Nowadays, many people in the freelancing world are uploading their videos on YouTube showing the earnings they have made from drop shipping. In today’s article vopbuzz Forum will shed light on the same topic for its readers, what is drop shipping and how people are making money from it and how you can do it.

What is drop shipping?

Although the concept of drop shipping is quite old, its widespread use and excellent earning potential have only started recently. Drop shipping is a retail fulfillment model in which a store does not keep the products it sells in stock. Instead, when a store sells a product using the drop shipping model, it purchases the item from a third party and ships it directly to the customer.

As a result, the seller does not need to handle the product directly. The biggest difference between drop shopping and the standard retail model is that the seller does not carry the merchant stock or own the inventory. Instead, third-party sellers typically purchase inventory as needed to fulfill orders from a wholesaler or manufacturer.

Let me give you an example to better understand the drop shipping model, suppose you have a craftsman in your home who makes the best types of wooden models that are used for home decoration. Now he spends 50 rupees on this particular type of model and he sells this model to his customers at a wholesale rate of 100 rupees.

The wholesaler buys this product for 100 rupees and supplies it to other cities and by the time it reaches the retail store owner, the product becomes worth 500 rupees, which he keeps in his store for resale at 700 rupees. Someone buys the same product from there and sells it on Amazon for 1000 rupees.

Since the first original price of the product was 100 rupees and the more it increased, the price went up to 1000 rupees due to their profit and you are getting this product from Amazon for 1000 rupees.

Now you know this artisan personally, you go to him and decide that bro, I will put this product on my online store, when I place an order with you, you will make this product for Rs.100. I will give you 100 rupees more that the product will be delivered to the address I will tell you. Your contract is settled.

Now you put this product on your online store or amazon store which you cost Rs.500, because there are no middlemen in your product, you get a good profit even for Rs.500. And since the customer was getting this product for 1000 rupees, he will buy this product from you.

Drop shipping procedure

The drop shipping business model does not require products to be in-store and any store can operate completely without a single product inventory. A store that has a physical presence may have potential dropship merchandise on display, provide details on mail-order items through a catalog, or maintain a website with information only available online. A virtual store, on the other hand, only has a website.

Drop shipping stores don’t have to deal with all that hassle, and don’t need to carry any inventory like other stores.

Now again using the above example, as soon as you receive your product order, you immediately contact the artisan and ask him to deliver the product to such and such address and that artisan delivers his product to you. He puts it in an envelope and delivers it to the respective address. You pay 200 rupees to the artisan and you keep the remaining 300 rupees as your profit.

In this whole process you neither have to buy any product and keep it with yourself nor you have to transfer this product from one person to another but you also get your profit from it and the one who is making this product. It also leads to increased sales, which makes all three parties, the artisan, you and your buyer, happy.

This whole model is called drop shipping model in which you only have to carry the marketing cast i.e. you have to find your desired customer and convince him to buy your desired product. You didn’t have any product but you were selling someone else’s product.

How is drop shipping possible in Pakistan?

As there is no amazon facility in Pakistan, you can’t do drop shipping with amazon but still there is no need to be depressed or disappointed as this is available in many other e-commerce websites in Pakistan. The best example of what is happening and doing well is Daraz where hundreds of drop shippers are doing their job in the best way and earning good money.

In this whole model, you have to make sure that the product you put in the store is of good quality for its price, that the product reaches your customer in a good way and at a fast speed, and any There is no direct contact between the customer and the product manufacturer so that they do not directly benefit from your marketing efforts.

But apart from all this, the most important thing is to do your thorough research on the product that you are going to apply first so that you choose the product that is suitable for you.
The demand in the market should also be such that it can be sold well and its existing price in the market should not be less than your price when someone will order from you.

Advantages and Disadvantages of Drop Shipping

On the face of it, the dropshipping model looks so simple that we talk to a product person and start working without making any investment or carrying any inventory and do a little marketing and turn a profit on the side. No, not at all. This model has its own advantages and disadvantages, which are discussed in brief.

Advantages of Drop Shipping

Low startup cost

Starting any business requires buying a large amount of products and keeping them in your warehouse which is sure to incur huge costs but in a dropshipping model business as you don’t have to buy and store any products. Therefore, you can start this business with less capital. Because all this work is done by some other party instead of you and you only find customers.

Lower order fulfillment costs

Till the fulfillment of any order you need to incur warehousing costs, order booking, order tracking, labeling, shipping etc. All the work doesn’t have to be done but the product manufacturer is doing all the work and you can focus on getting more orders and growing your business.

