There is no need to doubt that eCommerce has opened the door to many golden opportunities to make money, not only for big enterprises but for small and independent businesses as well. In recent years, the unprecedented development of dropshipping businesses has encouraged many aspiring business owners to start their own eCommerce store. For Magento store owners, the dropshipping business can be challenging sometimes. In this article, we will discuss a detailed guide on how to set up Magento dropshipping business.
Table of Contents
I. What is Magento dropshipping?
Magento dropshipping is an eCommerce business model that doesn’t require you to keep any inventory. In this model, customers order products from your store and items then will be packed and shipped from third-party vendors directly to your customers. In this way, dropshipping business owners don’t need to handle packaging, shipping, and most importantly, the product inventory.
Unlike the traditional business model in which you store inventory at your store and ship products to customers directly from your warehouse, Magento dropshipping business only need to market products to customers. Once any orders are made, a third-party fulfillment supplier will take care of the rest for you.
II. Magento dropshipping model
The process of running a business with Magento dropshipping can be described in 3 steps:
- You set up your Magento store and sell any kind of products
- Once an order is made by customers, it will be forwarded to a third-party supplier, manufacturer, or wholesaler who stores inventory or provide inventory for your Magento store.
- The order will be selected, packed and shipped directly to your customers under your Magento business name by third-party vendors or suppliers.
One intriguing advantage of Magento dropshipping model that attracts many small businesses is that third-party providers or vendors are totally invisible. Customers will still receive their orders under your brand, and they would believe that they receive their items from you directly
III. Magento dropshipping pros and cons
1. Advantage of Magento dropshipping
Magento Dropshipping business presents many outstanding benefits for Magento merchants:
- No inventory on-hand: The key point of Magento dropshipping business is that you do not need to store any inventory, and every item you sell will be stored at your vendor’s inventory. In short, you won’t have to worry about inventory or managing stocks at all.
- Less capital required: Traditionally, business have to deal with inventory capital upfront. As you have to store a certain amount of items in your inventory, it might cost you a huge amount of money. This can be quite a troublesome issue to some small or new business with not much capital. Magento dropshipping requires no capital for the inventory and storage, which helps you start a business with a tiny budget.
- Various product options: As you don’t need to store any inventory upfront, there is a wide range of products you can sell at your dropship store. You can freely select and market as many product niches at your Magento store as you like, and there is no need to worry about product inventory as suppliers will take care of it for you.
- Scalability: When you run a Magento dropshipping business, you don’t have to worry about order processing, fulfilment and shipping orders, so apparently it’s much easier for you to expand your business. Marketing and customer support might be the only two tasks that you have to focus on.
- Easy to launch: It’s fairly simple to start your dropship business with a small budget, as you do not worry about inventory. You can sell any items to everywhere within your vendors reach.
2. Disadvantage of Magento dropshipping
Though there are many benefits, Magento dropshipping business still has some drawbacks that you should think about:
- Fierce competition: Since eCommerce dropshipping is easy to start, there might be many small and middle-sized businesses selling the same products. Besides, customers might get pickier when there are too many options for them to choose from, which leads to the second disadvantage.
- Low margins: Since the competition is getting too fierce, you need to decrease your prices, which means lowering your margin so that your Magento business can stay competitive.
- Untruthful suppliers: Since half of Magento dropshipping model relies on third-party suppliers, they will decide how customers feel about their shopping experience and your business. Many items can be delayed in shipping, or product quality doesn’t come up to expectation, but you are still the one who has to deal with all of this, not your suppliers.
IV. Steps to set up Magento dropshipping business
1. Find out Magento dropshipping idea
The very first step to set up your Magento dropshipping business is to decide on what you want to sell. As mentioned above, there are various business niches you can choose to run your eCommerce dropshipping, but it’s better that you decide on the on-trend products and keep up with the latest trends.
There are many tools that can help you with that, such as Ubersuggest Keyword Tool, Google Keyword Planner, or Google Trends. These tools help you discover everything customers are looking for and what items are in great demand.
2. Analyze market competitors
Keep in mind that there are many other competitors who are running the same business as you. So make sure that you do research to see how your competitors are running their business. There are many business ideas that sound good but will not bring you lots of sales or their profit margin is too low.
Besides, what you know from your competitors may reveal what you need to improve in order to compete with them in this fierce competition. You might need to build your own marketing strategy to attract customer attention.
3. Decide on reliable dropshipping suppliers
The third step you need to do is to find and decide on reliable dropship suppliers. For each product niche, there might be many available suppliers with different services, prices and shipping conditions. So you need to analyze carefully what suppliers can offer you because their product quality, delivery time and policies can hugely affect your Magento dropshipping business.
4. Develop a Magento store for dropshipping business
At this stage, you already have in mind what you want to sell, and which supplier you can trust. Now you have to build a Magento store where you offer customers various products and items. Your eCommerce website needs to operate smoothly with full functionality to help customers enjoy their shopping experience.
If you are considering building your own Magento dropship website, you can always contact LandOfCoder. We can deliver the best web quality at a reasonable price based on your business size and needs. We tailor everything to make your website suitable for your business ideas, so don’t hesitate to contact us.
5. Advertise your store
Now you have everything in your hand, the only job left is to advertise your store and attract customers. In order to receive orders and scale up, it’s always essential to build up a detailed marketing strategy. At this stage, you might have to use a variety of marketing tools such as SEO, Google and Facebook Ads, influencer marketing, etc. Using your marketing channels in a strategic way along with the development of your business will help you to grow up your Magento dropshipping business faster.
V. Magento dropshipping solutions
1. Manually dropship
If you just start your Magento dropship business, it’s possible that you manage your orders manually. That means whenever you have an order, you can notice your vendor or place orders through the vendor’s website. This solution is useful if your store receives a few orders a day, and you can test your supplier as well.
2. Magento dropshipping extensions
If your store is already going big with hundreds or thousands of orders a day, it’s better that you install an extension that allows you to select and process all your orders from one platform. All orders will be automatically sent to third-party vendors, which saves you a lot of time and energy.
Wrapping Up
Though dropshipping business is getting really competitive recently, Magento store owners can still gain advantages of this business model with a suitable marketing strategy and reliable third-party vendors. We hope that this article can help you learn more about Magento dropshipping business model and decide on the best solution for your business needs.
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