GLOBAL SELLING BLOG

What is Dropshipping: Everything you need to know

Sellers from across the world are increasingly opting for dropshipping as a business method in 2021. Find out what is dropshipping, pros & cons, and alternative ecommerce business option for Indian sellers in this blog.
What is dropshipping

What is dropshipping?

Dropshipping is one of the recent but popular concepts in the world of product reselling, especially in ecommerce. It is a procedure or an order fulfillment method where ecommerce businesses outsource procuring, storing and delivering products that their customers ordered. Sellers simply place an order to the manufacturing unit or fulfillment centre. Once the order is placed, it becomes the third party's responsibility to manage the product, prepare it for delivery, and finally deliver it. This order fulfillment method appeals to Indian businesses that are seeking low overhead and capital investments. However, this method has its list of cons as well. Dropshipping may appeal to businesses that intend to sell generic products, but it can limit opportunities to build a global brand or offer different products.

If you are considering dropshipping for your ecommerce business, there are many factors you must review—including a few profitable alternatives that offer similar benefits.

How does dropshipping work?

● Order placement:
The process begins when a customer places an order on a marketplace or website. For instance, consider that a customer has placed an order for a leather bag from the drop shipper’s website or an ecommerce marketplace like Amazon USA. The drop shipper has to ensure the availability of the product displayed. Once the order is placed, the drop shipper forwards the order request to the manufacturer, supplier or the fulfillment center that stores the products.
Order confirmation:
As soon as the customer finalizes the purchase and orders a product, the seller sends a confirmation email to the customer, which includes the shipping and tracking details of the package. Simultaneously, the seller informs the supplier or fulfillment center about the product ordered. While it seems like a regular order, the difference is that the drop shipper here works as a bridge between the customer and the fulfillment center or supplier.
Delivery:
The delivery process of dropshipping is simple too. The entire process is just like standard shipping. The package is packed from the warehouse and delivered to the customer, once the order is placed.

What are the pros and cons of dropshipping?

One of the key benefits of dropshipping is that any Indian seller can start sell their products to customers without much physical investment. However, before deciding what kind of business to start, it’s important to understand both advantages and disadvantages of dropshipping. In this section, we explore the potential pros and cons of dropshipping for Indian sellers who want to build a global brand.

Pros

● Setup & overhead costs: Sellers do not have to store the products on their own in this business model. While owning a conventional business demands buying a store, warehouse, and many additional charges, a dropshipping business demands just an internet connection. Since you don’t store or ship the products, dropshipping has the potential to lower overhead costs.

● Multichannel selling: In this business, multichannel selling is possible to attract more buyers. You can use dropshipping to sell products from your own domain, through the Amazon Global Selling program or social media.

● Global delivery: Dropshipping allows you to deliver shipments to any place in the world irrespective of your operating location. The store owner can run the business from anywhere.

Cons

● Product quality: Dropshipping reduces your involvement in the order fulfillment process, limiting your ability to monitor and guarantee product quality to the end customer.

● Fulfillment timeline: When a dropshipping service handles the fulfillment process, you do not have control over order selection, packaging, and shipment.

● Range of offers: Since you don’t handle order fulfillment, you may not be able to place special offers and promotions, such as bundling or free shipping, to attract customers.

● Profit margins: Little to no product differentiators means your business may end up competing more aggressively on price. Selling at low prices can eat up your profit margin.

Fulfilment by Amazon (FBA): A seamless dropshipping model

Offering similar benefits as dropshipping, FBA enables Indian sellers to reach international customers and deliver their products across the globe in a hassle-free manner. Although it is not necessary to sell via Amazon to use FBA services, with 300 million+ customers internationally and 18 marketplaces to export to, Amazon Global Selling is a great option for ecommerce exports. When you choose FBA to dropship your products, here’s what you get:

- Amazon stores your products in the Amazon fulfilment center.
- Amazon handles quick delivery to destinations across the globe with the Prime shipping option.
- Amazon offers 24/7 customer service
- Amazon FBA takes care of the returns
- Amazon FBA notifies you when you need to restock the products (if needed).
Amazon FBA

How does FBA work?

Step 1: You send the products that you want to ship to the fulfilment center.
Step 2: Amazon FBA receives the products and stores them carefully.
Step 3: Once the order is placed, Amazon FBA packs, ships and delivers the products to the customers.
Step 4: Amazon manages the customer service and also handles the returns.

What is Amazon Global Selling?

Amazon Global Selling is an ecommerce exports program that helps you take your business from India to the global markets. With 200 million paid Prime members and over 300 million customers globally, you can leverage Amazon’s global scale across the 18 global marketplaces in 200+ countries and territories. Over 70,000 Indian sellers are successfully selling globally with this program on marketplaces like Amazon USA, UK, Australia, UAE and more. Along with FBA, Amazon Global Selling offers easy registration, attractive product listing and international state-of-the-art tools to help sellers with promotions, language translation, and more.

A business where there is less investment, no shipping complications, and lower risks can be the right business to start. Start your dropshipping business with Amazon Global Selling and increase your sales by selling into new Amazon marketplaces.
Amazon export business-  Amazon Global Selling benefits
Make the most of the increasing exports from India to the world with Amazon
Amazon global selling India
Increase sales by participating in year-round sale events like Prime Day, Christmas and Cyber Monday
Fulfillment by Amazon FBA
Reach 300 million+ customers of Amazon across 18 international marketplaces

Frequently Asked Questions

What is dropshipping and how does it work?
Dropshipping is a procedure where sellers do not have to fulfill the product orders. Instead, the customer gets it delivered from the supplier or fulfillment center directly. It works in three simple steps – finding a supplier, taking and placing orders, and delivering.
Can dropshipping be done with Amazon?
FBA is an easier alternative to dropshipping. The seller has to procure goods from the manufacturers or suppliers of your choice and send it over to the fulfilment center. Amazon handles the shipping, customer service and returns on your behalf.
How much does it cost to sell internationally on Amazon?
Amazon Global Selling fees depend on your selling plan, product category, fulfillment strategy, and other variables. The options are flexible allowing you to choose the most suitable export cost from India for your business goals.
Published on September 27, 2021.
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