Sell and test more products with less risk

Without the constraints of physical inventory and associated costs, drop shipping lets you update your inventory quickly, easily, and cheaply. If you know a product is doing well for another retailer or seller, you can immediately offer it to your customers without waiting for it to arrive in your warehouse.

Dropshipping allows you to test new items without risking your leftover inventory. You only pay for what you sell. That is, when there is no inventory, then there is no fear that if the product is changed, where and how will the previous stock be sold.

Without store location closures

Since in this business you are only running an online store which has no physical presence and you don’t have to store any products, so you don’t need to start this business from any particular place in the world. I can start this business from anywhere and handle it sitting in any part of the world, even if you started the business in Pakistan and later you go to UK for tourism, you can start your business from there. Can handle business.

More opportunities for business growth

In any physical store, if you have multiple orders for the same item, you have to handle each order separately, and if the same order comes in large enough to keep the required quantity in your warehouse. If the goods are out of stock, then this problem is compounded and you have to get the product from the wholesaler immediately and transfer it to your store to fulfill the orders in time, so you might order more than a certain limit. Don’t receive them or at least can’t deliver them on time.

But in the dropshipping model, you deal directly with the product manufacturer who is capable of producing the product in large quantities and always or often has more finished goods than your orders, so you can fulfill the orders. There is no hassle to do and you are able to grow your business very easily as all post-order matters are handled by the product manufacturer itself and you only need to focus on growing the business.

Disadvantages of the drop shipping model

Low profit

Because in the drop shipping model you are not doing business based on a specific region, but a very large area sometimes at the level of the whole world or even the whole country, in which the competition is very high and you have to have your own in this competitive environment. To make a position, you have to sell your goods at a lower price than others while keeping your profits to a minimum, so the profits are often very small. However, if you choose a niche in which the competition is very low to get a better position in this competitive environment, this problem can be controlled.

Problems of controlling inventory

Since in this business you have no inventory of your own and you are relying on the inventory of one or more people who are selling their products to people other than you, their inventory Changes happen very quickly and you may face many problems keeping this inventory updated on your store.
Less control over order fulfillment and lead time

Since you depend on others for the process of transferring the order to the customer, you have very little control over the process, if the product is not delivered properly to the customer, or the product to the customer. If it takes longer than usual to arrive, the customer will lose confidence in you And the customer may contact another store to buy the same product a second time which is your loss. Therefore, you should contact the suppliers who manufacture the product in a reliable and reliable way The order fulfillment people should be contacted immediately to avoid this type of risk.

Shipping complications

If you work with multiple suppliers, as most dropshippers do, the products on your online store will be sourced from several different dropshippers. This complicates your shipping costs.

Let’s say a customer orders three items, all of which are available only from separate suppliers. You will have to incur three separate shipping charges to ship each item to the customer, but it is probably not wise to pass this charge on to the customer. And even when it makes sense to include these charges, automating these calculations can be difficult.

Poor customer services

If your supplier delivers products late, damages them, delivers the wrong items, or otherwise cancels your customer’s order, the customer will give you a poor performance rating. We have already mentioned the problem when it comes to fulfillment process and timely transfer of goods. But it is more important than that.

You will not be able to maintain the personal contact that retailers who manage their inventory may provide to customers. You won’t be able to quickly resolve customer issues without monitoring inventory yourself – you’ll have to deal with your suppliers to resolve your customers’ concerns.

This way of helping your customers can cause problems for you that can take a long time to resolve, and with your customers who often don’t wait that long and will quickly tire of that wait and It will lead to bad rating for you.

Supplier errors

Have you ever been accused of something that wasn’t your fault, but you had to take responsibility anyway? Even the best drop shipping suppliers make mistakes in fulfilling orders, mistakes for which you must take responsibility and apologize.

Issues like mediocre and low-quality suppliers, missing items, delayed parcel delivery, and low-quality packaging etc. will cause frustration for you, which can also damage the reputation of your business.

Although most people reading the above drop shipping model would think that it is a difficult and risky business with low profit and high chances of loss, but it is not that this model is that bad. Many people are making good money by adopting the model.

So don’t panic and if you have the required skills you can create an online store and market it or connect with an already running store like Daraz etc then start selling a product today. Start researching what is in demand but not in supply and you can build a relationship with the manufacturers of this product and convince them to supply it and then you can start this business.

Initially choose a couple of products for testing, keep low profit and gain experience and when you think you can do it, then start it in earnest. But just keep in mind that this is a full business model and not something more suitable to do as part time.

Only start it if you can devote enough time and attention to it, otherwise you will not only risk losing money, but you will lose confidence in the business even though it will be entirely your fault.