What is Dropshipping and How does it Work?
Dropshipping is one of the most popular and profitable business models in e-commerce. An entrepreneur only needs a small start-up capital to achieve initial success in the vast, fast-growing direct-to-consumer market.
We’ll tell you how to scale your business quickly with multi-accounting, avoid the main risks, overcome artificial barriers, and maximize your profits. But first, let’s explore how dropshipping works and what you need to start implementing this business model.
We’ll tell you how to scale your business quickly with multi-accounting, avoid the main risks, overcome artificial barriers, and maximize your profits. But first, let’s explore how dropshipping works and what you need to start implementing this business model.
Table of contents
Global dropshipping market size, with forecast to 2026. According to Statista.
How does dropshipping work?
Dropshipping is a business scheme in which the retailer sells goods directly from the manufacturer’s or wholesaler’s warehouse. There is no additional cost to the retailer for purchasing and storing the goods. The manufacturer processes the order and sends it to the buyer. The dropshipper’s revenue comes from the difference between retail and wholesale prices or as a commission from the wholesaler.
Scheme of the dropshipping operation.
The seller’s only task in direct supply is to attract the buyer. After all, it is not the product that gets realized, but only the sales offer. It is up to the seller to decide which promotion channel is more effective: advertising, search engine optimization, content marketing, SMM, or influencer marketing.
Since the entrepreneur does not need to invest his money in stock and delivery infrastructure, nothing will prevent him from looking for new niches, testing business ideas, and choosing those that work best.
Since the entrepreneur does not need to invest his money in stock and delivery infrastructure, nothing will prevent him from looking for new niches, testing business ideas, and choosing those that work best.
Pros and cons of dropshipping
Advantages of dropshipping
- Low entry threshold. The main advantage of direct supply and the main disadvantage is the opportunity to start a business with almost no investment. All an entrepreneur has to do is set up an online shop or storefront on a marketplace and search for potential customers. There is no need to invest significant financial and time resources in developing a full-fledged retail business. Doing so attracts many seller agents, making dropshipping a highly competitive trading model.
- Simple and quick niche testing. The advantage of dropshipping is that you can easily update your range and quickly switch to trendy or seasonal products.
- Different suppliers. You can collaborate with multiple suppliers and offer a wide range of products.
- It’s easy to administer. The retailer does not need to manage stock and inventory, supervise a large staff, or keep a complex accounting. For e-commerce, there is a wealth of software and applications that make administration more efficient. Hundreds of virtual storefronts on marketplaces are easy to manage in Octo Browser.
Disadvantages of dropshipping
- Low-profit margin. A low entry threshold leads to high competition between sellers. The same supplier may have many dropshippers, with some lowering their margins, expecting to benefit from sales volumes.
- Reputation risks. You need to get involved in issues related to late delivery, defects, returns, and exchanges of goods. If a supplier has a lot of problems, they will cause severe reputational damage to your business. A dissatisfied customer will not be lazy and leave a negative review exactly where he purchased the goods.
- The impact of trends. The dropshipping market is rapidly becoming saturated with offers from your competitors. The customer loses interest in popular products and wants something new.
- Promotion costs. You need to invest in advertising, website promotion, or paid advertisements.
The primary sources of customer attraction
Internet Marketplaces
AliExpress, Dx.com, Banggood.com, Wildberries, Ebay, Amazon, Lazada and Alibaba account for most of the online sales.
These marketplaces have enormous potential for sellers. They host massive volumes of goods at relatively low prices. However, the requirements for dropshippers are high while the competition is intense. In addition, there is a commission of up to 20% of the retail price.
These marketplaces have enormous potential for sellers. They host massive volumes of goods at relatively low prices. However, the requirements for dropshippers are high while the competition is intense. In addition, there is a commission of up to 20% of the retail price.
Your dropshipping shop
Setting up your own dropshipping shop or using an off-the-shelf online platform means complete independence. The cost of creating a website is low, there are many website builders for a quick start, but to bring in traffic, you will have to do your best and invest in advertising. Filling content, creating product cards, and SEO promotion requires teamwork, time, and effort. But big brands and teams still work on independent sites and get traffic directly.
Social media
Social networks have a lot of traffic and good potential for selling goods. Many social networks have already integrated e-commerce into their resources.
Facebook Marketplace has ways to post and promote ads, but with a single account, it is hard to accommodate a large volume of products there. In addition, the platform limits payment methods and has introduced a sales volume limit for users outside the US.
Other social networks, such as Pinterest, are suitable enough for attracting traffic to your online shop or storefront on the marketplace, but it will take some skill and time to create a good conversion.
Facebook Marketplace has ways to post and promote ads, but with a single account, it is hard to accommodate a large volume of products there. In addition, the platform limits payment methods and has introduced a sales volume limit for users outside the US.
