Is this a model for success? Dropshipping

When it comes to e-commerce, dropshipping seemingly suits new entrants and established businesses alike. Here’s the lowdown.

Since the e-commerce boom of the late-1990s, Dropshipping has established itself as a prominent player. It’s both a business model and a logistical outsourcing solution: a company sells a product online that they never actually hold in stock; instead, the order is passed onto a third party wholesaler or manufacturer who ships directly to the customer.

New businesses are attracted to Dropshipping because it involves very little capital at the outset, while established businesses use it as a cost-effective complement to their usual operations. But while there are numerous tall tales of wily entrepreneurs sitting at home with a laptop, a nice marketing plan and a lucrative niche, watching the big bucks roll in, the reality is different.

Analysts talk about fierce competition, a saturated market and super-slim profit margins. To stand any chance against the big boys, value has to be added in non-pricing terms: through personalising the shopping experience, knowing the product inside out and understanding the customer’s needs.

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