Knowledge Base

What is Dropshipping (No Stock E-commerce)?

What is Dropshipping (No Stock E-commerce)?

After it was discovered that it was possible to trade on the Internet, entrepreneurs constantly tried new business models to generate income. There were some unsuccessful methods in this process, but dropshipping (stock-free e-commerce) has found a solid place among e-commerce trends. This e-commerce model, which is not negative for the buyer, is easy for the seller, and creates a new sales area for the supplier, is profitable for all parties in the chain.

Dropshipping
Being a seller in the no-stock e-commerce model is generally preferred during the first steps to e-commerce. The advantages of the model for the seller both make it easier to try this method and enable the seller to gain experience in the field of e-commerce. If you want to do e-commerce without having to deal with processes such as production, storage, cargo management, you can try the no-stock e-commerce model. But first, you should get enough information about what is dropshipping, how it is done, how much it saves.

What is Dropshipping?
Dropshipping; It is an e-commerce model that creates a bridge between the buyer and the seller, without the need to stock and store products. When we look at the meaning of the word dropshipping or dropship, it is possible to encounter terms such as "direct shipping, direct shipping" related to sales. But the term has passed into business jargon as "stock-free e-commerce". Stock-free e-commerce model is one of the most preferred methods for selling over the internet.

There are three main parties in stockless e-commerce: buyer, seller and supplier. But the main character is the seller. Because when the vendor and supplier are the same, the model turns to B2C commerce. A stock-free e-commerce seller sells products that he does not keep stocks and store. It lists the products it wants to sell on the e-commerce site or in virtual marketplaces. Customers, on the other hand, order the product. The incoming order is forwarded to the original seller of the product, that is, to the manufacturer or supplier.

After this step, the shipping of the product and the cargo management are the responsibility of the supplier. The supplier sends the product in its warehouse to the buyer. Thus, the supplier makes sales without any marketing work, and the seller without production and storage. The income from the sale is divided between the two parties in accordance with the agreement.

Dropshipping Advantages

• One of its most important advantages is its low cost.
• There are no costs for production, storage, packaging, staff salaries and the like.
• The initial capital is extremely low and the workload is small.
• Large-scale organizations are not needed to get started.
• It is also possible to be managed by one person from a single computer.
• Since large capitals are not invested, the risk of loss is low.
• It is possible to work with many suppliers from different sectors at the same time.
• Product diversity can be increased along with the number of suppliers.
• Since it is easy to increase the product range, a wider customer base can be reached.
• Since there is no need for storage, it is possible to work from home and manage the entire process digitally.
• Only the products on sale are within the scope of responsibility. The supplier takes care of the inventory costs.
• Since the shipping stage is also the responsibility of the supplier, there is no need for cargo agreements.

Dropshipping Disadvantages

• Profit margin is low as it works with commission logic.
• Commissions charged by payment infrastructure providers and marketplaces also reduce profits.
• Since it is a comfortable venture compared to other models, the number of entrepreneurs is high. Therefore, there
• is a fierce competitive environment.
• It competes not only with dropshippers, but also with other e-commerce model sellers.
• In order to stand out from the competition, it is necessary to lower the price and this causes a decrease in profit.
• Inventory management is a little more difficult. It is necessary to update the product list by constantly checking the supplier's stocks.
• For the issues for which the supplier is responsible, the addressee of the customer is the seller. Therefore, the seller has to deal with possible problems.
• The seller is adversely affected by the supplier's mistakes in the packaging and shipping process.
• It is the seller's responsibility to communicate with the customer and therefore has to listen to possible complaints.
• It is difficult to provide technical support, as there is not as much information as the supplier about the products on sale.

How to Dropshipping?

Before doing dropshipping, you should analyze the above advantages and disadvantages well. It is important that you can predict whether this model will be profitable for you in line with your entrepreneur profile and e-commerce strategies. So how is dropshipping done?

Dropshipping can be done on a private e-commerce site or virtual marketplaces. For this, you can start by opening an e-commerce site for yourself or opening a store in virtual marketplaces. If you wish, you can apply both methods at the same time. This gives you more sales channels. Of course, you also need to negotiate with your suppliers. After you open your site or store, you can list the products you can sell in line with your agreement with the supplier.

XML integration is often used in the product listing process. If you do not use integration; You have to enter the descriptions, features and images of all products one by one. That's why you should get XML data from your suppliers. After entering the data, your products are listed and you can start selling. The most important job you need to do after this stage is to market the products correctly and effectively.