E-commerce has greatly changed the way businesses operate today. The greatest advantage is that one can afford to run a business on the Internet without having a physical store. Customers also enjoy the convenience and personalized shopping experience that e-commerce offers.
One of the most innovative e-commerce models that does not require a startup capital to start a business is the dropshipping model. Here, manufacturers and suppliers play a major role in freeing up the budget and time for new, and Small and Medium Businesses (SMBs).
How Does Dropshipping Model Work?
- In this model, the business does not manufacture or create the products they offer to customers. This is done by a manufacturer or wholesale dealer, while the online store is only used to put them up for sale.
- Once the online store and the wholesaler sign a partnership deal or an agreement, the products are added to the website.
- When a customer buys a product from the online store, the order is immediately passed on to the supplier. Here, the product is packaged and shipped to the customer on behalf of the online store.
- The storage, packing and shipping of the goods are not in the purview of the online store.
- When it comes to dividing profits, the supplier keeps the wholesale price of the product, while the online store retains the profits.
Benefits & Drawbacks
Dropshipping e-commerce model has its fair share of benefits and drawbacks. It requires very less money and resources to get started, and the profits can be used for other areas like website development, Search Engine Optimization (SEO), and more. With the supply chain aspect completely taken care by the manufacturer or wholesaler, the business needs to only oversee every order till delivery. This makes dropshipping a lucrative business model to pursue for entrepreneurs and SMBs.
The challenges arise due to less control over the supply chain process. The customers will not be aware of the dropshipping supplier, and any mistake or error will be attributed to the online stores. From the economics perspective, you need to be spending more to spruce up your online stores and the profit that is generated may not be sufficient to meet those needs. The toughest challenge of them all is to find the right supplier for the business. For every dropshipping partner (manufacturer or wholesaler) you select, a thorough selection process needs to be followed to ensure your customers get the best purchasing experience. Factors such as reliability, scalability, quality of products, packaging, timely delivery, etc. need to be taken into consideration before finalizing the partner.
Whether it is dropshipping or any other e-commerce model, you must ensure that your potential customers believe you are better than others offering the same product or service. With a greater number of customers using smartphones to shop these days, m-commerce has come to support e-commerce businesses in a large way. Mobile apps can give your online store much-needed visibility, and assist in keeping the customers constantly engaged.
With a mobile app for your online store, you can beat competition through smart customer outreach programs. Mobile apps are not only useful to bring in first-time website visitors, but also for loyal customers to continue their support. Vajro’s mobile apps can act as a catalyst to improve your visibility in the e-commerce space. We are a mobile app factory catering to a number of global retail businesses. We offer a 14-day free trial for you to experience the multifold benefits of our mobile app. If you are interested in Vajro, drop us a line and we’ll get back to you.