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What Is Dropshipping and How Does It Work? (2024 Version)

CrossBorder Studio | Author

Stacey

|

2024-04-07

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Hello, future entrepreneurs! Ever heard of dropshipping? No worries if it's new to you! This business mode can make things much easier for you. If you want to find out more, check out our blogs! We'll explain dropshipping step-by-step and share some handy tips to help your business grow.

Table of contents

1.What Is Dropshipping?

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Have you ever wondered how some stores sell things without having any stock themselves? That's dropshipping!

Here's how it works: Imagine you run an online store. A customer orders a cool hat from you. Instead of keeping hats yourself, you work with a supplier who has them. You send the order details (like size and color) to the supplier, and they ship the hat directly to your customer. You never have to touch the hat yourself! Basically, you connect the customer to the supplier and take a cut of the profit.

Dropshipping might be a good fit if you are thinking of starting your own business.

Here's why:

-Low Startup Cost: You don't need a lot of money upfront to get started with dropshipping, unlike businesses that require keeping inventory.

-Easy to Manage: You can run a dropshipping business on your own, without needing a big team in the first stage.

-Flexible Schedule: You can set your own hours and work whenever you have time.

But please remember: Dropshipping success isn't guaranteed. It takes effort to make real money. Keep learning and improving your skills to increase your chances of thriving!

2. How does dropshipping work?

Imagine you have an online store, but you don't keep any products at home. Here's how dropshipping works:

Step 1: Customer Orders Someone sees something cool on your online store and places an order.

Step 2: Forward the Order You send the order details (like what they bought and where to send it) to your supplier.

Step 3: Supplier Takes Over Your supplier then packages and ships the product directly to your customer.

Take a look at the diagram below to get a visual understanding of the dropship model simplified.

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3.Where to buy?

As a thriving e-commerce retail business model, dropshipping offers several advantages, including the following:

There are two key questions to answer before you jump into dropshipping. where to get your stuff (to sell) and where to sell it to customers.

Think of your supplier as your team partner. They'll store, pack, and ship the products you sell in your online store. Below list mentions 13 popular platforms where you can get your dropshipping products:

3.1 Aliexpress

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With an average of over 400 million monthly visits throughout recent years, AliExpress is undoubtedly one of the most well-known site that connects ecommerce platforms to dropshipping providers and products. There are more than 100 million products on AliExpress, in categories such as fashion, toys, consumer electronics, skin care products, jewelry, furniture, and even cars and motorcycles. The majority of goods are made in China. Dropshippers can use AliExpress to find trending products, do market research, build relationships with vendors, and order wholesale. It’s a good place to start when testing out your niche and researching potential competitors. Still, it can be difficult to manage since you have to find suppliers that cater to dropshipping independently.

3.2 Alibaba

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Alibaba is the parent company of AliExpress and one of the largest eCommerce platform with more than 2.8 million suppliers and more than 5,900 categories. The difference between the two is that Alibaba functions as a B2B eCommerce marketplace, which is more suitable for wholesalers than single sellers, and facilitates transactions directly with manufacturers. Dropshipping might be a bit more tricky on Alibaba than AliExpress since it’s not made for single orders. Alibaba is ideal for finding direct manufacturers to produce an original design with consistent shipping times. It's recommended to advanced dropshippers who prefer private label manufacturing and want to buy bulk goods at the distribution level to sell as consumer items.

3.3 SaleHoo

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If you’re comfortable paying an annual membership, SaleHoo might be worth a look. SaleHoo provides a directory of over 8,000 verified wholesalers, dropshippers, manufacturers, and liquidators. This gives you a large pool of potential suppliers to find dropshipping products. Also, product research tools are offered to help you find winning products. This can help you to figure out what niche you want to target. SaleHoo’s inventory source is AliExpress. You can find pre-vetted dropshipping providers from a variety of trending and profitable niches, then import items directly to your Shopify store. They also have resources like articles and courses to help you learn about dropshipping, e-commerce in general, and how to run a successful online business.

3.4 Doba

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Doba is another platform similar to Salehoo for finding dropshipping suppliers and products for any category and niche. Instead of simply listing dropshipping vendors, Doba integrates with suppliers, allowing you to place orders with multiple warehouses using its centralized interface. Membership also includes a Push-to-Marketplace tool that automates the process of listing items on eBay. Pricing is one of Doba's distinctive features. It consistently offers discounts and sales on the wholesale price of seasonal items and bulk deals. Many of the products have low enough prices that you can compete with Amazon and pass on some savings to your customers. If you want more automation and features specifically designed for dropshipping, Doba might be a better choice. Their order fulfillment automation and wider range of platform integrations can save you time and effort.