Other social networks, such as Pinterest, are suitable enough for attracting traffic to your online shop or storefront on the marketplace, but it will take some skill and time to create a good conversion.
Noticeboards
Commercial noticeboards are fee-based and do not have many options for showcasing products. Their advantage is that visitors often come in already set up to buy the goods on their query.
When using aggregator sites, you need to be prepared for the fact that they are monetized through paid promotion and renewal of advertisements, and there is also moderation that slows down the placement of goods.
When using aggregator sites, you need to be prepared for the fact that they are monetized through paid promotion and renewal of advertisements, and there is also moderation that slows down the placement of goods.
New strategies to increase sales
The backbone of income is quality traffic, which will translate into sales of your product with a high conversion rate. It is now trending to use new channels to promote products and brands, including TikTok, Instagram, Twitch, and Snapchat. Big brands have been paying attention to them for a long time and are not neglecting to work directly with influencers.
Activity on these platforms continues to grow. Streams, posts with recommendations, sales in chats and dialogues, podcasts, and other formats are already promising areas for online sales.
Activity on these platforms continues to grow. Streams, posts with recommendations, sales in chats and dialogues, podcasts, and other formats are already promising areas for online sales.
How Octo Browser can boost your dropshipping business and increase sales
Despite a relatively easy start in dropshipping, there are many pitfalls and significant risks against which you can protect your online shop with Octo Browser.
Protection against blocking on marketplaces
In order to identify visitors, major websites track a number of device parameters and form a browser fingerprint from them. If you have more than one account on eBay or Amazon, you may face an unexpected ban on these sites. Website security algorithms can easily detect when multiple accounts were created by the same user. These accounts are then automatically flagged as suspicious and access restricted.
But how do you avoid being blocked? In this case, the better option is using the anti-detection browser for multi-accounting. Octo Browser allows you to create hundreds of accounts with browser fingerprints indistinguishable from real devices. Websites treat your virtual profiles like they do with actual users and do not block them because they do not see any violations.
But how do you avoid being blocked? In this case, the better option is using the anti-detection browser for multi-accounting. Octo Browser allows you to create hundreds of accounts with browser fingerprints indistinguishable from real devices. Websites treat your virtual profiles like they do with actual users and do not block them because they do not see any violations.
Increasing trade offers
Making money from one product, showcase, shop, or brand looks hard enough. Octo Browser allows you to create hundreds of independent storefronts on a popular marketplace. Launch new sales, test hypotheses, and increase your brand’s reach and representation in a single browser with no additional investment.
Sales across product categories on Shopify. According to Statista.
Various channels of income and risk sharing
One of the effective ways to increase sales from dropshipping on the Amazon, eBay, and Walmart platforms is to create individual showcases in different product niches. It is a difficult task. Major marketplaces ban using multiple accounts while their algorithms closely monitor compliance with these rules. Crossing accounts increases the chances of permanently losing both the main and additional accounts.
Octo Browser will protect the brand you don’t want to harm or weaken by offering new product categories. You can promote different products simultaneously, highlight new areas, and set up advertising and coverage for various trade sectors. Manage any number of stalls without the risk of losing customers altogether if your primary source of income is blocked.
Octo Browser will protect the brand you don’t want to harm or weaken by offering new product categories. You can promote different products simultaneously, highlight new areas, and set up advertising and coverage for various trade sectors. Manage any number of stalls without the risk of losing customers altogether if your primary source of income is blocked.
One niche — different platforms and geography
With a unique offer, you can concentrate on a particular niche to achieve success in this specific niche. Octo Browser allows you to control all sales channels and simultaneously promote your products on various online platforms.
Enter new markets and stay ahead of competitors. Octo Browser easily bypasses artificial regional restrictions for sellers, perfectly cooperating with proxies and VPNs.
Enter new markets and stay ahead of competitors. Octo Browser easily bypasses artificial regional restrictions for sellers, perfectly cooperating with proxies and VPNs.
Reputation management
Customers often turn to product reviews to make a final purchase decision. Multi-accounting is, therefore, a powerful tool for sales promotion and reputation management. Having reviews on marketplaces and displaying product reviews in a dropshipping shop increases the conversion rate. The answer is that 84% of website visitors trust reviews as much as personal recommendations.
Using multi-accounting, you can support your storefronts with comments. Create hundreds of reputation management accounts and write live reviews by simulating UGC content. It’s safe because each Octo Browser profile for sites looks like a separate user.
Using multi-accounting, you can support your storefronts with comments. Create hundreds of reputation management accounts and write live reviews by simulating UGC content. It’s safe because each Octo Browser profile for sites looks like a separate user.
Improved search for user queries
Customers are not attached to your dropshipping shop. Ordering goods from a shop in the first line of the search engine is easier for them than browsing through all the available offers. Increase the number of search engine positions for your products with independent accounts and push your competitors out of the top.
