What Is Dropshipping & How Does It Work? (2024)

Although the concept of drop shipping is quite old, its widespread use and excellent earning potential have only started recently. Drop shipping is a retail fulfillment model in which a store does not keep the products it sells in stock. Instead, when a store sells a product using the dropshipping model, it purchases the item from a third party and ships it directly to the customer. What Is Dropshipping & How Does It Work?

As a result, the seller does not need to handle the product directly. The biggest difference between drop shopping and the standard retail model is that the seller does not carry the merchant stock or own the inventory. Instead, third-party sellers typically purchase inventory as needed to fulfill orders from a wholesaler or manufacturer.

Let me give you an example to better understand the drop shipping model, suppose you have a craftsman in your home who makes the best types of wooden models that are used for home decoration. Now he spends 50 rupees on this particular type of model and he sells this model to his customers at a wholesale rate of 100 rupees.

The wholesaler buys this product for 100 rupees and supplies it to other cities and by the time it reaches the retail store owner, the product becomes worth 500 rupees, which he keeps in his store for resale at 700 rupees. Someone buys the same product from there and sells it on Amazon for 1000 rupees.

Now you know this artisan personally, you go to him and decide that bro, I will put this product on my online store, when I place an order with you, you will manufacture this product for Rs.100. I will give you 100 rupees more that the product will be delivered to the address I will tell you. Your contract is settled.

Now you put this product on your online store or amazon store which you cost Rs.500, because there are no middlemen in your product, you get a good profit even for Rs.500. And since the customer was getting this product for 1000 rupees, he will buy this product from you.

Dropshipping Procedure

The dropshipping business model does not require products to be in-store and any store can operate completely without a single product inventory. A store that has a physical presence may have potential dropship merchandise on display, provide details on mail-order items through a catalog, or maintain a website with information only available online. A virtual store, on the other hand, only has a website.

Dropshipping Model Dropshipping Model No. 2

Dropshipping stores don’t have to deal with all that hassle, and don’t need to carry any inventory like other stores.

Now again using the above example, as soon as you receive your order for your product, you immediately contact the artisan and ask him to deliver the product to such and such address and that artisan delivers his product to you. He puts it in an envelope and delivers it to the respective address. You pay 200 rupees to the artisan and you keep the remaining 300 rupees as your profit.

In this whole process, you neither have to buy any product and keep it with yourself nor you have to transfer this product from one person to another, but you also get your profit from it and the one who is making this product. It also leads to increased sales due to which all three parties, the artisan, you and your buyer are happy.

This whole model is called drop shipping model in which you only have to carry the marketing cast i.e. you have to find your desired customer and convince him to buy your desired product. You didn’t have any product but you were selling someone else’s product.

How is Dropshipping Possible in Pakistan?

As there is no amazon facility in Pakistan, you can’t do dropshipping with amazon but still there is no need to be depressed or disappointed as this is available in many other e-commerce websites in Pakistan. The best example of what is happening and doing well is Daraz where hundreds of drop shippers are doing their job in the best way and earning good money.

In this whole model, you have to make sure that the product you put in the store is of good quality for its price, and that product reaches your customer in a good way and at a fast speed.

But apart from all this, the most important thing is that you should first do a complete research on the product that you are going to invest in so that you choose the product that has the demand in the market so that it can sell well and sell well in the market. As soon as someone places an order with you, the existing price is not less than your price.

Advantages and Disadvantages of Dropshipping

On the face of it, the dropshipping model looks so simple that we talk to a product person and start working, we don’t make any investment, we don’t carry any inventory, we do a little marketing, and we turn a profit on the side. No, not at all. This model has its own advantages and disadvantages, which are discussed in brief.

Advantages of Dropshipping

Low startup cost

Starting any business requires buying a large amount of products and keeping them in your warehouse which is sure to incur huge costs but in a dropshipping model business as you don’t have to buy and store any products. So you can start this business with less capital. Because all this work is done by some other party instead of you and you only find customers.

Lower order fulfillment costs

Till the fulfillment of any order you need to incur warehousing costs, order booking, order tracking, labeling, shipping etc. All the work doesn’t have to be done but the product manufacturer is doing all the work and you can focus on getting more orders and growing your business.

Sell ​​and test more products with less risk

Without the constraints of physical inventory and associated costs, drop shipping lets you update your inventory quickly, easily, and cheaply. if you

If you know a product is doing well for another retailer or seller, you can immediately offer it to your customers without waiting for it to arrive in your warehouse. What Is Dropshipping & How Does It Work? (2024)

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