3.5 Sunrise Wholesale

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If you are merchants in the US and Canada looking for fast shipping times, Sunrise Wholesale may be a good choice. It offers more than 10,000 dropshipping products and ships directly to customers in the US and Canada, with shipping times averaging at about one to two days. In addition, Sunrise offers sales reporting tools, product data, inventory updates delivered via email, and automatic price adjustments to ensure your profit remains consistent, even when suppliers change their prices.

3.6 Wholesale2b

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Wholesale2b offers real-time inventory automation, so orders and tracking updates are easily imported into your Shopify store. With more than a million dropship-ready products from multiple niches, it’s easy to create unique product collections. With a single account, you can import up to 10,000 products. Wholesale2B offers dropshipping plans for eBay, Amazon, Shopify, BigCommerce, and multiple other platforms. It also has educational courses for dropshipping beginners and a curated list of top-selling dropshipping favorites. Overall, Wholesale2B can be a good option for those who are new to dropshipping or want a convenient way to manage their online store.

3.7 Megagoods

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Founded in 2004, Megagoods is a reliable dropshipping supplier specializing in consumer electronics. They have a vast selection of brand-name electronics and offer custom private labeling. Despite being a wholesaler, Megagoods offers dropshipping services without any minimum purchase requirements, meaning you can ship products directly to your customers without any risk of overstocking. It is a good choice if you focus on business of electronic equipment and want to ship internationally.

3.8 Wholesale Central

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Wholesale Central prides itself as America’s leading B2B directory and is one of the oldest running companies on this list, connecting wholesale suppliers with online sellers. Unlike many other directories, there’s no charge to search Wholesale Central for vendor dropshipping options, because it charges suppliers a fee to be listed and displays ads on its site. There’s no registration required, and the website is easy to navigate. The platform boasts almost 100 US-based wholesale dropshipping suppliers that are fully screened and verified, with new options added frequently. It is recommended for dropshippers who need US-based vendors for quick delivery.

3.9 Modalyst

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Modalyst is an automated vendor dropshipping app, which makes dropshipping and print-on-demand easier for online sellers. It’s known for offering products from brand names like Calvin Klein, Dolce & Gabbana, and more well-known brands that shoppers love. Modalyst also offers a curated list of independent and trendy brands, print-on-demand items for every target audience.

The platform offers direct integrations to eCommerce platforms and marketplaces like Shopify, Wix, and BigCommerce, and a comprehensive digital inventory for all your product updates. With a focus on luxury and trendy brands, Modalyst is also a part of the AliExpress Booster Program, which gives dropshippers access to an endless catalog of products.

3.10 Spocket

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Spocket simplifies dropshipping by connecting you with reliable US and European suppliers. It allows you to quickly find and connect with suppliers who are closer to your customers from their vast marketplace, allowing you to take advantage of their 2–14 day shipping delivery. Their marketplace is known for offering high-quality goods at up to 60% off, leaving you with a higher markup on each item. With their one-click import button, You can have a fully automated dropshipping store with Shopify and WooCommerce. Spocket's user-friendly interface makes it ideal for new dropshippers. It's especially suited for those interested in fashion and beauty products, offering a wide variety to choose from. The best part is that you can get started with Shopify and Spocket for free! They both have a free trial period where you can try out the platform.

3.11 CJDropshipping

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CJDropshipping is another wholesale supplier directory with a huge list of products and automatic listing integrations. You can easily import products into your Shopify store, normally at a price lower than on AliExpress, sourced directly from 1688 and Taobao marketplaces. The 1668 and Taobao marketplaces are home to independent designers and small-business owners in China. There are hundreds of millions of listings you can access through CJDropshipping, and products range from mainstream items to hard-to-find items and even virtual products. CJDropshipping uses US-based warehouses to execute same-day processing for your store. It works with USPS, UPS, DHL, and FedEx. If you are shipping from China, it has its own shipping line called CJPacket, which can deliver products to the US in about eight days. CJDropshipping is recommended for retailers who want a one-stop place for all things dropshipping, including product sourcing, order processing, order fulfillment, and quick shipping to the United States.

