You have your own idea for making money. You’re starting your own business. You open an online store and source the products you want to sell. You need warehouse space, but you can’t afford it. Does that mean your chances of growing your business are slim? No. If you don’t have a warehouse, dropshipping comes to the rescue.
The sales process in the dropshipping model – how does it work?
We’ve written about what dropshipping is we’ve written about here, so we won’t go into detail about the concept itself. For the sake of clarity, we’ll just remind you that it’s a logistics model that allows you to sell online without having to invest in your own warehouse.
How does dropshipping work in practice?
- Customers place orders through the online store. The store, in turn, is integrated with a supplier, manufacturer, or dropshipping wholesaler.
- Customers pay for the items they purchase, and it is up to you, as the online store, to record the payment.
- We hand over the order fulfillment process to the supplier. The supplier also handles product packaging and shipping.
In this situation, what should you do as the owner of a dropshipping-based online store?
Online stores without a warehouse – what obligations do they entail?
There’s no denying that dropshipping can be more challenging than running a traditional online store. Why? As a business owner, you lose control over one of the most critical processes—logistics.
What are the responsibilities of the owner of a dropshipping-based online store?
- Product selection.
- Finding a supplier and negotiating the most favorable contract terms with them.
- Adding products to the online store. Ensuring that product descriptions and photos are of high quality.
- Optimal pricing.
- Advertising, advertising, and more advertising. When running an online store, it’s not enough to rely solely on a good product. You need to be visible online. There are plenty of options available. A few of them include Facebook Ads, Google Ads, SEO (search engine optimization, which helps you rank as high as possible in organic search results), and influencer marketing.
- The store owner is also responsible for organizational and administrative matters related to running a business in Poland. This includes the website’s terms of use, GDPR compliance, sales documents, tax reporting to the tax office, and so on.
What should you look for when choosing a wholesaler or distributor?
It’s worth noting that choosing the right business partner is crucial for running an online store that uses dropshipping. The better your choice, the greater the chance of a successful partnership—that goes without saying. If the partner fails to fulfill their obligations, you, as the online store, will suffer the consequences. Customers will be dissatisfied with the shipping, leave you a bad review, and next time they’ll buy from the competition—if the competition offers them faster or more efficient delivery or returns.
4 Things to Consider When Choosing a Wholesaler or Distributor
- It is essential to determine, even before formally establishing a partnership, who will handle returns and complaints.
- It’s also worth finding out whether we can get discounts from the supplier if we have high online sales.
- Shipping is a very important issue—let’s determine which logistics services our distributor uses. Online store customers are eager to order products with international shipping options—we need to know whether this is a problem for our business partner.
- If our store carries seasonal merchandise, it’s a good idea to check with the wholesaler to see if we can reserve certain items in advance. This will give us peace of mind, as we’ll be able to provide customers with what they need without buying too much inventory that might not sell later on.
Online retail with and without your own warehouse—what are the differences?
The main difference between running a store with a warehouse and one without is control over the logistics process (or the lack thereof—in the case of an online store without a warehouse). We can never be 100% certain that a product will be shipped to the customer on time, nor do we know how it will be packed and delivered. The only way to ensure this is by integrating logistics into the company’s internal processes.
But that’s not the only difference. Another factor could be economic considerations—an online store without a warehouse is a cheaper but riskier option. If a business partner you hire makes a mistake, you’re effectively the one who pays for it.
Dropshipping – A Solution for E-commerce Beginners
If you want to start your first business and have decided to run an e-commerce store, it’s worth trying dropshipping; however, you must remember that only having your own warehouse will give you full control over the process itself, which is why it’s a much better solution if you want to grow your business over time.
