What Is Dropshipping In 2021?
Having a side hustle always keeps you on the safe side. This is the reason why more than 4.4 million Americans have a side hustle.
When it comes to choosing the perfect side hustle, the role of dropshipping comes into the picture. After the pandemic, people are even more oriented towards e-commerce and want to know what is dropshipping, and why it has become a very tempting proposition.
Let’s go through some interesting statistics of dropshipping to realize its increasing demand in 2021.
According to the research, the market size of dropshipping is more than $150 billion after the pandemic, when this trend has increased by 28%.
Moreover, various statistics reveal that the trend of dropshipping will enormously increase in the next few years and it will become one of the biggest side hustles in the world.
If you have also heard a lot about dropshipping, you should read this comprehensive guide to know what is drop shipping in 2021.
Without further ado, let’s get started.
What Is Dropshipping?
Dropshipping is the very unique type of e-commerce business and is completely different from the traditional side hustles. To start a dropshipping, you should have a dropshipping website, a little know-how of e-commerce, and some marketing skills.
The best part of dropshipping is that you do not need any kind of inventory, stock, or anything to start this business. It is a unique type of trading in which you act as a third party and connect the buyers with the sellers.
Want to know the most interesting part?
You can set the prices according to your choice and still are not responsible for shipping. It is a one-of-a-kind business that keeps you free from the worry of doing big investments or storing the products.
Still, confused?
Let’s understand this concept in simple words.
In dropshipping, you create an online store and display the products for selling along with the rates. When people visit your site to buy something, they click on the “Buy” option and place an order. When you get the payment, you redirect this order to the company with which you are connected as a drop shipper. As a result, the buyer gets the product from the company who is the real manufacturer.
In the upcoming lines, we are going to break each element down regarding the dropshipping process.
What Is The Dropshipping Process?
Whatever the product is, the process of dropshipping remains the same.
Order Placement
This process initiates from the customer who places an order on the drop shipper’s website. The retailer receives the amount in the bank account and confirms the purchase.
Order Forwarding To The Supplier
After the confirmation of the payment, the drop shipper directly sends all the details of the order to the supplier and also confirms the supplier about the payment. Keep in mind that drop shipping retailers do not pay all the amount to the supplier and only pays for the pricing on the product. The extra amount is the profit of the drop shipper.
Product Shipping To The Buyer
After the payment is processed and the supplier gets all the details of the order and the payment, it ships the product directly to the customer. But the interesting thing is that the product contains all the information of the drop shipper and the return address is also that of the dropshipping retailer.
So the buyer thinks as if he is directly purchasing from the dropshipping website, but there is someone else in the back-end. The buyer remains unaware of the agreement between the retailers and the distributors and does not know that the dropshipping website is not the original shipper.
This does not make any difference for the buyer when there exists a strong trust between the retailer and the supplier. The buyers are always concerned with the quality of products, and when they get the desired quality of the things, they become least concerned about anything else.
The key planners of the dropshipping business are the retailers and the suppliers, so their cooperation is very important to run a successful dropshipping business.
Without proper commitment, the dropshipping business cannot be run successfully. For example, if the drop shipper does not know about a certain product such as whether it is in stock or out of stock, he will lose the trust of the consumer or may achieve a negative review on the website.
How Dropshipping Has Changed In 2021?
In 2020 and 2021, people are under the impact of Covid-19 and more ready to buy online as compared to the past few years.
It is no secret that pandemic has increased the demand for dropshipping and now people are more actively relying on the dropshipping stores to buy the things. So this order fulfillment process has proved to be an easy and enticing option for more than 40% of the buyers.
According to an estimate, more than 50% of people buy things online and search e-commerce stores through the search engine, and dropshipping stores constitute 33% of online stores.
In 2021, there are more dropshipping sites than ever and the good news is that there are more buyers as well. If you are good at marketing the products and enticing the consumers, then you can easily take an edge over the competitors by understanding deeply what is drop shipping in 2021.
Who Can Start Dropshipping?
Almost anyone! Seems incredible? But this is true.
With a dropshipping website, you can start selling the products by directly receiving the orders from the customers. You can easily open your online store and get started with the selling of the products.
Dropshipping is best for those people who cannot afford to buy the inventory or do not have enough space to keep the products. So, they start dropshipping as a side hustle and sell things online on their online e-commerce stores.
Is Dropshipping A Get-Rich-Quick Idea?
No, it will not make you rich overnight, but when you will start getting orders and positive reviews on your website, you will observe more and more increase in sales. This is because reputation building takes time and you should be determined and patient enough for this.
With dropshipping, you are not going to lose anything as you have not spent even a single penny in buying the products as you have contracts with other selling platforms.
How Dropshipping Is Different From The Retail Business Model?
Well, for most people who do not know what is drop shipping, it seems completely difficult to differentiate between traditional e-commerce businesses and dropshipping.
Let’s understand the huge difference with an example.
Best Bay is one of the electronics retailers in the US. When someone goes to the Best Bay store to purchase the Smart TV, he has to preview the product before paying the bill. But after he makes the bill, Best Bay has to buy it from the manufacturer, store it and pay for the smart TV and the retail space. All these steps turn out to be too hectic and risky.
Here you may ask:
What if I buy the Smart TV from BestBay.com online? How will this online e-commerce differ from dropshipping?
Well, keep in mind that even if you buy at the traditional stores online, the store has to pay for the shipping charges and it often costs a lot of money as they need to hire the workers who do all the packing and shipping.
On the other hand, drop shipping saves you from all such confusion and helps you stay easy by letting the manufacturing company pay the shipping charges.
Some Interesting Statistics About Dropshipping
- According to the research conducted in 2016-2017, 23% of the online sales are made through online dropshipping stores. After the pandemic, we can understand that this percentage would have been increased in 2021.
- The retailers who sell their products online get 18% more profits as compared to the ones who use traditional methods of selling online.
- 34% of the total sales of Amazon proceed through dropshipping stores and this is a huge percentage.
- Finding the right suppliers is the biggest hurdle that drop shippers face. According to an estimate, more than 84% of drop shippers find difficulty in finding the right suppliers.
- 33% of the online stores use drop shipping as their fulfillment model.
- After the pandemic, a 28% increase is observed in the dropshipping business.
Conclusion
In 2021, it is even more important to know what is dropshipping because now people are more geared towards online shopping. So if you are in search of a side hustle that is easy and does not require any particular skill, you should focus on the idea of dropshipping.
Well, now you have read all about what is dropshipping in 2021 and what are the key planners and components of this side hustle, you should practically focus on it.
Still, have questions?
Feel free to ask them in the comment section below.