What is dropshipping?
Instead of keeping product stocks, the company directs the orders received through the site to the supplier company and manages the orders through the supplier’s warehouse. Thus, the company can sell suppliers’ products without keeping product stocks.
When consumers enter the e-commerce site, they can see and buy different products. In the background of the work, the seller company directs the incoming orders to the supplier company and ensures that the product is sent to the consumer. This process is implemented by integrating XML. In XML integration, the supplier company sends the file containing the photos, product description and price information of the products to be sold to the company that wants to sell without stock, and this company adds this file to its own e-commerce site and pulls the products from the supplier company.
Dropshiping / drop-shipping companies do not need a warehouse. Since they do not need a warehouse, companies do not have to deal with operations such as warehouse and stock management, both reduce workload and significantly reduce costs.
Due to the lack of warehouse management, there is no need for people to work here, and this again helps to reduce costs.
Since there is no sticking to a single supplier, different products can be pulled from different suppliers and a wide product category can be included on the site.
It is possible to reach wider target audiences with increasing product variety.
Thanks to the absence of warehouse and stock management and product packaging operations, an e-commerce site can be managed from any location with an internet connection, product orders can be placed by following the order, communicating with the suppliers.
When you start to do drop shipping, you do not need any capital to supply products, so you can enter e-commerce at low costs.
The e-commerce site only pays the stock costs of the products offered for sale on its website to the supplier company. For this reason, it is not held responsible for the products it does not sell and it reduces its costs because it does not pay any price for them.
Since the product packaging and shipping are done by the supplier company, the e-commerce firm that sells without stock does not have to make an agreement with the cargo companies.
When you shoot products on the supplier, you may not have much information about the products you sell. If you do not know how the products work and what kind of problems they cause, you will have difficulties in customer support. It is very important for your e-commerce site that you provide technical support before and after sales. For this reason, starting business without knowing about the products you sell may cause you to lack customer support.
Consumers will contact you first when they encounter any problems when purchasing products through you. For this reason, the mistakes made by the supplier can be left on you and this may cause you to have problems with customer satisfaction.
The fact that the supplier company delivers the product does not mean that you will not take any responsibility. You need to follow up the cargo simultaneously with the supplier company. Otherwise, you may have to deal with problems such as not being delivered or shipping the cargo late.
It is very important that you also follow the supplier company’s stock management. Because these companies can work with other e-commerce companies and the related products may be exhausted in their stocks. If your supplier does not manage the stock correctly and does not update the products that are out of stock, it may cause you to sell products that do not have stock on your e-commerce site. This will make consumers quite unhappy, and you may have to deal with transactions such as refunds.
Care may also be required when obtaining product information from suppliers. The supplier company may have entered incomplete or incorrect information about the product. In this case, you can misinform the consumers. For this reason, you should check the descriptions of the products whose information you have taken and display the products on your site in this way.
You will be highly likely to do business with low profit margins in dropshipping / dropshipping. Since many companies do business this way, they try to sell products with little profit on them to increase their sales. High competition will also result in low profit margins. These low margins can prevent you from increasing your profitability in the long run.
You should also take into account that banks or payment systems will charge a commission per transaction. Setting prices without thinking about these cuts can further reduce your profit margin.
What you need to pay attention to?
If you want to do drop shopping, you should first choose the supplier company you will work with. Working with a company that does warehouse and stock management correctly and you can trust in product shipments will allow you to do your job better in the long run. It is also very important to have technical knowledge about the products you sell. In this way, you can provide the necessary support to consumers before and after sales and increase customer satisfaction.