Thinking about starting an online business, but unsure of where to source your products from? Wondering where to find suppliers selling at wholesale prices? If yes, dropshipping may be the answer you’re looking for.
But what exactly is dropshipping? It is a business model where you, the store owner, do not keep stock of the products being sold on your website. Instead, you forward all your orders to a manufacturer or wholesaler, who ships them to your end customer. You earn your profits gaining on the difference amount between the wholesale price and retail price.
If you are able to work out the processes well, you can go ahead and increase your sales from a number of products you get from your drop-shippers.
How are manufacturers, wholesalers, distributors and drop-shippers different from each other?
A manufacturer is the first person in a supply chain. He is someone who creates and produces their own products, usually at a factory or workshop. The distributors purchase directly from the manufacturers and sell across to wholesalers. These wholesalers in turn sell to retailers.
Some distributors play the role of wholesalers and sell to retailers. A drop-shipper is someone who keeps stock of the goods and is ready to ship products when orders are forwarded to him.
How do I find Drop-Shippers in India?
Before you start looking for drop-shippers, you need to decide upon the type of products that you plan to sell. Having an incredibly large catalogue is not necessarily the best way to open an online store. Instead, do a little research about your target audience and display only those products that you are certain will sell. There is another major advantage to this approach which we will cover in the latter part of the post.
1. Search on online marketplaces
Many drop-shippers sell across online marketplaces such as Flipkart, eBay and Amazon. Try searching for such sellers and message them there seeking help. Else, check if they have a website from which you can find out their contact number.
Additional Tip: Price comparison sites also direct you to sellers across the popular online marketplaces. Searching for products on these websites might eventually lead you to a wholesaler willing to dropship.
2. Search Engine results
Search across popular search engines like Google, Yahoo, Bing, etc. for drop-shippers and wholesalers. Spending a few hours leads us to Indiamart’s directory and a bunch of wholesalers like India2bharat, Hothaat, Seasonsway, Metro etc. Try contacting wholesalers and ask if they will dropship for you. Discuss all terms and conditions thoroughly before deciding to do business together.
Additional Tip: Don’t miss out on searching for manufacturers. Some of them face difficulty in retail business. Hence, they look out for ‘trade agents’ who can help sell their products in the market.
3. Talk to peers in the industry
Everybody has friends, family members or professional contacts who are into business. Reach out to these people and ask them where they source their products from. If you are on good terms with them, they wouldn’t mind revealing their trade secrets to help you.
Additional tip: Make acquaintances with other people working in the same industry through social networks. Learn about their tactics and how they started their business. It will give you a lot of ideas that will help you out.
4. The ever present local market
Every city has a local market bustling with customers and shopkeepers. These markets are a great source to make acquaintances. Some of these shopkeepers, wholesalers themselves, might be interested in increasing their customer base. You should definitely look at these opportunities and try to tie up with them.
Additional Tip: Even within a market/haat, a lot of internal selling takes place. Spend a lot of time in finding the cheapest source before making a deal.
5. Go old school
Trade and business magazines (like Forbes, Business Today, Business World etc) are still the best sources of gaining knowledge regarding a particular industry. A lot of businesses put up advertisements in these magazines and keeping a good track of them is highly recommended.
Additional Tip: Not just advertisements by large scale wholesalers, even retailers who have made it large are interviewed. You can try similar sources to start your online business.
What should I consider before narrowing down on a drop-shipper?
Now that you know some of the channels for finding out drop-shippers, you must keep certain points in mind while scanning through your options.
1. Track Record of the drop-shipper
Make a thorough check of the track record of the drop-shipper. Ask them all the proofs required for their business like Sales Tax certificate, VAT Registration, CST Registration, Wholesale License and clients’ list.
2. Initial Investment
A good drop-shipper will never charge you any money upfront as an initial investment to gain trust. However, you may be introduced to different discount slabs depending upon the orders you bring in every month. Always make sure these points are covered when you sign the contract with them.
3. Profit Margins
After you have seen the stock and sorted out the supply chain, calculate your profit margins. You must take into account your costs and the amount the drop-shipper is going to charge to find out your net profits. You’ll have to price your products on your store accordingly.
4. Time of Delivery
Each drop-shipper has a different time interval when it comes to delivering goods. If you are tying up with more than one drop-shipper, make sure you define the delivery time correctly on your store. Also, avoid drop-shippers who create a delay as it will lead to bad brand reputation among your customers.
5. Warranty of products
When signing the contract with the drop-shipper, understand the warrant and return policy correctly. In case of damaged products, who is responsible for the replacement? Your customers aren’t going to be happy if they hear that they have to contact your drop-shipper for replacement of their products.
I’ve zeroed in on a drop-shipper. What should I do now?
1. Build a good business relationship
Business relationship cannot be made in a day or two. You need to invest time for them to be fruitful. Spend your time wisely in generating the sales so that your drop-shipper also knows that you mean business. When this happens, you will be able to work upon strategies with your drop-shipper to expand your business to reach out to more people on a larger scale.
2. Focus extra on those products that sell
Remember we had earlier mentioned about why you should focus on a select prominently selling products? Well, the other reason is that if you are aware that a certain product sells more than others, you can avail additional discounts on that product from your drop-shipper. This means increasing your profit margins on the most selling products on your store.
3. Try out new products
You should always experiment with the new products the drop-shipper brings out. Usually, wholesalers give out free samples to test the market-readiness for the products themselves. Don’t miss out on these opportunities in experimenting with your customer base either. This will additionally change your outlook as a serious business which is ready to take on challenges of the market.
Once you have gone through all the steps detailed above, you should have a fairly strong idea about how to find good drop-shippers for your online store. Drop-shipping is catching up as a practice in the Indian eCommerce scenario. Understand and execute all the processes involved well and you are sure to reap the benefits!
Good things should go online. Happy selling!
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