Dropshipping
In recent years, dropshipping has become increasingly popular. Start-up entrepreneurs reduce their risks, by not immediately starting to hold their own inventory. Products are shipped directly from the dropshipment supplier to the customer. Did you know that to use dropshipping, you don't need your own online store? You can use various platforms to start your own store. It makes dropshipping and starting an online store in general very accessible to a wide audience.
On this page, we zoom in on what is meant by dropshipping. How can we define this phenomenon? What are the pros and cons of dropshipping. How do you apply it in your own online store? And so on. What do you already know about dropshipping?
What do we mean by dropshipping?
Dropshipping, which is also known as dropshipment, is a form of business where products are shipped directly from the supplier to the customer. The supplier can be another online store or, for example, a wholesaler. The idea behind dropshipment is nothing more than sending orders to an external party. To the price this external party charges you, you can add a certain margin. This margin covers the risk you run as an entrepreneur and is therefore your gross profit in the event of a successful sale.
Automate dropshipment for your webshop
There are several ways to use dropshipment for your own online store. For example, you have the option of making the entire process automatic. A link with the supplier, often an API, ensures that the supplier's inventory is loaded into your online store daily or several times a day. Is the product sold out at the supplier? In that case, a customer in your store will no longer be able to order the product. It prevents you from having to disappoint customers, or buy the product elsewhere at less favorable terms.
Today, this dropshipping software is so advanced that it is even possible to load a product feed from different suppliers. Later on this page, we will take a closer look at webshop software that offers this functionality.
Dropshipping Chinese products from the Netherlands
Dropshipping doesn't always get good coverage. Lately, more attention has been paid to online stores that have products delivered from China directly to a Dutch customer. The Chinese sender is often still listed on the supplier's packaging. The moment a consumer looks at this supplier for the product they just ordered, it often turns out that a huge margin has been charged by the Dutch selling party. Something that leads to many people feeling cheated and returning the product.
It is not only the extortionate prices of such webshops that make dropshipment not received positively by everyone. Also, customers often have to wait weeks before they receive a product shipped directly from China. On top of that, they run the risk of losing their package in transit. Products sent directly from China to a Dutch customer do not always have the necessary European certifications.
Reason enough to think carefully about this way of doing business. It makes more sense to choose a European supplier, or to import Chinese products and then ship them to customers from your own office premises.
Benefits of dropshipment for entrepreneurs
The fact that dropshipment is gaining popularity is easy to explain. With this form of business, the risk you face as a company is greatly reduced. For one thing, you don't have to worry about holding inventory yourself. Holding physical stock means that you have to rent or buy a space for this, that you have to take care of the security of this space, that you have to have employees for sending the orders, and so on. Apart from the fact that it takes a relatively long time to make such a process run smoothly, it comes at a high cost. It does not fit the budget a start-up normally has.
Another key benefit of dropshipment is that you never have to throw away products. Think of products that are past their expiration date, products that no longer fit current trends, and so on. Under no circumstances will you be stuck with leftover batches when you choose dropshipment.
White label dropshipping
Earlier you read that Dutch consumers sometimes see a Chinese sender on their package. It's something you want to avoid as an entrepreneur! Many European suppliers offer white label dropshipping. This means that it looks to a customer as if the product was sent to them by yourself. For example, your online store's return address will be on the packaging, as well as your business address and company name. Contact a supplier that offers dropshipping to see what options they offer.
What are the disadvantages of dropshipping?
So are there only advantages to dropshipping? No, absolutely not. Dropshipment has some significant drawbacks compared to holding your own inventory. Although you can automate and outsource much of the order processing in your online store, you remain responsible for the delivery of products. The moment a product does not reach the customer on time, the customer will approach you to ask for an explanation. At that point, it's hard to sell that a supplier is to blame. If that were the case, you could have mentioned on your website that the delivery takes longer because of limited or exhausted stock.
Products returned
Even when a product does not meet the customer's needs, it comes to you. It means you have to refund the customer's payment and return the product to the supplier. It's not always easy to return a product that was previously shipped to one of your customers. You would be wise to check with your supplier beforehand. Look carefully at the costs involved in returning a product.
To come back to Dutch webshop owners who have products delivered directly from a Chinese supplier: returns are virtually impossible in such a case. Returning packages to China costs a lot of money. In addition, it is sometimes difficult to find out the address of the Chinese supplier. A good reason to stick with Dutch or European suppliers.
Listing company information on your website required
It is common not to display company information on a website. This is against the rules! Listing your company details is mandatory, when offering products for sale in a webshop. The (conscious) omission of company information makes it very difficult for customers to find out who is behind a webshop. Not only does this make the webshop unreliable, it is also annoying if a customer cannot return the wrong product. A simple contact form to let the customer contact you is not enough.
Competition is often high in dropshipment
Another disadvantage of dropshipment is the fact, that competition is often very high. The fact that you have found a dropshipper indicates that other entrepreneurs will also have found this dropshipper. It means that the product you offer for sale will also be sold by numerous other webshops. Something that significantly reduces the margin on these products. Would you own and sell the products yourself, the margin is often higher. After all, you do not pay service costs for the time a supplier spends on processing an order.
