Dropshipping might not be a familiar term to many of us but when you think of companies like Amazon, Jumia and Masoko, what comes to mind? Well, they are basically the definition of dropshipping. It’s a system where the vendor doesn’t keep their products in stock instead, they sell through a third party. It’s also the reason why Jeff Bezos, CEO of Amazon, is the richest man in the world. So, it’s good business both for the vendor and the dropshipping company. For now, we’ll focus on the vendor’s perspective.
Drop shipping companies basically act as middlemen for your business. Depending on the company, all you’ll be required to do is pay a small fee and provide the products. From there, the company will include your products on its website which will be available to a larger customer reach. They save you the trouble of building a market for your product from scratch.
Starting a business with drop shipping in mind might be one of the most reliable and cost-effective ways to entrepreneurship. It’s a business module that doesn’t require you to ever hold any stock thus reducing the cost of storage, delivery and packaging. All you need to do is supply the drop shipping company with your products which they store in their warehouses. Once you’ve made a sale, the company delivers the product on your behalf and you get your share of the profit.
Additionally, it is easily accessible since all you need to do as a vendor is to register with a dropshipping company. Some companies don’t even require a membership fee such as AliExpress and Nordstrom which are titans in the drop shipping world. This means that you can register with such companies and start doing business at no cost at all.
You can sell virtually anything from furniture and electronics to food and clothes. There’s a world full of endless possibilities when you use dropshipping for your business. You’re more likely to get sales as opposed to selling by yourself.
This business module works for both online and physical shops who want to expand their audience. Dropshipping is definitely catching on in the Kenyan market. However, many Kenyans online shopping is still not acquainted with online shopping. The best thing about it is that you have a worldwide audience as well. Therefore, you can sell to people from other countries especially the West who are big on online shopping.
When the deal’s too good think twice. There are some downsides to dropshipping. The biggest being the immense competition from the thousands of vendors on the platform. It’s like walking down a street with hundreds of stores selling similar products.
Another huge problem is delivery time especially if the goods are coming from abroad. Companies like Jumia have a 15 – 20-day delivery policy for their international products. Some companies also experience numerous customer service issues which might affect your sales as a vendor. Since it takes a big part of customer service out of your control, this might cause unnecessary problems due to the company’s failure.
To conclude, dropshipping is something to consider if you want to start a business with limited capital. Ensure you identify a market niche to make your products stand out on the platform.