3.12 Dropified

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Dropified is a web-based tool designed to simplify and automate dropshipping, especially for Shopify stores. You can use the platform to automate your dropshipping process, from order fulfilment to delivery. The built-in Dropified Private Label On-Demand Plan is offered to help you launch your brand. You can use Dropified’s AliExtractor research tool to find profitable products. The platform enables multi-vendor product listings — multiple vendors with different variants, such as size, colour, and style, can be added to one product. Users can also bulk edit prices, tags, categories, and descriptions and add product videos.

3.13 Conclusion

Dropshipping can be a profitable business, but finding the right partner is crucial. The type of goods you want to offer your customers, the quality of their suppliers, and how well they'll integrate with existing elements, such as your website, all play a role in determining the best dropshipping company for you. Ultimately, the best choice depends on your specific needs. Analyze your priorities and choose the partner that best complements your vision.

4. Is dropshipping agent worth it?

While working with platform is a good starting point, there are other options! You can also consider working with a dropshipping agent for these benefits:

4.1 Convenience

Let's be honest, starting an online business can feel overwhelming. Dropshipping agents are like your awesome personal assistants, taking care of all the behind-the-scenes stuff: finding cool products, negotiating killer deals, keeping track of inventory, and getting those orders shipped out to your customers. This frees you up to do what you love – building your brand, marketing your store, and watching your business take off!

4.2 Expertise

Dropshipping agents are like seasoned explorers who've already mapped the dropshipping landscape. They can connect you with the best suppliers who offer top-notch products, help you snag amazing deals, and keep you in the loop on all the latest industry trends. It's like having a secret weapon to navigate the dropshipping world with confidence, even if you're a complete beginner!

4.3 Reduced Risks

Dropshipping agents will do product quality control and advance order fulfillment. This can help you reduce some of the risks associated with dropshipping, such as receiving poor-quality products or dealing with unreliable suppliers. So less stress for you.

4.4 Trade-off

Of course, there's a trade-off: Dropshipping agents typically charge fees for their services, which can eat into your profits. These fees can be a fixed monthly cost, a commission on each sale, or a combination of both. However, considering the potential increase in sales volume, it can be a worthwhile investment. But please remember: it's important to choose a reputable agent that meets your specific needs.

Here are some additional things to consider:

  • The reputation of the dropshipping agent: It's important to choose a reputable dropshipping agent with a good track record. Be sure to research the agent thoroughly before doing business with them.
  • The types of services offered by the agent: Not all dropshipping agents offer the same services. Make sure the agent you choose offers the services that are important to you.
  • The cost of the agent's services: Compare the fees charged by different dropshipping agents before making a decision.

Ultimately, the decision of whether to use a dropshipping agent is up to you. Carefully weigh the pros and cons, and consider your specific business needs before making a choice.

5. Where to sell?

Now, let's talk about where to sell your dropshipping products! This is your virtual storefront where customers will find your products.

Here are some popular options:

5.1 Large Marketplaces (Ebay, Amazon, Etsy)

Marketplaces like Ebay, Amazon, and Etsy are bustling with potential customers thanks to their massive built-in audience. This makes it easy to get your products seen quickly. However, the flip side is cutthroat competition. Price wars can be common, potentially squeezing your profit margins.

5.2 Independent Website

Building your own website gives you complete control over branding and pricing. This allows you to create a unique shopping experience that reflects your brand identity and lets you set competitive prices without the pressure of marketplace wars. However, the downside is that attracting customers to your website requires more effort. You'll need to invest in marketing and SEO (Search Engine Optimization) to drive traffic and build brand awareness.

5.3 Saas Websiet Building Platform (Shopify, WooCommerce)

Platforms like Shopify and WooCommerce offer user-friendly tools and templates to create a professional online store, even if you're not a tech whiz. Shopify is known for being particularly beginner-friendly, getting you up and running quickly.

5.4 Social Media

Instagram and Facebook are great places to showcase your products with beautiful photos and videos. This is especially effective for products that are visually appealing, like clothing, homeware, or accessories. If you have a strong brand identity, social media as a personal channel can help you build a community directly with potential customers.

Remember: Choosing the right supplier and sales channel depends on your target customers and the products you want to sell. Do some research to find the best fit for your dropshipping business!

No worries! We'll explore these topics in detail in future articles. To learn more, please follow us!

Click here to start a dropshipping business now with Crossborder Studio.