What is Drop shipping?
Drop shipping is the form of retail where the re-seller (and you actually are the re-seller) collects orders from customers and transfers them to the actual manufacturer or another re-seller (supplier). In this model drop shipper doesn’t hold any stocks, he only markets the goods. However the re-seller markets the goods setting the prices that are pretty higher than the ones set by the supplier, this difference is your profit.
When you open a retail store, you have 2 choices: to hold inventory, or not. You can buy products in bulk, unpack them, and ship them to your customers as you generate sales. OR, you can find a wholesale distributor (supplier) who will warehouse the items for you and ship individual items directly to your customer.
Drop ship, “pack and ship”, “direct fulfillment” – they all mean the same thing. A supplier will ship the item to your customer for you, and you never have to handle the product. Drop shipping allows the reseller to focus on marketing the business and eliminate the hassle, time, and cost of dealing with the actual products they are selling.
In drop shipping model although you don’t need to stock the goods you will still need some money at the very start. The reason is when you receive the order from the customer the money he pays won’t transfer to your account immediately but will be frozen for the safety reasons. At the same time you will have to pay for the order to the supplier which will require your own money.
AliExpress drop shipping works the same way as the traditional drop shipping business model. You copy the product from AliExpress to your own store, set your own prices/markups, and after you sell a product, you purchase it from AliExpress and have it shipped directly to your customer.
To learn more about how drop shipping works, check this video:
How does the buying and selling process work?
Once you have your website up and running and filled with products from your chosen suppliers, it is time for business. When a customer buys a product from you, you will accept payment for the product for your retail price and shipping costs. Once you have received the funds, you place the order directly with the seller from AliExpress.com. This is typically a usual online order at AliExpress.com. The seller will then charge you for the cost of the item and ship the item directly to your buyer. That’s it! You have just sold an item at your set retail price and processed the order for your customer.
What kind of profit margins are there with drop shipping?
It much depends on what kind of products you are selling. It’s often a good idea to stick to low price with a high margin potential. Such products usually cost within a £1-£20 price range and these products generally can be priced at £20-£50 or more.
We recommend having a profit margin of 40%-70%. You can also try this formula that works well for our own drop shipping projects:
£0<Supplier Price<£2=Your Price: £7.95
£2<Supplier Price<£5=Your Price: £9.95
£5<Supplier Price<£30=Your Price: Supplier Price x 2
£30<Supplier Price<£50=Your Price: Supplier Price x 1.75
£50<Supplier Price<£100=Your Price: Supplier Price x 1.5
Supplier Price>£100=Your Price: Supplier Price x 1.35
Why are people more likely to purchase from a niche store rather than AliExpress?
AliExpress is widely known as a huge online trading platform where you can find practically everything. Nevertheless, customers looking for a specific product tend to place their orders on a niche site that is devoted to this or that particular product category. It can be explained by the following reasons:
1. There are more than 100 million items currently listed on AliExpress. Therefore, it’s not that easy to look through numerous product options and choose the one that fully suits one’s needs.
2. Niche online stores are made by people who are passionate and well-educated about this particular sphere. Therefore, in such a store customers find themselves in a friendly atmosphere of well-informed experts who are true fans of their own products.
3. As the result, you can count on a high quality customer support – these online stores can quickly and fully answer all the niche-related questions if necessary.
4. Nicely and professionally designed niche stores with affordable items easily prompt visitors to make a purchase. Impulse buying, in turn, boosts an online stores performance.
5. Speaking of impulse purchases, it’s necessary to say that the whole procedure of buying from our niche stores is really easy. They provide a great shopping experience since you can check out even without registering, and make a payment directly through PayPal. Even if customers don’t have any previous experience of online buying, they will have no technical troubles at all.
Why should I decide to go with my own online store instead of using Amazon or Ebay?
When you have your own online store you are not stuck to any rules and requirements of other marketplaces. Besides owing your site gives you more opportunities for promotion and marketing strategies. Furthermore, building your own site is a wise investment, because you can easily sell this business one day. Such established drop shipping websites are always a very marketable product.
What are the benefits of your own drop shipping online store?
1. High income – Selling items from your own store, you will get much greater profits than you can get from other platforms. Shoppers prefer to make purchases in online stores instead of blogs or social media. The level of trust to online stores is much higher, so the conversion, and therefore profit, is solid as well.
2. No competition – If you post your products on Ebay, Amazon, or any other marketplace or ads portal, there will be lots of competitors selling identical items for a low price. If you use your own website, there will be no other sellers, so online store visitors will only make their purchases from you.
3. Full control – Drop shippers who own their dedicated online store run the site and think through its strategy independently. It means they are free to choose any kind of products, they are not limited in their pricing methods and they can stick to any marketing strategy they like.
4. Additional value. It is possible to hugely increase the store value for customers. It is done by thinking of a good marketing strategy, providing a fine customer service, adding necessary content and building a brand that is widely known and trusted. Such an online store is a great investment asset that can be sold for a profit in the future.
5. Technical convenience. You will have no troubles while communicating with customers, handling the order, keeping track of the deals, etc. It is also a benefit for shoppers themselves – with a specially developed website they will place their orders and make purchase easy and quickly.
6. Analytics – online stores provide their owners with detailed statistics about the volume of orders, the amount of revenue, the number of visitors, etc. The website owner can easily track the store performance and make any changes if necessary.
All in all, owning a dedicated store allows a drop shipper to make appealing profit and become an independent entrepreneur. In other words, by creating a drop shipping store, you build your own brand, control everything and get an unlimited potential for your future business growth.
Will my customers be redirected to AliExpress?
No, neither your customers nor your visitors will not be redirected to AliExpress and they will not get to know about your products source.
Learn more about Alidropship