Hey all, it’s Matt from Style Factory here,   the go-to site for advice on ecommerce  and growing an online business. In this video I’m going to  explain what dropshipping is,   its pros and cons, and the  tools you’ll need to do it. So stay tuned to end and find out if  dropshipping is the right business model for you.

But before I dive in, I’d like to invite you  to like this video, subscribe to our channel   and hit the notifications bell. This will give  you easy access to all our ecommerce resources. Ok, so let’s start things off with  a simple definition of dropshipping. Dropshipping is a business model  where you don’t manufacture,   purchase, store or deliver any products.

Instead, you take orders for products  via an online store, and pass them onto   a supplier. The supplier then charges you for  the order, and sends the goods to the customer. This sounds like an easy,   stress-free way to do business — but there  are some important pros and cons to consider.

Let’s walk through the key ones now,  starting with the advantages of dropshipping. 1. Dropshipping doesn’t  require much startup capital. The main advantage of dropshipping is that you  don’t need much cash to start doing it. When you   dropship, you become a ‘middle man’: you mark up  on products that you never buy, stock or deliver.

Because you don’t have to spend a lot of money on  inventory that you might never successfully sell,   dropshipping is ultimately a low-cost,  low-risk way to start a business. 2. Ongoing running costs are low. In addition to providing a low-cost way to  start a business, dropshipping also lets you   run a business cheaply.

It doesn’t require  you to pay for storage space or staff; you   can technically run the business yourself using  just a laptop and some fairly cheap software. 3. You can sell a wide range of products. With dropshipping, there are no limits  placed on what you can sell online.   A lot of dropshipping companies are available that  can supply a huge number of products — meaning   that you have a lot of flexibility  regarding the niche you want to dropship in,   and can offer your customers  an extensive range of products.

4. You can run your business from anywhere. A dropshipping business doesn’t tie you down – so   long as you have an Internet connection and  a computer, you can run it from anywhere. 5. It’s not labour intensive. Unlike a business that involves  selling your own products,   dropshipping is not labour intensive.

You don’t  need to worry about sourcing warehouse space;   packaging goods; shipping products; dealing  with product returns; or inventory management. 6. It’s easy to scale. In order to scale certain types of online  businesses, you need to invest heavily in staff,   systems and inventory — and sometimes change your   operations in radical ways  to ensure continued growth.

This is not really the case with dropshipping  — aside from investing in marketing,   you don’t need to spend much or change much  to grow this type of ecommerce business. Most of a dropshipping business’  infrastructure can more or less   stay as it is — it’s just a case  of putting more orders through it.

7. It’s easy to experiment with. Because setting up a dropshipping business is  fairly risk-free, you get a lot of freedom to   experiment and try things out. Changing your  online store’s branding and product ranges doesn’t   have to involve much of a time or cash investment. So, as you can see from the long list of   advantages associated with it, dropshipping  can be a very attractive business model.

But it shouldn’t be viewed as a  get-rich-quick scheme — it can be   tricky to do dropshipping right, and there are  some key ‘cons’ to consider as well as pros. So, let’s take a look at the reasons  why dropshipping might not be for you. 1. The profit margins can be low. Because dropshipping is a low-cost, low-risk  business model, the barriers to entry are low.

   This means that you will find a lot of other  entrepreneurs entering the dropshipping space,   marketing the exact same products  as you, and competing hard on price. 2. It’s hard to ensure that dropshipped  products are ethically produced. The advantage of making your own products,  or sourcing them locally to stock and sell,   is that you can gain a clear  understanding of who made them and how.

With dropshipping however, you’re often  completely in the dark about the working   conditions in which your goods were made,  and many dropshipping suppliers are based   in countries that don’t have a great record when  it comes to working conditions and forced labour. 3. You have limited control over the  appearance and branding of your goods.

With most dropshipped products, you have  little or no control over their appearance:   you are generally dealing  with ‘off the shelf’ items. So, if having a product range featuring  your own brand is important to you,   then dropshipping is not  necessarily the best approach. 4. Suppliers can be unreliable.

With dropshipping, you’re often  relying on suppliers that you   don’t have a personal connection with,  and that you can’t extensively vet. Sometimes this can lead to  issues with product quality,   poor communication, items going  missing and low-quality packaging. And all this can result in unhappy customers.

5. Managing multiple  suppliers can get complicated. If you’re working with multiple suppliers for your  dropshipping business, you can end up with quite a   complicated supply chain. Different suppliers  may have different operational structures in   place for shipping and billing — and all  this can add up to some tricky admin work.

6. Providing customer service can be challenging. When things go wrong with a dropshipping order,   providing good customer  service can prove challenging.   This is because to sort out any problems,  you’ll often need the help of a third-party   supplier that you don’t know well and who may  be located on the other side of the planet.

This may lead to a long wait for  your customer to get their problem   solved — and they will be puzzled  as to why you, as the store owner,   can’t simply resolve the issue or arrange  a new delivery of a product yourself. 7. Shipping costs can be high. Depending on where your customer  base and suppliers are located,   you may face quite high  shipping costs on your products.

For example, a lot of dropshipping  suppliers are based in China,   and if the bulk of your customers are  based in the US, they — or you! — will   have to pay quite a lot of money to  get their products delivered to them. Ok, so those were the key pros and cons of  dropshipping. But how do you actually do it? To start dropshipping,  you’ll need three key things:   an online store building tool, a dropshipping  app and an online advertising platform.

Let’s look at each of these in turn. An online store builder As its name suggests, an online store builder  lets you build a website that sells stuff! Popular online store builders include  Shopify, BigCommerce, Squarespace and Wix;   of these we feel that Shopify and  BigCommerce give you access to the   most comprehensive range of dropshipping features.

Shopify is an ecommerce store builder that  is particularly well suited to dropshipping. Unlike competing platforms, it makes a  free dropshipping starter kit available   to its users that contains a 14 day  trial of Shopify, dropshipping course   and other training resources. You’ll find  a link to this in the video description.

A dropshipping app In addition to an online store builder,   you’ll need a dropshipping app to connect  your store to a dropshipping supplier. Once installed, this will let you select products  from a supplier’s inventory, list the relevant   products on your site, accept orders for them and  pass the orders onto your supplier for fulfilment.

You’ll find dropshipping apps in the app  store of your chosen online store builder,   with popular ones including DSers;  Modalyst; Spocket, Printful and Printify.  An online online advertising platform  New dropshipping stores are highly  unlikely to perform well in organic   search results — getting a new site to rank  highly involves quite a lot of SEO work.

So, in order to get a dropshipping  business off the ground quickly,   you usually need to invest in online advertising. Typically this involves search  engine marketing and social media   advertising — with Google being the obvious  platform choice for search engine marketing,   and Facebook and Instagram being  the obvious choices for social ads.

  And that’s all the key things you need to  know about getting started with dropshipping. But there’s lots more to learn about how  to run a successful dropshipping business.   So make sure you check out the full Style  Factory guide to dropshipping — there’s a   link to this and other dropshipping  resources in the video description.

  To get more ecommerce tips, do  make sure to subscribe to our   channel and hit the notifications bell. And finally, if you have any questions   about dropshipping, do leave them in a comment.  We read them all and will do our best to help.

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