Things You Need to Know about Dropshipping
Editor's Note: The author Gu Xiaobei is an authoritative B2C marketing expert in mainland China. He has rich experience in cross-border e-commerce and is willing to summarize his experience in blogs to share with friends in the industry. Idvert is very honored to receive the reprint authorization of his articles and will share them with everyone, hope you can be inspired from it.
The original link：http://www.guxiaobei.com/know-about-Dropshipping.html
I recently heard Amazon is going to do payment itself, so many people are worry that payment companies like Wordfirst, Payoneer, etc. may have to be closed down!
Many Amazon and Wish sellers deem Payoneer simply as a platform payment method, however, they did aware of that Payoneer actually has a fairly wide business scope.
Especially in the traffic market, for those network affiliates who run native ads, they use Payoneer to receive money quite often.
There are way too many traffic platforms and media buyers in the world. Though many of the media buys work as solo or a small team, you can never underestimate their monthly statement, and Payoneer just plays an importantly role in the process.
For example, if you do CPS on Amazon offers , you will see three methods for receiving the payment after you have successfully generated an order:
◎ Gift card
◎ Bank card
If you use the Gift Card, it is very troublesome because you have to go to eBay for exchange, and there will be difference of the exchange, it`s not worthwhile at all.
If you use a check, it will take roughly a month to be delivered to you, and you still need to take your ID card and photocopy to the bank. After the bank receives the money, it will also charge you a certain fee and this process takes another month, so altogether two months are needed to get your money.
Bank cards, local bank cards can be acceptable in many occasions, however most people do not have them.
So what should we do?
At this time, Payoneer can come in handy, you can apply for a virtual card on Payyone's official website to receive the payment.
Applying for a Payoneer card is equivalent to obtaining a virtual US bank account that accepts payments from Payoneer partners through the US Payment Service. (including Amazon and Paypal).
Payoneer also has plastic cards. With them, you can withdraw money from any ATM machine with MasterCard logo in China. You can also purchase cards on the Internet such as Taobao or foreign shopping websites, and you can also purchase foreign hosts and domain names.
If you do Dropshipping, especially though shopify, you will find that the payment you can’t handle with stripe and 2checkout can easily be done by payoneer.
For example, if a Chinese Dropshipping sellers finds it’s hard to check an order on AliExpress, then he can use payoneer instead for the check out.
Ok, let’s get back to our topic today, Things You Need to Know about Dropshipping.
Have you noticed that the topic Dropshipping has been mentioned over and over again recently? Especially with the popularity of shopify, many people who want to quickly start a business will choose the following set of modes:
Shopify+ AliExpress + Facebook
◎ Shopify: to quickly build a website, you can easily set up a website through directly buying the theme and promotion plug-ins
◎ AliExpress: to find your selling products and drop-ship directly to your clients without stocking to your warehouse firstly, this could save your costs and reduce the risk of product management
◎ Facebook: to quickly get traffics for your website
You see, in this process, what matters is not building a website. As long as you find a good and profitable product to sell, it’s so easy to make a fortune out of it. So the real problem and cost will be your advertising cost, this is our top concern.
What is Dropshipping?
I’m trying to explain it in simple words that everyone can understand.
In a transaction, there are actually three different roles:
The is a very simple and common sales mode. The retailer gets the products from the suppliers and sells them to the customers through certain channels.
Whether you are doing eBay, Amazon, or AliExpress, you all need to follow this rule.
Dropshipping follows this rule as well, but in a more flexible way during the process. For a dropshipper, now he
◎ Doesn’t need bulk purchase to start the business
◎ Doesn’t need to stock the products
◎Doesn’t need to spend much money on the stock and logistic (the main cost is simply on the advertising)
◎ Ddoesn’t need customer service
◎ Doesn’t need to pack and ship the order himself
What is the whole process of Dropshipping?
The first stage: the retailer will put the product information provided by the supplier on its own website.
The second stage: after a client purchases from the retailer's website, the retailer places an order on the supplier’s Aliexpress store and leaves the buyer's delivery information.
The final third stage: the retailer earns the difference after the buyer's payment - the payment to the supplier including the shipping costs.
In the first phase, retailers list their products on an individual site, in most cases this is acheived by using shopify (of course, you can use other site-building system for it, we will talk about this later)
In the second stage: the retailer sends the buyer's order information to the supplier, this is the pattern of speculating buying and selling (usually using oblero)
In the third stage: the retailer earns the difference
Let's make a comparison:
You need a certain amount of venture capital first, right? Assume your starting capital is 100,000 yuan. Then, you open another store. At this time, you may have to go to alibaba.com to purchase the goods. The cost of getting the goods may vary. Suppose the cost is 40,000 yuan.
The remaining 60,000 will be used to cover a variety of expenses, so there is not much left to be spent on advertising. And more importantly, the goods you are stocking may not be sold out in a day or two.
If you select a wrong product, say it’s hard to convert for sales, then your stocks become useless, you can immediately feel the pressure on you.
This would not be a problem if you choose Dropshipping. In the Dropshipping business model, the retailer successfully transferred the inventory risk to the supplier, and also outsourced the packaged delivery to the supplier, he only needs to focus on the operation and promotion of the website .
In this mode there is no inventory, no shipping and packaging to handle, you just need to focus your time on the marketing to get more traffics, or simply spend more time to test profitable products.
Which means that more budget can be invested in advertising. The same startup cost can be deducted by at least 80% in the Dropshipping mode.
So from this point of view, the advantages of Dropshipping are obvious!
Usually the foreign dropshippers would change their selling products if there’s no outcome for the investment. So if you have a lot of stock in your hand, it's not that easy.
Why do we need Facebook to obtain the traffics?
In fact, it’s useing facbeook ads to obtain the traffics ! We’ve mentioned in the dropshipping mode above:
Shopify+ AliExpress + Facebook
You can use Shopify to quickly build a website, use AliExpress to make product prices (general profit is 15% to 50%), and then use Facebook ads to quickly test products.
So in the first two stages, you don't have to spend too much time, that is why the effect of testing products directly with ads is faster, so in this case, you are less likely to hear that People who do Dropshipping rely on SEO to optimize the traffic. Instead, Facebook ads is a common word to hear.
To quickly test the product and quickly find the profit point for the product, this is the truth of Dropshipping!
Therefore, I think that in the Dropshipping mode, the most important thing is your ability to select products, and your ability to get traffics. These two points are the most important!
Dropshipping has long been discovered by retailers abroad, and they are quite keen on!