Customer reviews usually contain many related targeted keywords and phrases, which positively influence SEO. Use our multi-account browser to generate your comments and increase the number of relevant queries to optimize your search engine algorithms. Otherwise, all the cream of the traffic goes to competitors in the top ten search strings.
Customer reviews usually contain many related targeted keywords and phrases, which positively influence SEO. Use our multi-account browser to generate your comments and increase the number of relevant queries to optimize your search engine algorithms. Otherwise, all the cream of the traffic goes to competitors in the top ten search strings.
Teamwork
To grow a dropshipping business, you need to expand your team, but the problem may arise with security, transfer of access, and leakage of your work. Octo Browser has a flexible system of team roles and visibility tags. Every team member will have access to the corresponding accounts and paid tools without openly sharing usernames and passwords. It eliminates the consequences associated with their misuse and harm to the business.
Automation of time-consuming tasks
If the goods do not arrive on time or are not on hand in the supplier’s warehouse, you will suffer your reputation. It’s crucial to monitor the availability of the range from manufacturers, the stability of deliveries, and the execution of all business processes.
Octo Browser is perfect for automating and streamlining routine tasks in dropshipping. Add the necessary scripts using any handy browser management library. You can simplify time-consuming processes and focus on analysis, marketing, and sales.
Octo Browser is perfect for automating and streamlining routine tasks in dropshipping. Add the necessary scripts using any handy browser management library. You can simplify time-consuming processes and focus on analysis, marketing, and sales.
Control of the competitive landscape
Given the fierce competition in direct sourcing, it is no longer enough to enter dropshipping market with a good product at a favorable price. You need to study the market at all stages and analyze the value of your product before setting the price.
Set up secure data parsing with Octo Browser and quickly track competitors' price changes. One can use this advantage to implement a strategy based on flexible pricing, discounts, and selling combinations of products in bundles.
Set up secure data parsing with Octo Browser and quickly track competitors' price changes. One can use this advantage to implement a strategy based on flexible pricing, discounts, and selling combinations of products in bundles.
Scale up your dropshipping business with multi-accounting mechanisms
The dropshipping market is developing fast, and 2023 will be no exception. It is a profitable business model for retailers making money from direct deliveries online, and for manufacturers and wholesalers, it is a promising area to drive sales growth.
Today it is easy to enter this business with minimal investment and access to professional tools to avoid many problems at the start-up. Octo Browser will take care of your accounts, remove barriers to opening and promoting new shops on marketplaces, protect your reputation, and create the necessary foundation for growth.
Today it is easy to enter this business with minimal investment and access to professional tools to avoid many problems at the start-up. Octo Browser will take care of your accounts, remove barriers to opening and promoting new shops on marketplaces, protect your reputation, and create the necessary foundation for growth.
FAQ
What is dropshipping and how does it work?
Dropshipping is a model of online trading in which the merchant sells products directly from the supplier's warehouses, while the manufacturer bears the transportation costs. The dropshipper’s earnings are the difference between wholesale and retail product prices or a sales commission.
Is dropshipping legal?
Yes, dropshipping itself is legal. It is essential to establish the legal entity for your business, sign contracts with suppliers, monitor the quality of goods, and pay taxes to comply with the applicable laws.
Is dropshipping profitable?
Yes, you can earn on dropshipping if you find a promising niche and a reliable supplier and understand how to promote products. It is essential to monitor the quality of the goods. If a buyer is dissatisfied, they will give the seller a low rating, write a negative review, and return the product, which will negatively affect the seller's rating and reputation.
Is dropshipping good for beginners?
Yes, the advantage of dropshipping is that you do not need a significant initial capital, just a few hundred dollars to launch advertising and start the business. Moreover, dropshippers do not have to deal with logistical issues, which lowers the entry barrier even further.
What's the difference between dropshipping and retail arbitrage?
In both cases, the seller acts as an intermediary between the product supplier or wholesaler and the end customer. The difference in business models is that the retailer owns the goods and manages their logistics, while the dropshipper does not.
Is dropshipping allowed on eBay?
Yes, the platform policy allows dropshipping. However, it is necessary to adhere to the direct delivery rules established by the supplier. Most importantly, it is the seller, and not the manufacturer, who is responsible for the quality of the product and timely delivery.
Is dropshipping allowed on Amazon?
Yes, dropshipping is allowed on Amazon if the business meets three conditions:
- The packaging of the product must only contain information about the dropshipper.
- The seller is responsible for the quality of the products and timely delivery.
- It is prohibited to purchase a product from another seller on Amazon and send it to the buyer.
Stay up to date with the latest Octo Browser news
By clicking the button you agree to our Privacy Policy.
Related articles
