Question

Write a publication on drop shipping ecommerce business. The paper should follow this format; title, abstract, introduction, literature review, method, conclusion, analysis, recommendation and reference. The paper should be at least ten pages long

Answer 1

DROP SHIPPING ECOMMERCE BUSINESS

ABSTRACT

Dropshipping is a retail fulfillment method where a store doesn't keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product.

The biggest difference between dropshipping and the standard retail model is that the selling merchant doesn't stock or own inventory. Instead, the merchant purchases inventory as needed from a third party – usually a wholesaler or manufacturer – to fulfill

INTRODUCTION

Ecommerce, also known as electronic commerce or internet commerce, refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions. Ecommerce is often used to refer to the sale of physical products online, but it can also describe any kind of commercial transaction that is facilitated through the internet It involves the use of Information and Communication Technology (ICT) and Electronic Funds Transfer (EFT) in makingcommerce between consumers and organizations, organization and organization or consumer andconsumer. With the growing us of internet worldwide, Electronic Data Interchange (EDI) has alsoincreased in humungous amounts and so has flourished e-commerce with the prolific virtual internetbazaar inside the digital world which is righty termed as e-malls.

Whereas e-business refers to all aspects of operating an online business, ecommerce refers specifically to the transaction of goods and services.

Drop shipping sounds simple on the surface. It entails you setting up your own ecommerce shop and reaching out to suppliers who take your orders and ship those orders to your customers. It's slightly different than ecommerce fulfillment.

In short, it's designed so that you don't have to house any inventory, and you don't have to worry about any shipping costs or logistics.

Drop Shipping

In the drop shipping scenario:

• (1) The customer pays you for the product.
• (2) Only after you get the money from the customer, you pay the supplier to fulfill the order.
• (3) The supplier sends the final product directly to the customer.

Classic

In the classic commerce model:

• (1) You get the materials or the elements of the product from the supplier + at this stage you also need to pay the supplier.
• (2) The customer pays you for the product.
• (3) You send the product to the customer.

As you can see, the most significant difference between drop shipping and the classic way of operating is that you don't hold any product inventory Instead, you only pay for it when the customer has already given you the money for the order.

This makes  drop shipping one of the few business models where you don't need to spend money before the customer actually pays you,  which minimizes a lot of your risks.

PROS & CONS OF DROP SHIPPING

Pros	Cons
Good earning potential with arguably low barrier to entry.	You outsource a big chunk of your customer satisfaction. Someone else builds and sends the product. This is just a huge part of the overall customer experience. If anything goes bad with your supplier, the customer will still blame only you. In general, you lose quality control since you can't see or use the product before it goes to the customer.
Location independent (for the most part). For small, one-person businesses, most of the time you just need a laptop and an internet connection.	It's more probable to come across copycats – people attempting to do exactly what you are doing.
Less capital needed for the initial investment. With drop shipping, you don't manufacture anything yourself, so you don't need to invest in inventory, materials, tools, or anything else related to getting a product created.	Returns can be tough. Based on the agreement you have with your suppliers, customers might be required to return the products to you, and then you have to take care of the return/complaint process yourself. During that time, keeping the client happy can be difficult.
You buy from your suppliers only after you've already made your money.	You lose control over shipping quality/speed. In a business where you do everything from A to Z, you also control (nearly) everything. This includes all things related to shipping. With a drop shipping business, basically by definition, the shipping part is outside of your control.
It's easier to scale your business. Quite simply, as a drop shipping business, ramping up your sales volume is not that much connected to higher product/operating expenses. You have your suppliers doing the heavy lifting in that department … with one exception – more on that in the corresponding cell	As you grow, more sales means more customer support. This is the one area you can't escape. Even having fulfillment handled by your suppliers, customer service is still on you. This is just simple math. While selling 100 products vs 10 products isn't more costly for you, supporting 100 customers vs 10 customers is.
Less overhead. There's: no storage needed, as you don't keep any products with you, no need to pack anything yourself, no need to track your inventory, no need to hire more staff to deal with more products or sales coming in.
Easier to pivot or change directions. If your current drop shipping business model doesn't play out that well, it's easier to change directions and start offering something else. Compare this to the traditional model … where you'd need to invest in new tools, materials, processes, and whatnots.

