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 orders.
There are 2 main approaches to eCommerce Dropshipping:
Aliexpress Dropshippers in China
Using Aliexpress to dropship is a very popular method. This method works more as retail arbitrage than the traditional dropshipping method as you’re essentially finding items on Aliexpress and selling them at a higher price on your store and buying them for a lower price, making a profit in the difference.
It’s not the same as the traditional dropshipping method because you’re not really looking for suppliers or working with wholesalers in the same way – you just use the Aliexpress marketplace to source your products. Any of your customers could find and buy the item themselves on Aliexpress if they wanted to and knew how. The fact is, most don’t.
Dropshipping from Aliexpress is a method many new dropshippers like to use because it’s very easy to get started in and practically requires no set-up fees. You don’t have to buy or hold stock, you don’t need to create relationships with wholesalers, which can be quite daunting for someone new to the game, and creating an Aliexpress account takes no time at all.
So what’s to consider with Aliexpress dropshipping?
Benefits of Aliexpress
+ Easiest way to get started with dropshipping as a newbie.
+ No start-up costs, very low-risk.
+ No requirements to start, anyone can set-up an Aliexpress account within minutes.
+ Cheap products can give good profit margins.
+ Huge marketplace, lots of products to choose from.
Potential problems with Aliexpress
– Products are not always great quality. Often best to sample products first and test for quality to ensure minimal returns or bad reviews.
– Shipping times usually between 20-40 days. Shipping is cheap but it’s still longer than industry-standard times.
– Will have to be willing to deal with customer service, often inquiries about when the product will arrive.
– The packaging of products isn’t always great but it varies from product to product. Some suppliers package well and/or can be negotiated for better or branded packaging.
Local Dropshippers in Your Country
Benefits of local dropshippers
+ Good range of products to choose from.
+ Better quality products and easier to monitor quality control.
+ Much faster delivery (industry standard) than using Aliexpress, which in turn gives a more premium service and fewer customer inquiries to deal with.
+ Easier to build a relationship with your suppliers. Ability to negotiate, visit warehouses and possibly alter products or packaging for your store.
Potential problems with local dropshippers
– Fewer items to choose from as likely working with a few different suppliers in comparison to the whole Aliexpress marketplace.
– Lower profit margins, as items will cost more to buy than from China.
– A little more challenging to get started with. To access most wholesaler lists you have to pay for access (membership). These can be affordable but mostly work as a monthly/yearly or lifetime membership and still requires an upfront cost.
Print On Demand (POD) eCommerce
Benefits of POD
+ No upfront cost, super easy to get started with.
+ Can create awesome and professional looking products.
+ Unique to your store, so have no worries of customers finding your product at a lower price and feeling scammed.
+ Can essentially sell at any price you want. That said unless you’re marketing as a high-fashion brand, your profit margins aren’t going to be crazy good.
+ Orders can be pretty much automated if using the right tools, no hassle!
Potential problems with POD
– Can be low-profit margins per item.
– Requires creativity and some technical know-how to create designs.
– A much smaller pool of items to choose from to sell to your niche.