend time on marketing to get more traffic, or you can have more time to test the product.
So in this process, it means that more budget can be invested in advertising promotion. The same entrepreneurial cost can be promoted at least 80% under the Dropshipping mode.
So from this perspective, the advantages of dropshipping are obvious!