You really need give yourself is whether drop shipping is something you should actually do, and not as much if it's something that you can do. You need to consider all the pros and cons, and also look into whether the model is in tune with your vision, goal, and actual market/niche.

To help you with that, let's start with the most common misconception in the drop shipping land … and also probably the main cause of failure of many drop shipping businesses.

LITERATURE REVIEW

Many e-commerce retailers use drop shipping to satisfy demand. A retailer simply forwards customers' orders to the manufacturer who fills the orders directly to the customers and is paid a predetermined price by the retailer. Advantages of drop shipping include lower costs of holding inventory, materials handling, and obsolescence. Disadvantages of drop shipping include fragmented order delivery when a single customer order involves products from different manufacturers and longer delivery times. A mix of holding inventory and drop shipping is frequently optimal for e-retailers. In this paper, we design an optimal mix strategy which captures the advantages of drop shipping and avoids many of its shortcomings. We use two different optimization criterion, maximizing the expected profit and maximizing the probability of achieving a target profit.

Misconception about drop shipping is that you can start in almost any niche imaginable, and that you'll be able to make it profitable no matter your previous experience.

This is simply not true.

Keep in mind that no matter what market you join, you will come across multiple competitors – competitors that are much more experienced than you, who may have been in this market for years now, and who probably have a much better understanding of the customers and their needs.

The fact that your initial costs are low – due to the drop shipping model – doesn't mean that you are going to be able to compete with them effectively.

That's why you really should pick a niche that you know and understand  This will give you some additional advantages over the competitors who might not have invested the same amount of research or personal experiences.

And don't get me wrong, you don't necessarily need the seller's experience in the niche, but the following would help a lot:

• you're a consumer in that niche yourself – you've bought a number of products in that niche, and you understand what's good/bad about them, and how to make things better;
• you have professional or academic expertise – you're educated in that specific area, which allows you to approach it from a more professional level;
• you've already done research in that niche – even if just among your friends and family, but the point is that you have some first-hand understanding of the target audience;
• you've witnessed other businesses in the niche rise and fall, you know the mistakes + how to avoid them;
• and so on.

Having some sort of understanding of the niche will not only help you to compete and cater to your customers better, but it's also especially important when dealing with your suppliers who send products directly to your customers.

Without any knowledge about the niche, you won't have the ability to pick up on anything fishy about the quality of the products, the process, the pricing, or anything related.

METHOD

A drop shipping retailer might keep display items on display in a physical brick and mortar store or provide a hard copy or onlineproduct catalog to enable customers to review items before purchase.

Retailers that drop ship merchandise from wholesalers can take measures to hide this fact or keep the wholesale source from becoming widely known. This can be achieved by "blind shipping" (shipping merchandise without a return address), or "private label shipping" (having merchandise shipped from the wholesaler with a return address customized to the retailer). The wholesaler might include a customized packing slip, including details such as the retailer's company name, logo, and contact information.

Drop shipping can occur when a small retailer (that typically sells in small quantities to the general public) receives a single large order for a product. The retailer may arrange for the goods to be shipped directly to the customer from the manufacturer or distributor. Drop shipping is common with expensive products.

Sellers on online auction sites also use drop shipping as way of distributing products without handling the stocking and shipping of the inventory. A seller will list an item as new and then ship the item directly from the wholesaler to the customer. The seller profits from the difference between the sales of the product and the wholesale price, minus any selling, merchant, or shipping fees.

An emerging trend in the drop ship business is private label drop shipping, in which a manufacturer produces a custom item for a retailer and drop ships it. The range of private label drop shipped items available includes simple keepsakes, apparel with custom logos, pictures, and customized formulations for vitamins and nutritional supplements.

Back ordering may occur when a seller places a shipment request with a wholesaler, but the product is sold out. Back orders may be accompanied by a long wait for a shipment while the wholesaler waits for new products, which may reflect badly on the retailer.

If you are aiming for a big business, then you have to get in touch with a solid supplier who can handle your items on time. That is more convenient and effective rather than drop shipping directly from Aliexpress , or other sites like that.

After scaling up and when having a lot of orders, it is always recommended to use a third party fulfillment company at the destination country(only if your selling to one specific country) or at the country where your suppliers are located.

