IndiaMart, AliDropship, Amazon Dropshipping are some of the popular dropshipping suppliers and platforms in India.
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Dropshipping Vs Traditional Business Models: Run A Successful Dropshipping Business
5 min. read
21st Feb, 2024
For digital entrepreneurs, finding a viable business model that doesn’t involve an upfront payment, inventory, investment, and logistical concerns is no longer a tiring task. The dropshipping business has been gaining traction in India over the last decade. The good news is that you can start this online business even without any physical infrastructure, capital, or risking your money.
Do you know that dropshipping business constitutes as much as 23% of all e-commerce sales? In terms of annual revenue, it accounts for a massive $85 billion. With global e-commerce sales in the retail category likely to hit $8.1 trillion by 2026, it’s time to understand the dropshipping business model.
As a low-risk business model, dropshipping looks promising for digital entrepreneurs. Easy to start, manage, and scale up, you just need the right marketing strategy and approach to make it work.
Let’s understand the basic differences between traditional business models in India and dropshipping, along with some practical guidelines to make a profitable start.
Do you know that dropshipping business constitutes as much as 23% of all e-commerce sales? In terms of annual revenue, it accounts for a massive $85 billion. With global e-commerce sales in the retail category likely to hit $8.1 trillion by 2026, it’s time to understand the dropshipping business model.
As a low-risk business model, dropshipping looks promising for digital entrepreneurs. Easy to start, manage, and scale up, you just need the right marketing strategy and approach to make it work.
Let’s understand the basic differences between traditional business models in India and dropshipping, along with some practical guidelines to make a profitable start.
How is Dropshipping different from traditional business models?
While it’s easy to confuse the dropshipping business with the traditional e-commerce business, let’s understand the differences at the outset. Dropshipping is an order fulfilment method, where you need not keep stock of the inventory. Rather, you receive orders from customers and pass them on to third-party suppliers, who are responsible for the shipment process. Building dropshipping websites is easy, particularly with tools like the SmartBiz app. With SmartBiz, all you need is 5 minutes to get started with creating a fully functional e-commerce website- that too, without any coding or design skills. Know more here!
The retailer (you) serves as a middleman and works on acquiring customers, marketing, and processing orders while the dropshipping suppliers handle inventory management and shipping logistics. The key advantage of dropshipping lies in its low upfront costs. As a retailer, you need not invest in large inventories and storage costs associated withthem.
Let’s take a closer look at the differences between the dropshipping business model and traditional eCommerce businesses in India.
The retailer (you) serves as a middleman and works on acquiring customers, marketing, and processing orders while the dropshipping suppliers handle inventory management and shipping logistics. The key advantage of dropshipping lies in its low upfront costs. As a retailer, you need not invest in large inventories and storage costs associated withthem.
Let’s take a closer look at the differences between the dropshipping business model and traditional eCommerce businesses in India.
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Inventory management
Traditionally, owners of eCommerce websites are responsible for maintaining inventory, requiring large warehouses or storage spaces. Dropshipping eliminates this need for you to store or manage inventory.
Upfront Costs
For traditional businesses, upfront costs are high as they need to spend on storage, infrastructure, and inventory. When you own dropshipping websites, the upfront cost is minimal, and you have sophisticated website builders like the SmartBiz app to assist you.
Risk Management
Market trends, consumer preferences, and overstocking pose significant risks for traditional e-commerce businesses. In dropshipping, you need to source products on demand from dropshipping suppliers in India. So, you virtually face zero risk. However, every supplier has a MOQ (minimum order quantity) when you place an order with them. Thus, you will need to work with a supplier and get an MOQ that you are sure will sell within a timeframe. This is one of the primary risks associated with dropshipping.
Does Dropshipping work in India?
Yes, the dropshipping business model has proved to be successful for digital entrepreneurs in India. The country has a booming e-commerce industry and the entrepreneurial spirit of many has created tremendous opportunities for dropshipping businesses to grow.
In India, several successful brands have embraced the dropshipping model to build their businesses. Some of the most popular marketplaces to find dropshipping suppliers in India are Indiamart, TradeIndia, Meesho, and ExportersIndia.
