Dropshipping is becoming more and more popular - and with good reason. Because it's a business model with benefits for webshop owners. But what exactly is dropshipping? And how can it benefit your business? I'll go into that in this guide.
Dropshipping is a business model where a company sells goods to customers without having a warehouse. Instead, the stock is held by an external supplier, who also handles order processing and shipping.
When the company receives an order, it is sent directly to the supplier's ordering system. The supplier then packs and ships the order, and only then does the webshop owner buy the goods from the supplier.
In this way, the company avoids having to invest in inventory and can also avoid some of the costs associated with keeping products in stock. Dropshipping is particularly popular in e-commerce because it allows a business to offer a wide range of products without having to invest in stock.
You don't own your own stock, which can be an advantage if you want to start an online business without having to invest large amounts in inventory - which is why startups typically use dropshipping.
Dropshipping can also be a good way to test a product in the market without having to invest in a large batch of goods, just as established businesses can use it if they want to expand their existing stock without investing further.
There are really no restrictions on what products can be dropshipped. From electronics to clothing, furniture to kitchen utensils, most product groups are possible to sell through dropshipping.
However, it is important to choose a niche in which you have interest and knowledge, as this will make it easier to find the right suppliers and target your market. In general, if you decide to become a dropshipper, there are some good tips you can take into account.
Choose a popular product and make it unique
To stand out from the crowd, it's important to make your product special. You can do this by niche-targeting your product range. If you want to sell clothing, you might consider focusing on a specific segment, such as swimwear. If you are interested in selling sports equipment, specialise in a particular sport.
Find products that are cheap to ship
Profits are lower when dropshipping, so it's important to choose products that are cheap to ship to customers. To avoid your entire profit being spent on delivery costs, you need to minimise the extra costs.
A good idea is therefore to choose products that weigh less and are therefore cheaper to ship. You can choose to sell clothes instead of furniture or jewellery instead of exercise machines. Always make sure you check the cost of different products before you choose what to sell.
Sell products with a low return rate
Most people have probably tried to return an item because it was free. In these cases, however, the webshop pays the shipping, and this can be an expensive pleasure if it happens many times. If you want to avoid putting yourself in a position where your customers are more likely to return goods, choose an industry with a lower return rate.
You can dropship from abroad, but the easiest starting point for you would be to have your suppliers in Denmark. This avoids a lot of challenges and makes it much more likely that the product will reach the customer smoothly.
If you still want to use suppliers outside Denmark, the best option is to stay within the EU, otherwise you may be hit by customs duties, VAT and other fees.
If you choose to import goods from outside the EU - for example, from Alibaba or Aliexpress - be aware of the following:
Dropshipping is a business model where a company sells a product, but instead of stocking the product itself, the company has the product delivered directly from a supplier to the customer. There are several advantages to using dropshipping as a business model.
First, it requires less investment compared to setting up a physical warehouse, as the company does not need to buy the products in bulk and store them. This allows the company to offer a wider range of products without having to invest in storage space.
Another advantage of dropshipping is that it is easier to change suppliers or products without negatively affecting the business. The company is not tied to inventory, so it is easier to adapt the business to changing market conditions or demand.
Finally, dropshipping can be beneficial for the company because it allows the company to focus on marketing and selling the products instead of having to deal with inventory and logistics. This can help the company increase sales and create a more efficient business model.
In summary, the advantages of dropshipping are:
Since you don't need to invest in inventory, you can start a dropshipping business with relatively low start-up costs. Plus, you don't have to worry about spending money on premises and insurance. In other words, dropshipping requires less investment.
With dropshipping, you can offer a wide range of products without having to worry about storing them in your own warehouse. This allows you to adapt your range to customer demand. In addition, dropshipping also makes it easier to work remotely or on the move, because you don't have to be on-site in relation to your stock.
Dropshipping makes it easy to manage your supply chains, as you don't have to worry about storing or shipping the products yourself. This allows you to focus on other aspects of your business such as marketing and sales.
When you don't have to store the products in your own warehouse, you don't have to worry about storage density. This can save you a lot of time and hassle.
With dropshipping, you can easily test new products on the market without having to invest in large amounts of inventory. This makes it easier for you to determine which products are most popular with your customers and which are not.
