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What is reverse dropshipping: Guide to creating an export strategy for it

Reverse dropshipping is usually the method of sourcing high quality products from the countries that usually import goods. In this blog, find out how it works and its pros and cons.

The internet has opened multiple business avenues for businesses and MSMEs in India and dropshipping is one of them. Dropshipping allows sellers to sell products of a manufacturer or wholesaler without having to store them. Similarly, reverse dropshipping is gaining popularity among entrepreneurs as one of the growing business models that offer substantial profit margins.

What is reverse dropshipping?

Reverse dropshipping is a relatively new business model in which online sellers source high quality products to sell in countries like China, India, Indonesia and other Asian countries, which are home to mass production facilities. As the name suggests, this is usually the opposite of dropshipping. In dropshipping, countries like India and China export products to USA. However, in reverse dropshipping, products used are made in developed countries like USA or United Kingdom that usually outsource bulk manufacturing to Asian countries.

How does reverse dropshipping work?

Here’s a sample process with steps of how reverse dropshipping works:

Connecting with dropshipping suppliers

As the first step, it is important to connect with dropshipping suppliers, who are the major source of products for your business. They manufacture, store, package and deliver products. Therefore, business owners must collaborate with them to ensure defect-free manufacturing, quality assurance, secure packaging and timely delivery.

Listing products on your e-commerce store

Once you have a trusted supplier of high quality products, the next step is to list products on an e-commerce website like Amazon international marketplaces. List all products on individual product pages with suitable descriptions and photos. Set reasonable prices for these products and ensure that customers can easily place their order to buy these products.

Marketing your store

Similar to regular dropshipping, you need to market products on your e-commerce store or brand page. You can leverage various marketing strategies provided by e-commerce websites itself like Amazon advertising or opt for social media marketing, paid ads and search engine optimisation to increase your reach and sales.

Pros and cons of reverse dropshipping

Pros

High profit margins
One of the lucrative benefits of reverse dropshipping is that it offers high profit margins than the traditional business model. Most vendors purchase goods in bulk, which gives them a better profit margin. Reverse dropshipping vendors leverage higher demand for high-quality products. Hence, they sell smaller quantities of high-demand products to increase their demand further.

Less competition
As most sellers use regular dropshipping model, reverse dropshipping involves high-quality sourcing products from western countries and selling them to Asian countries where they are in high demand. Thus, less competition will help you stand out from the rest.

Lower setup cost
Unlike traditional businesses that require massive setup costs for inventory and manufacturing, reverse dropshipping has lower setup costs. You need to list on an e-commerce store and you can export to any part of the world.

Cons

Logistic difficulties
Logistics is a challenging aspect of any import-export business. The lack of cooperation and control can affect your reverse dropshipping business. So, it is important to plan your logistics in advance and prepare accordingly.

Marketing difficulties
Effective marketing ensures higher sales. No matter how great products you sell, it has to reach the customer, which is impossible without effective marketing. It can be challenging to market your products abroad due to many reasons like language barrier and marketing campaigns. Thus, listing your products on e-commerce sites like Amazon USA, UK, etc means you can use their tools to advertise your products.

Should you opt for reverse dropshipping?

After analyzing the benefits over drawbacks, you will be able to decide whether it is worth investing in a reverse dropshipping business. This model allows you to sell products in new markets and earn high profit margins. With the rising customer base and disposable income in Asian countries, the demand for products from western countries is also on the rise. If you are open to taking the risk of relatively new business models and want to leverage this rising demand, you can start a reverse dropshipping business.

Fulfillment by Amazon (FBA): A seamless dropshipping model

Offering similar benefits as dropshipping, Fulfillment by Amazon (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 e-commerce 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).

Explore Amazon partner carrier service

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 e-commerce 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 100,000 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.

Frequently Asked Questions

Is dropshipping illegal?

No, dropshipping is not illegal. It is a retail fulfillment method where seller do not stock products listed in their stores instead they source from the manufacturer and directly sell it to the customer.

How does Amazon Global Selling assist exporters?

Dropshipping can be tricky for beginner or early-stage exporters. Amazon Global Selling is a revolutionary export program that helps exporters expand their business by crossing national barriers and selling their products in 18+ international marketplaces like the USA, the UAE, the UK, Australia, and more. It also assists them in selling products in more than 200 countries and territories. AGS helps exporters in obtaining crucial documents for legal registration and export operations.

Published on October 21, 2022.

Sources:
1. https://pagefly.io/blogs/shopify/reverse-dropshipping
2. https://www.shiprocket.in/blog/what-is-reverse-dropshipping
3. https://www.bluecart.com/blog/reverse-dropshipping
4. https://www.reconvert.io/blog/is-dropshipping-legal/

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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.

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