While Indiamart started as a B2B company, it has transformed over the years. Currently, it is one of the most trusted marketplaces to find dropshipping suppliers. It has an extensive network of suppliers from industries like fashion, medicine, furniture, jewellery, food, and others. You simply need to register on its platform to connect with reputed suppliers. Once you build your customer base, you can use Indiamart as your dropshipping supplier.
Besides, Amazon dropshipping has emerged as a reliable venture for thousands of digital entrepreneurs in India, to know more click here. Using Amazon’s expertise in the e-commerce market, customers get access to reliable suppliers at nominal rates that allow them to start selling in any niche category.
In India, several successful brands have embraced the dropshipping model to build their businesses. Some of the most popular marketplaces to find dropshipping suppliers in India are Indiamart, TradeIndia, Meesho, and ExportersIndia.
While Indiamart started as a B2B company, it has transformed over the years. Currently, it is one of the most trusted marketplaces to find dropshipping suppliers. It has an extensive network of suppliers from industries like fashion, medicine, furniture, jewellery, food, and others. You simply need to register on its platform to connect with reputed suppliers. Once you build your customer base, you can use Indiamart as your dropshipping supplier.
Besides, Amazon dropshipping has emerged as a reliable venture for thousands of digital entrepreneurs in India, to know more click here. Using Amazon’s expertise in the e-commerce market, customers get access to reliable suppliers at nominal rates that allow them to start selling in any niche category.
The Pros And Cons Of Dropshipping
While dropshipping looks lucrative as an e-commerce business, like any other concept or idea, it too has its own pros and cons. Let’s have a look at them:
Pros:
- Starting a dropshipping business requires a minimal upfront cost.
- Entrepreneurs can easily scale their businesses without the constraints of managing inventory physically.
- They can choose from a wide plethora of products without the risk of overstocking.
- The model mitigates risks like excess inventory and glitches in the shipment process.
- Entrepreneurs can easily test new products in the market with minimal financial commitment.
Cons:
- Although dropshipping is a profitable business model, its profit margins are lower compared to traditional e-commerce websites.
- As a dropshipping business owner, you don’t have any control over the quality and availability of products. So you will need to work with a reliable supplier to create quality products.
- Longer shipping times and potential shipping errors can affect customer satisfaction as you have to count on dropshipping suppliers in India for order fulfilment.
- Customisation options are limited as you have limited control over packaging, handling, and the overall experience of customers.
- Due to the low entry barriers, dropshipping markets often see intense competition.
What businesses thrive using dropshipping?
As a popular business model, dropshipping works great for businesses thriving on adaptability, agility, and a wide range of products. Niche markets have significantly strengthened the dropshipping business model, capitalising on the specific demands of customers.
Particularly, e-commerce businesses dealing with fashion, accessories, and electronics goods often find success with the dropshipping model. This business structure allows them to introduce new products and test them without burdening themselves with inventory.
As an entrepreneur venturing into the dropshipping business model, you may explore markets like personalised or custom products. This will bring you the privilege to test and add new items to the product line. Besides, this model works well for trending or seasonal products. Businesses thrive on short-lived market interests without risking themselves to leftover inventory.
If you are someone who prioritises online presence and marketing strategies over traditional inventory management, the dropshipping business can prove to be profitable for you. Establishing a virtual storefront takes minimal effort, and you can channel your efforts to building brand identity, optimising e-commerce websites, and ensuring a better customer experience.
Particularly, e-commerce businesses dealing with fashion, accessories, and electronics goods often find success with the dropshipping model. This business structure allows them to introduce new products and test them without burdening themselves with inventory.
As an entrepreneur venturing into the dropshipping business model, you may explore markets like personalised or custom products. This will bring you the privilege to test and add new items to the product line. Besides, this model works well for trending or seasonal products. Businesses thrive on short-lived market interests without risking themselves to leftover inventory.
If you are someone who prioritises online presence and marketing strategies over traditional inventory management, the dropshipping business can prove to be profitable for you. Establishing a virtual storefront takes minimal effort, and you can channel your efforts to building brand identity, optimising e-commerce websites, and ensuring a better customer experience.
When should you not use dropshipping for your Business?
