Dropshipping Business Guide for Beginners

If you’re an online seller or a freelancer, you would probably hear about dropshipping. You might wonder how they earn so much profit in doing such business. Then, you’ll get curious about how dropshipping works and how much it will cost to start up. Or perhaps, is having a successful dropshipping store enough for you to buy an affordable house and lot in Lumina Homes? 

Before we get any further, let us give you a quick overview of dropshipping business.

What is Dropshipping?

Dropshipping is an online business of shipping goods and items to your customers directly from a third-party supplier or seller. It’s a method where you don’t have to store these items yourself or have a physical store location.

A standard business transaction goes like this:

• You order and buy the goods at a wholesale price from the supplier. Often, you are required to purchase a minimum order quantity (MOQ). 
• You store and maintain the inventory of the goods until a customer makes an order.
• You process the purchased and shipped goods to your customer.

On the other hand, a dropshipping business model work like this:

• A customer made an order from your business.
• You pass the order info along to your dropshipper or third-party supplier.
• The dropshipper will charge you for the goods purchased at a lower price plus a dropshipping fee upon receipt of the order. Then, the dropshipper sends the goods directly to your customer. 

Therefore, dropshipping is a type of selling without actually handling fulfillment and shipping. 

Benefits of Dropshipping

Is dropshipping business fit for you, or is it a profitable business model? The answer usually depends on your goals and marketing skills. If you are determined to get a house and lot in the Philippines, you will surely do anything to achieve this goal.

Take a look at the benefits of dropshipping business model.

Easy to Set Up

You can quickly launch a business as it does not require business experience or expertise. You don’t have to look for a place to store your goods. You can start immediately with the right tools and resources.

 Doesn’t Demand Much Capital

As mentioned, you don’t have to spend money renting or maintaining a physical store, which requires high investment capital. You don’t have to purchase the products to maintain availability. You only need to spend on advertising, which is quite affordable.

Manageable

You can run the entire business alone without needing staff or employees. You are only responsible for managing your storefront once you find the right dropshipping supplier.

Flexible

The most significant benefit of dropshipping is you set your own rules and be your own boss. As long as you have a laptop and stable internet, you can run your business in your comfort, even if you are on vacation. What’s more, you can adjust your product lists and eliminate non-moving items. Thus, it sets your own pace.

Scalable

Another advantage of a dropshipping business is its scalability. You don’t have to change anything as you grow your business. You don’t have to worry about operational costs because your expenses don’t change. In fact, you spend less once you gain traction.

Pitfalls of Dropshipping Business

Along with its perks also comes with disadvantages.

Margins are slim

You should expect that the margins are slim during your start-up, especially if your chosen niches are competitive. It can be challenging to achieve bigger profits since you’ll be fighting for customers’ attention. However, if your chosen niches are less competitive, you’ll get better margins.

Order Processing is Difficult

The process of dropshipping may seem straightforward, but it can be difficult sometimes. This usually happens if you have multiple suppliers with different shipping solutions. Other suppliers also have different structures in placing processing and billing.

Lack of Control Over Products

You don’t completely control certain aspects, such as product stockings, fulfillment, and shipment. You will have to rely on it all your suppliers, and it can be overwhelming to manage if something goes wrong along the process.

Customer Service is More Challenging

The greatest drawback of dropshipping is handling customer service. You will have to take the blame if something goes wrong with the orders. You already did your best to provide the best customer service to your buyers, but you’ll be taking responsibility on behalf of your suppliers.

Guide to Start Dropshipping Business in 6 Steps

Start a dropshipping business in six (6) simple steps.

1. Start with the right business concept.

Dropshipping offers many options, so choose the right business concept or dropshipping business ideas. The most suitable dropshipping business idea must be your preferred niche and target market. It would be ideal to start with a limited number of products to test the waters. But remember, your concept is the foundation of your business or products to sell, along with your marketing efforts.

2. Look for multiple distributors.

Having the right business concept doesn’t guarantee you to sell the goods right away based on your chosen target market. Therefore, take the time to look for multiple suppliers, compare, and determine which one offers the best wholesale price. Also, get thorough research on the latest trends in your chosen niches.  

3. Choose the right suppliers.

In choosing the right suppliers, you need to consider four (4) things - quality, profitability, return policy, and reliability. Choose suppliers that are proven to provide quality items; read their reviews first and the success stories of dropshipping companies. Identify how much you can earn from this supplier’s product. Ensure you include the shipping, sales tax, and transaction costs. Also, opt for suppliers who keep their stocks available whenever you order. Lastly, determine if they have a return policy to lessen your problems in the future, especially in customer service concerns.

4. Build your own online store.

Building an online dropshipping business store can be tricky for a newbie, but it is essential to setting up a dropshipping business. It is where you market and sell your products, purchase transactions, and gateway to your potential customers. You can choose from different eCommerce store platforms like Shopify or WordPress. Some dropshipping eCommerce businesses utilize social media marketplaces like Facebook or Instagram. 

5. Register your dropshipping business.

Make sure you register your business to avoid future problems, especially if you plan to buy an affordable house and lot for sale or apply for a business loan. One of the standard requirements is the certificate of income tax returns. Moreover, it is also an effective way to separate your business from your personal asset. As such, you can also create a separate bank account for your dropshipping business and savings.

6. It is time to market your business.

Since dropshipping business is mainly done online, it is important to join various social media groups for online stores or online communities. Make sure they are relevant to your business or products. One effective way to market your business is not just to sell products. A successful dropshipping business must attract them through helpful tips, engage with them by providing solutions, and delight them by offering your products. Hence, you need to work hard on your marketing or use search engine optimization for online visibility.

Kickstart Your Dropshipping Business: Earn More to Invest More

Having one job is not enough to provide a better living for your family. Once unemployed, it may be difficult for you to cope with your monthly obligations. But if you own dropshipping business as side hustle can significantly help or maybe the next big thing for you. By following these simple steps mentioned above, you can earn more to invest more. You can even fulfill your childhood dream of owning your dream house.

Lumina Homes is here to achieve your goal. We offer affordable housing packages with the best payment scheme available for a business owner like you. Talk to our accredited sellers in your area today and learn more about our residential properties nationwide.