Dependence on an external party
Not the least important reason dropshipment compares well to holding your own inventory: it makes you very dependent. The moment your external supplier stops selling products from your webshop, it often means that you have to stop yourself as well. It can prove difficult to find an alternative supplier offering the same products.
In doing so, you will have to look for another supplier if your current supplier does not deliver products to your customers on time or damaged, for example. If you had the products in-house, this dependence on other parties would be less.
Webshop software for dropshipping
Automating dropshipment helps you save a lot of time and serve customers in the best possible way. It would be annoying if, after receiving an order, you first have to contact the supplier yourself. This slows down the order processing process and may result in a customer receiving the product much later than expected. They might order the product from you before the end of the afternoon, but you then fail to pass the product on to the supplier on time. As a result, the product is shipped to the customer a day later.
There are different types of web shop software, which offer the possibility of automatically forwarding orders to your supplier. As mentioned earlier, this webshop software also offers possibilities to load products from the supplier into your own webshop.
Using Shopify for dropshipment
One example of webshop software that offers such functionality is Shopify. Setting up your shop within Shopify is relatively easy, as you can choose from several existing layouts. You can choose from more than one hundred variants! Within Shopify you can activate plug-ins after setting up the shop. An example of such a plug-in is Oberlo. With this plug-in it is very easy to add items for dropshipping.
Also not unimportant: Shopify offers support for improving the SEO of your shop. SEO stands for Search Engine Optimization. The better the SEO of your shop is set up, the better is the basis for getting higher in the search engine.
JouwWeb as a Dutch alternative
Are you looking for a Dutch party with webshop software that can be used for dropshipping? In that case, JouwWeb may be worth considering. This provider is relatively cheap and at least as easy to use as the previously described Shopify.
With JouwWeb, it may be worthwhile to request a trial subscription first. This gives you the opportunity to try out the various functionalities within this web shop software. Do you like it? In that case, you can get started with your final dropshipment webshop!
Lightspeed HQ as a third option for dropshipping
Still unsure about the shopping cart software for your online store? A third option besides Shopify and JouwWeb is Lightspeed HQ. Compared to both other solutions, Lightspeed HQ offers the most features. This is not always an advantage! For example, it can also make it confusing to build your own online store. You also need some technical knowledge for Lightspeed HQ to get the most out of it. Once you have mastered it, the possibilities are virtually endless.
As with JouwWeb, Lightspeed HQ is also worth requesting a free trial package first. By trying the webshop software yourself, you often find out soon enough whether the software suits your technical knowledge and wishes as a user.
Keep in mind that it is often very difficult to switch from one webshop software to another. Reason enough to think carefully in advance about the shop software most suitable for your store and the ambitions you have with it!
Determine if dropshipment is for you
In this article, we told you more about what dropshipping is. You read more about the difference between using European and Chinese suppliers, we went into the different types of webshop software suitable for dropshipping, and so on. You also read more about the various advantages and disadvantages of this form of business. Are you excited about dropshipping, or do you prefer to keep your own stock? Below we help you through a few questions to make an informed choice.
What is the risk you want to take?
A first question to ask yourself: what risk am I willing to take? Someone who is just starting out in business and wants to do this alongside another job for the time being can opt for dropshipment. The dependence on an external party does not have to be a big disadvantage here. In the sense that you still have another job. Thus, you are not dependent on the revenue from your shop.
What budget do you want to spend on your webshop?
You may have chosen a specific budget in advance to start your own online store. When this budget is limited, dropshipment can be a good option. You do not create an extensive webshop, but choose to use a platform. Within this platform you offer the products for sale, which you deliver to the customer through dropshipment. The investment you have to make in your webshop is very limited. The disadvantage is that the competition on such a platform is often very high. It reduces the chances of success.
How much time are you willing to put into your webshop?
You already read that choosing dropshipment can be an interesting one, if you want to do it alongside your existing job. Following this, you can ask yourself the question: how much time do I want to spend on my webshop? When time is limited, it doesn't pay to keep your own stock. You may not have the time to pack and ship orders to customers on time, to replenish stock with a new delivery from the supplier, and so on. Dropshipment costs you very little time when you set it up efficiently. Keep in mind, though, that you have to process returns, answer customer questions, and so on. This applies to merchants with their own stock as well as those who use dropshipment.
Conclusion: dropshipping a popular form of business
All in all, we can conclude that dropshipping is here to stay in the coming years. It is a low-threshold and easy way to start an online store, without running any major risks. The moment a webshop is disappointing, you can stop it. You'll never be stuck with a remaining stock! The only costs you incur are those for using the shop software and any marketing campaigns.
When choosing dropshipping, it is highly recommended to work with a European supplier. Although you can also have products from China delivered to Dutch consumers' homes, this is not recommended. The chances of problems, such as late deliveries and returns, are unnecessarily high. You run a much higher risk than if you choose a European supplier.