Dropshipping is to be done only at the staring point of the business. You have to use a warehouse,store inventory and pack it with your own branded custom packing to make your business a brand in the future.

CONCLUSION

A lot of entrepreneurs shy away from kickstarting a business of their own for various reasons. You might share some of their fears. Maybe you think your business plan isn’t good enough or that you’ll never make it in your niche.

What many big time entrepreneurs won’t tell you is that many of them had absolutely no idea what they were doing when they started. In fact, by just reading this guide, you’re more equipped than a lot of current business owners were at the start of their careers.

With that in mind, I want to remind you that you can do it. You don’t have to have a perfect business right now. You just need to start taking action toward building a business of your own.

If you create a business with the goal of providing value, you’ll be able to move past all your shortcomings and fire up a successful business. So many people today just want to make money fast, and customers see right through that. You have to have a desire to improve people’s lives if you want your business to last.

The entrepreneurs who have been so successful didn’t get to where they are today by doing everything flawlessly. They all made more mistakes than they could count. You’ll do the same on your journey. You’ll fall, pick yourself up again, and find out how to stop falling. It’s a long road, but if you start today, you’ll be surprised at how fast you can move.

ANALYSIS

Dropshipping is an order fulfillment method that does not require a business to keep products in stock. Instead, the store sells the product, and passes on the sales order to a third-party supplier, who then ships the order to the customer.

However, contrary to popular belief, dropshipping is not a get-rich-quick scheme.

Sure, it seems like easy money — you sell other people’s goods and take a cut for yourself — but when you factor in all the drawbacks, obstacles, and day-to-day management, it’s far from easy.

However, if you approach it the right way, and use the proven strategies below, dropshipping can still help you build a successful business…just not as quickly as you’d hoped.

Let’s put it this way: if you’re only doing dropshipping, it’ll be difficult to get your business off the ground; but, if you’re already established in ecommerce, you can use dropshipping to complement your existing services and improve your business.

In this guide, we walk through all the problems with dropshipping that aren’t as publicized as its perks. But despite its flaws, dropshipping can still be a powerful tool for ecommerce brands, as long as it’s used properly.

RECOMMENDATION

The world of dropshipping is often considered the easiest way to sell products online. The biggest difference between drop shipping and the standard retail model is that in drop shipping, the selling merchant doesn't stock his own inventory. Instead, the merchant purchases inventory as needed from a third party – usually dropshipping wholesalers or manufacturers – to fulfil orders.

Table of contents:

1. Finding Good Dropshippers
2. How to Spot Fake Dropshipping Wholesalers
3. List of places to find products
   1. Salehoo
   2. Oberlo
   3. Spocket
   4. AliDropship
   5. Dropship.me
   6. World Wide Brands
   7. Dropified
   8. Alibaba
   9. Wholesale Central
   10. Doba
   11. Dropship Direct
   12. Sunrise Wholesale
   13. Modalyst
   14. Dropshipping by Dropwow
4. Dropshipping Countries
5. Contact Relevant Businesses and Go to Trade Shows
6. Cost of drop shipping
7. More Tidbits on Dropshipping
8. List of Reputed Dropshipping Companies
9. Over to You
10. Finding wholesale Suppliers

Contact the manufacturer

This is a way to easily locate legitimate wholesale suppliers. If you know the product(s) you want to sell, call the manufacturer and ask for a list of its wholesale distributors. You can then contact these wholesalers to see if they drop ship and inquire about setting up an account

Since most wholesalers carry products from a variety of manufacturers, this strategy will allow you to quickly source a selection of products within the niche you're exploring. After making a couple of calls to the leading manufacturers in a niche, you'll quickly be able to identify the leading wholesalers in that market.

Reference  of 10 Relevant Dropship services:

1)Wholesale2b

2)Oberlo

3)Doba

4)Inventory Source

5)Sunrise Wholesale Merchandise

6)Dropship Direct

7)Worldwide Brands

8)MegaGoods

9)SaleHoo

10)National Drop shippers

REFERENCES

•Dropshipping:Step-by-step guide : Mark Bresett

•Dropshipping for beginners: Robert J Murphy

•The ultimate guide to Dropshipping: Andrew Youderian

•Dropshipping a beginner guide: Brett Standard

•Dropshipping Blueprint to $10k a month: Greg Addison