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5 Reasons to Start a Dropshipping Business
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If you want to be an ecommerce entrepreneur, starting a dropshipping business has several advantages, such as low startup costs and minimal overhead. But is it right for you? Let’s take a closer look at why the dropshipping model might be a great way to enter the ecommerce space.
1. Minimal startup costs
Many other business models might require you to have a lot of money upfront so you can invest in retail floorspace, inventory, and other costs of doing business. One big dropshipping advantage is that the business model is low cost and easy to start.
Your only significant startup costs might be designing your business website, setting up your URL, and perhaps buying memberships or subscriptions to some of the best wholesale supplier directories.
2. No overhead costs
Unlike the high-overhead business models of brick-and-mortar retail, dropshipping lets you run an ecommerce business without the traditional overhead costs.
Think of all the costs of doing business that you have to cover if you run a traditional retail business: rent, utilities, inventory, warehouse costs, shipping. The costs of inventory management and fulfillment (picking, packing, and shipping) are all built into your agreement with your wholesale dropshipping suppliers.
You don’t have to worry about covering the ongoing month-to-month costs of paying rent and keeping the lights on before you even make a sale. Instead, with dropshipping, you pay for inventory only after your business makes a sale. This takes a lot of the financial risk out of your business. Dropshipping is the ultimate in “just-in-time” supply chain—your suppliers provide the inventory only when your customers have already purchased it.
3. Omnichannel sales opportunities
With a dropshipping business model, you have the freedom and flexibility to sell products through almost any channel. You can sell through your business’s website or via Amazon, eBay, social media channels, and anywhere else you can reach customers.
Dropshipping can be adapted to suit the needs of your customers and is versatile enough for any sales channel. As long as you have great suppliers lined up who are ready to handle the fulfillment of your customers’ orders, you can sell using nearly any channel.
4. Digital nomad lifestyle
The past few years have seen a rise in the number of people who are interested in working remotely, being location-independent, or becoming digital nomads who can travel the world while still earning an income. Being a dropshipping entrepreneur can be an ideal lifestyle if you want to have freedom to move around the country or travel abroad.
Since your dropshipping business is managed entirely online and your product fulfillment is managed by your suppliers, you will have a lot of flexibility for where you want to live and how you want to work. Any coffee shop, co-working space, or hotel room with WiFi can be your office. Just keep maintaining relationships with your suppliers and customers, and your business can help you have a lifestyle of freedom and travel.
5. Unlimited growth possibilities
With a dropshipping business, the only limit to how fast you can grow is how many customers you can find. Your inventory and fulfillment are all managed via third-party suppliers who can likely handle a much larger scale of orders than you can send, so you don’t have to worry about not having capacity to handle more orders.
With dropshipping, you can also keep pushing forward on customer acquisition and repeat sales. And as you get smarter about marketing and sales conversions, you’ll be able to get more traffic to your website and keep customers coming back.
Running a dropshipping business can be a great way to start your entrepreneurial journey. From low startup costs to unlimited growth potential, this business model can be ideal for anyone looking to enter the ecommerce space.
If you’re thinking about launching a dropshipping business, don’t miss our guide to starting a dropshipping site.
At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.