Unless you have been living under a rock, you have probably heard the term dropshipping. This business model follows a formula that is simple, legal, and brilliant. It allows you to sell and deliver products to your customers without having to manufacture, store or ship them.
It falls under the category of a Life-Style business. These start by asking yourself “how do I want my life to look?” and then build accordingly. They allow entrepreneurs to run their businesses flexibly from anywhere, anytime, and make money on their terms while they focus on building a life they enjoy and are passionate about.
How does it work?
The dropshipper acts as an intermediary that offers products coming from a third-party company (a wholesaler or manufacturer) that can either be local or foreign.
Developing a dropshipping business will require coming up with a specific niche to focus on, finding the perfect supplier(s), creating a website to list the products that will be sold, setting a pricing strategy, and starting to take orders.
These orders are then forwarded to the suppliers who take care of shipping the products to the final customers’ addresses. It is a win-win scenario where the supplier makes a sale, the customers get what they want, and the dropshipping site gets to keep a profit margin.
The advantages to building an online dropshipping business are many, for example:
There is no need to make a huge investment.
Keep in mind that there will be no need to buy an initial inventory or rent a brick-and-mortar location or warehouse. This alone allows dropshipping business owners to provide customers with appealing discounts which then translates into having better profit margins (the average net profit margin can be around 25%)
Work from anywhere in the world.
This is one of the most sought-after benefits. Each day, more people are looking to escape the 9-5 rigid business model and free themselves from the standard office space. Instead of having to settle for a couple of vacation weeks a year, entrepreneurs are now able to travel while they work. On top of that countries have now noticed this trend and started to provide digital nomads with legal ways to extend their stays (check out our article on the new Costa Rican digital nomad visa).
No physical stock.
If a product is not performing as expected, you can hide it or delete it from your site without having to deal with stock that is not selling. This is a huge benefit. We can all think of someone who decided to start selling a random product, ran into an issue, and was then stuck with boxes of said product that ended up gathering dust in the basement.
How to get started?
Building a dropshipping store will allow you to make an income without having to worry about many of the day-to-day problems that traditional business models deal with. This does not mean there will be no issues whatsoever (all business models have them).
If you are interested in starting a profitable, semi-automated dropshipping business, and are looking for ways to prepare for potential issues like highly competitive markets, low-profit margins, fraudulent orders, etc., is through knowledge in the form of training courses, one-on-one coaching, online communities and digital software to name a few.
You can start by investing in a program that specializes in helping you do this.
Regardless of what the resources you use to learn are. Everyone can agree on the fact that these five things will always contribute to a dropshipping store’s success:
- Launching with an original branding concept that stands out.
- Having clear policies for returns, privacy, and shipping.
- Focusing on organic and paid traffic strategies for the site.
- Having a strong social media presence.
- Providing top-notch customer support.
Being willing to learn every day and staying motivated is also a must, grand ideas take time to blossom and grow.
Now let’s focus on the true MVP when it comes to building a successful dropshipping business: THE MANUFACTURERS. This whole business model is built on offering products that are sourced through third-party carriers, so selecting the best manufacturers to work with is fundamental and can make or break a store.
Why dropship with U.S. suppliers?
Shipping is easier. Most customers are not willing to wait weeks on end for a product. If something is being shipped from overseas there will be inevitable delays due to unforeseen issues and customs this can easily lead to angry customers, canceled orders, and chargebacks (no one wants to deal with that).
Returns are streamlined. If the manufacturer is in the same country as the buyer, it will be easier for all parties involved to send something back when needed. Sometimes items are defective, or customers experience buyer’s remorse. When those things happen you will be glad to have a local supplier that might even send a prepaid return label.
Quality Control. Carrying quality items will set you apart. If manufacturers are local, dropshipping business owners can vouch for the quality of the items offered. Some companies will even invite dealers to their warehouses before establishing commercial relations so they can be in direct contact with the products before listing them.
No Time-Zone or language barriers. Getting an email reply during your business hours will always be better than having to wait until the wee hours for a foreign sales rep’s shift to start. Speaking the same language also ensures that the process of taking and fulfilling orders will run more smoothly.
Logistics. One of the most valuable lessons that came from the 2020 pandemic was that we must find ways to source our needs locally and not depend on foreign countries to fulfill our demands. Working with local suppliers is a way of working towards U.S. independence.
Trusted Carriers. Shippers will be reputable, well-known U.S. companies that are known to have reliable customer support lines and platforms where customers can live trace their orders.
Long-Term business relationships. Putting time, effort, and energy into developing a long-term business relationship with your manufacturers will always pay off.
Money stays here. U.S. economic reactivation must be pursued, and we can all do our part to work towards that goal.
If you are wondering how to find U.S. suppliers, the first step is to do some research. Once you find the manufacturers you are interested in working with, don’t be afraid to reach out! Most businesses are more than happy to find ways to grow and increase sales. Even if the company does not have a dropshipping program set up yet, they might be willing to get started.
If the manufacturer already works with dropshipping then they will probably welcome you to their program by providing you with marketing materials, a Dropbox link to professional photos for their products, price lists, and sometimes even training sessions to go over more specific information and clear doubts.
Others will make things easier by asking you to upload the products based on what you see on their site. They will then give you a dealer discount code and ask you to place the orders online on their portal and enter the final customer’s shipping address.
Dropshipping has worked for over 50 years!
If you are still hesitant and think that dropshipping with U.S. suppliers is a new, risky way of doing things: you are in for a treat!
In a way, the history of dropshipping can be traced to the 60s and 70s, way before the internet was even developed. It worked with catalogs or booklets that showed you what was available and allowed you to place an order over the phone or through a sales representative and then receive it at your doorstep.
Companies like JC Penny and Sears were selling to U.S. Families and making sure they got what they purchased without ever having to leave the house! As their sales grew, they needed to develop a way to manage the high sales volume and ensure shipping was handled effectively. They saw an opportunity in renting out warehouses, located in different areas of the country, and shipping to the final customer, from the nearest warehouse available. This allowed them to maximize profits and minimize shipping wait times.
After studying that successful business model, companies like CompuCard saw a huge opportunity for getting in on a piece of the cake. They took those same items the big companies stored in their warehouses and listed them on their CompuCard catalogs for a marked-up price, this is when the first dropshippers were born! The model has been working successfully since.
Fast forward to 2022, the catalogs have been replaced by websites and e-commerce has grown to heights that seemed impossible. It is anticipated to reach USD 7.65 trillion by 2028 (read the full report here). Dropshipping is a great part of the mix and according to Grand View Research, the industry is expected to reach $557.9 billion by 2025.
Our advice is: to make sure a part of that goes to your bank account! We will make sure to provide you with tools that will save money and time while doing so.