No business model is perfect - while the benefits of dropshipping are many, there are also drawbacks to not managing your own stock. So, if you're considering dropshipping, it's a good idea to understand the drawbacks and challenges of this business model so that you can safeguard.
Firstly, there is a higher risk of delays or errors compared to having your own stock, as the company is dependent on the supplier's ability to deliver the products on time. This can lead to dissatisfied customers and bad reviews, which can damage the company's reputation.
So choose your supplier carefully, unless your Trustpilot is going to be flooded with sour reviews. Ultimately, it is you as the business owner who is liable for any failures by the supplier.
In addition, it can be difficult to control the quality of the products as the company does not have direct access to the products until they have been delivered to the customer. If the quality is poor, this can also lead to dissatisfied customers and bad reviews.
Finally, margins may be lower in dropshipping as the company does not have the possibility to buy the products in bulk and thus obtain discounts from the supplier. This may make it more difficult for the company to monetise the products.
Okay, now you know the benefits of dropshipping and you're ready to sit back and let the orders roll in without having to think about delivery of the goods. But how do you get on the journey to becoming a dropshipper? The answer can be found in 5 simple steps.
Choose a product and target group you want to specialise in. It pays to think narrowly, as you can then shoot sharper with your marketing.
The supplier is probably the most important link in your dropshipping strategy, so take your time to choose the right one. Make sure you have various agreements in place for webshop integrations and goods handling.
Not least, you need a way to sell your products - in other words, you need a webshop. Here, for example, I can recommend Shopify as a sales platform, as it is user-friendly and comes with many out-of-the-box features that make it easy to turn thought into action.
You need customers in your store if you want to be successful with dropshipping. That's why you need to get your marketing strategy right. In the start-up phase, it pays to advertise on social media, as your start-up is unlikely to be top of mind in your customers' minds - top funnel marketing can cement your brand in the minds of your target audience.
Unless you're in a niche industry, you should also aim to market in the mid- and lower funnel. Here, paid channels such as Google Ads and Google Shopping can be advantageous because you can buy ad space at the top of search engines and get lightning-fast exposure to your target audience.
However, advertising is not always a long-term strategy, so you should continuously work on search engine optimisation to ensure long-term success in search engines.
Once you've got customers in the store, it's all about making them as loyal as possible so they come back. You do this by providing world-class customer service to all your customers, so they want to choose your webshop over your competitors'.
Basically, succeeding with a dropshipping webshop is no different than succeeding with a regular webshop. You therefore need to have a basic grasp of your business and your brand to be successful.
The basic rule is that you should earn more money than you spend. Even if you don't make money from day one, you need to have a plan for how you will make money in the future. This means keeping track of all your costs so you know how many items you need to sell to hit your desired profit.
It is important to find reliable and trustworthy suppliers who deliver quality products and can process and dispatch orders quickly. That's why you need to spend some time researching your options to make sure you get the best deal.
Make sure your website looks professional and is easy to use. It is also important that your products are described in detail and correctly, and that your customers can easily find you in the search results.
Use social media, Google Ads and other online marketing tools to drive traffic to your webshop and generate sales.
Differentiate yourself from the competition by offering exclusive offers and promotions to your customers.
Build a strong brand by delivering great customer service and building trust and loyalty with your customers. Create brand awareness with your target audience so you are in their minds.
Dropshipping is a form of business where you sell products to customers but outsource the storage and handling of your stock to a third party. This allows you to focus on branding and marketing.
Potentially, dropshipping can be profitable if done correctly. It is important to research suppliers and products carefully so that you can offer competitive prices and fast delivery. It is also important to have good marketing tactics to attract customers to your shop.
Dropshipping can be a good option for e-commerce businesses, especially for those who want to start a shop with limited capital. It can also be a good option for those who want to test a product or niche before investing in larger quantities of goods.
Yes, it is possible to make money dropshipping. However, it requires a good understanding of products, suppliers and marketing. It is also important to have a good business plan and to understand the costs of running an online store.
To get started with dropshipping, first research suppliers and products to find the best deals. Then you need to set up an online store and choose an e-commerce platform like Shopify. You'll also need to get your marketing right to bring customers into your store. If you need help setting up a Shopify webshop?
Whether you're a generalist or a marketing specialist, our SEO specialists have put together some great advice for you on our blog.
Learn more about SEO in Webamp Academy.