Know How Dropshipping Works and Its Benefits

By | January 1, 2022

How Dropshipping Works – Dropshipping business systems are currently many choices because they are considered very practical and profitable. With this system, it opens up opportunities for many people to run a business. Dropshipping can also bring benefits with very light capital, even almost no capital.

This article will discuss more fully about the dropshipping work system and its advantages.

Read on to the end!

What is Dropshipping?

This type of business continues to evolve over time and technology changes. And in recent times we have become acquainted with a new type of business called dropshipping.

This is a business method where someone who acts as a dropshipper will offer other people’s products (suppliers), without having to buy the product first.

Later the product ordered by the buyer will be directly sent by the supplier who owns the product. But usually the supplier includes the name of the dropshipper as the sender of the goods. So the buyer only knows that (as if) the dropshipper owns the product.

If seen from the above understanding, it can be said that this dropshipping business applies an intermediary system. So the business actor (in this case the dropshipper) only acts as an intermediary from the supplier to the consumer (buyer).

Later, the order for goods will be made by the dropshipping business actor through the supplier.

So a dropshipper does not have to have stock of goods first.

Usually this dropshipping business method is chosen by people who want to run a business, but the capital is very limited. The main task of a dropshipper is to promote goods and find as many buyers as possible.

This business can be said to be almost without capital and the profits can be directly received by the dropshipper (according to the sales results). The capital is only a laptop / cellphone, internet quota, and expertise in attracting buyers.

Ways of working

From the discussion about the definition above, we can actually understand a little about how dropshipping works. But for more details, it can be understood step by step this business work system.

Here are the stages of how the dropship business works that are important to know:

1. Find a Seller

Dropshippers can start looking for sellers or business actors who will become suppliers. Make sure that the seller does open up opportunities for collaboration with dropshippers.

This section will be a challenge in itself, because not all sellers (suppliers/agents) are willing to sell their products using the dropship system. So you have to be good at lobbying, so they are willing to cooperate.

2. Establish Cooperation

If you have found the right supplier, then just work together. However, you should make sure to first read the dropshipping rules set by the supplier.

Each seller may apply different rules. So look for a supplier whose rules match your expectations.

3. Start Selling Products

After confirming the cooperation with the seller, then immediately sell the product. Product sales can be done through various media. Starting from social media, e-commerce, WhatsApp, and so on.

Make sales optimally so that more products are sold. The process of selling this product is the most challenging because it has to compete with other business actors.

4. Submit Order

Once you get an order, the dropshipper can directly enter the order to the supplier.

Later the goods will be sent from the supplier to the buyer/customer of the dropshipper directly.

The question of the rules for writing the name of the online shop in the purchase invoice will usually be discussed further (between the supplier and the dropshipper). For example, does the name written use the name of the dropshipper’s online shop or include the name of the supplier.

5. Get Profit

If you have succeeded in selling goods, the dropshipper can immediately benefit. This is the main goal of this dropship business, which is to make a profit from selling as many goods as possible.

The calculation of this profit is usually already included in the rules or dropship cooperation agreement that was agreed earlier.

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Profits Earned

After understanding how dropshipping works, let’s find out what are the advantages or disadvantages of this one business system. Many say that this one business system offers various types of benefits.

Here are the advantages of a dropshipping business system:

1. Minimum Business Capital

First, this business system requires very small business capital (almost no capital). Many dropshipping business actors out there have proven that this business system can indeed be done without capital, or with very light capital.

Because there is no large capital in this business system, it is highly recommended for students, students, and housewives.

Although it does not require large capital, it does not mean that this business system cannot generate large profits. There are many dropshippers who have been successful and have made huge profits from this business.

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2. No Product Management Needed

One of the conveniences of a dropshipping business is that the dropshipper does not need to do product management. Because product management has been carried out by the seller (agent/supplier). Especially for the quality control stage, dropshipping business actors do not need to be complicated to take care of this part.

In the absence of product management matters, the dropshipper’s work will be easier. A dropshipper can make a profit and run a business without having to spend a lot of time or effort. This business is suitable for people who want to earn extra income.

3. Don’t Have to Collect Stock

Based on how dropshipping works, it can be seen that this business system does not need to collect stock.

Business actors do not need to have an abundant stock of goods. This means that no large capital is needed to have stock, because the merchandise is directly provided by the supplier.

In addition to being light in terms of capital, the absence of stock of goods also makes it easier for business actors to determine the location of their business. Businesses can be run anytime and anywhere, because they don’t need a shop or a fixed business location.

There is no need to provide space to store stock of goods, but you can still sell goods smoothly. Suitable for business actors who do not have large capital to provide business space.

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4. Minimal Loss Risk

Dropshipping business system players will not bear a big loss. The risk of losing this business is very small. Dropshippers only need to promote products to potential buyers.

Because it does not keep stock, so there is no loss burden that will be borne by a dropshipper when they have not found a buyer.

It has been mentioned earlier that this business system does not require large capital, some even can be started without capital. It means; regardless of stock items that have been sold or have not been sold, it will not be a burden for a dropshipper.

So this type of business is perfect for those who are just starting to learn business, and want to practice the science of promotion effectively without being burdened by the risk of loss.

5. Unrestricted Work System

This dropshipping business has a work system that is not tied down. So, dropshippers can change their supplier at any time. Likewise with the supplier, who may break the cooperation relationship with the dropshipper.

Based on how dropshipping works and all the advantages above, it can be understood that this one business system is indeed worth trying.

This business is very practical and easy to start. Apart from that, dropshipping can also make a lot of money. Moreover, if the promotion strategy is right and the media used for selling is also effective, so many consumers buy the products being marketed.

Good luck and success always for you.