While dropshipping offers several benefits to entrepreneurs, here are some instances when you should refrain from adopting this model:
Perishable goods: If you deal with sensitive products like fresh food or delicate items that can perish easily, dropshipping may not be the best choice. This is due to the lack of control over storage conditions and delivery timelines.
Large and heavy products: For businesses dealing with oversized or heavy items, the shipping costs associated with dropshipping may become expensive. Traditional models with centralised warehousing might be more cost-effective in these cases.
Businesses requiring strict quality control: Do you deal with something that requires stringent quality control? Luxury goods or products with strict manufacturing standards are not suitable for dropshipping entrepreneurs.
Focus on brand control: In case it’s a priority for you to maintain strict control over branding, packaging, and customer experience, go for the traditional e-commerce model.
Limited product availability: Dropshipping is most effective when you have multiple suppliers. So, if you are offering unique or exclusive products with limited availability, this model won’t work for you.
Perishable goods: If you deal with sensitive products like fresh food or delicate items that can perish easily, dropshipping may not be the best choice. This is due to the lack of control over storage conditions and delivery timelines.
Large and heavy products: For businesses dealing with oversized or heavy items, the shipping costs associated with dropshipping may become expensive. Traditional models with centralised warehousing might be more cost-effective in these cases.
Businesses requiring strict quality control: Do you deal with something that requires stringent quality control? Luxury goods or products with strict manufacturing standards are not suitable for dropshipping entrepreneurs.
Focus on brand control: In case it’s a priority for you to maintain strict control over branding, packaging, and customer experience, go for the traditional e-commerce model.
Limited product availability: Dropshipping is most effective when you have multiple suppliers. So, if you are offering unique or exclusive products with limited availability, this model won’t work for you.
The real secret to running a successful dropshipping business
Now, if you are planning to launch your dropshipping website, here are some tips from experts:
Build strong relationships with suppliers: Transparency and clear communication with dropshipping suppliers is the key to order fulfilment. This also ensures the delivery of high-quality products on time.
Optimise your e-commerce website: Invest in a user-friendly and visually appealing website for your dropshipping store. A well-optimized website goes a long way in enhancing the overall customer experience. With SmartBiz by Amazon, you get a mobile optimised website from the get-go, with easy listing, collections and themes to help your customers easily discover the products that they want.
Strategic marketing and branding: Focus on targeted marketing strategies to drive traffic and sales. A unique USP and brand identity will help your target audience resonate with your store. Also, work on content marketing, SEO, and social media marketing to boost visibility.
Build strong relationships with suppliers: Transparency and clear communication with dropshipping suppliers is the key to order fulfilment. This also ensures the delivery of high-quality products on time.
Optimise your e-commerce website: Invest in a user-friendly and visually appealing website for your dropshipping store. A well-optimized website goes a long way in enhancing the overall customer experience. With SmartBiz by Amazon, you get a mobile optimised website from the get-go, with easy listing, collections and themes to help your customers easily discover the products that they want.
Strategic marketing and branding: Focus on targeted marketing strategies to drive traffic and sales. A unique USP and brand identity will help your target audience resonate with your store. Also, work on content marketing, SEO, and social media marketing to boost visibility.
Conclusion
While you might not face a lot of financial constraints to start your dropshipping business, building a custom website to capture customers can be capital intensive and require specialized coding or design skills. Editing your website for your latest launches and drops will also have dependencies on your developer team. Instead opt for no-code solutions like the SmartBiz app which can help you get your website ready in no time. Based on your interests and preferences, choose a profitable product niche, contact a supplier, build a website and start testing it!
The dropshipping business is lucrative indeed, and there is no dearth of reliable dropshipping suppliers in your niche. Get started with this new business model and make the most amidst the booming e-commerce market in India.
The dropshipping business is lucrative indeed, and there is no dearth of reliable dropshipping suppliers in your niche. Get started with this new business model and make the most amidst the booming e-commerce market in India.
FAQs:
What are some popular dropshipping suppliers in India?
How can I build a dropshipping website?
Using SmartBiz by Amazon is the easiest way to create and manage your dropshipping exercise. Want to know how to get started? click here.
Which products are ideal for dropshipping in India?
To start with, you can check out products like apparel, electronics devices, trendy items, gift items, and other customised goods.
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